Bombay HC Orders BMC to Refund ₹9.91 Cr Deducted as TDS to Builder
By: Admin|July 29, 2024|Categories: Income Tax News | News
The Bombay High Court on Thursday directed the Brihanmumbai Municipal Corporation (BMC) to refund ₹9.92 crore to the Bombay Real Estate Development Company, holding that tax deducted at source (TDS) cannot be levied for land acquisition compensation.
Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, “unequivocally provides that no income tax or duty shall be levied on any award or agreement made under the Act,” stated the bench comprising Justice MS Sonak and Justice Kamal Khata.
The bench added that the only exception to this rule is the acquisition made under Section 46 of the Act, which did not apply to the BMC’s acquisition of 9,302 square meters of land at Poisar, Kandivali, belonging to the construction company, to build a cemetery. Section 46 excludes certain entities like government-aided bodies from the benefit of tax exemption.
Since the exemption under Section 96 of the Act applies in this case, the BMC should not have deducted the TDS from the compensation amount paid to the petitioner, the bench said.
The high court was hearing a petition filed by the Bombay Real Estate Development Company challenging the BMC’s decision to deduct TDS. The civic body took over the land in November 2022 under an agreement with the construction company, setting the price at ₹99.19 crore. However, in February 2023, the BMC transferred only ₹89.27 crore, claiming that the balance amount of around ₹9.92 crore was deducted as TDS.
The court has now directed the BMC to file a correction statement with the Income Tax authorities within 30 days, declaring that the amount of ₹9.92 crore was not liable to be deducted. The Income Tax authorities were, in turn, directed to process the correction statement to refund the amount to the company.
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