Bombay High Court Directs BMC to Refund ₹9.92 Crore to Real Estate Company
In a recent development, the Bombay High Court has ruled that tax deducted at source (TDS) cannot be levied for land acquisition compensation. The court directed the Brihanmumbai Municipal Corporation (BMC) to refund an amount of ₹9.92 crore to the Bombay Real Estate Development Company.
This decision stems from Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which unequivocally provides that no income tax or duty shall be levied on any award or agreement made under the Act. The bench, comprising of Justice MS Sonak and Justice Kamal Khata, emphasized that the only exception to this rule would be the acquisition made under Section 46 of the Act, which does not apply to the BMC’s acquisition of 9,302 square metres of land at Poisar, Kandivali. This land belonged to the construction company and was intended for the construction of a cemetery.
The court noted that the exemption under Section 96 of the Act clearly applied in this case, and thus the BMC should not have deducted the TDS from the compensation amount paid to the petitioner. This ruling came as a result of a petition filed by the Bombay Real Estate Development Company, challenging the BMC’s decision to deduct TDS after the civic body took over the land in November 2022. The BMC had agreed to a price of ₹99.19 crore for the land but only transferred ₹89.27 crore, citing the deduction of approximately ₹9.92 crore as TDS.
As per the High Court’s directive, the BMC is required 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. Subsequently, the Income Tax authorities have been instructed to process the correction statement in order to refund the deducted amount to the company.
This ruling sets a significant precedent in ensuring fair compensation for land acquisition and upholding the provisions of the Land Acquisition Act, 2013.
