Refund Alert: Bombay HC Orders BMC to Return ₹9.92 Cr to Real Estate Company
Bombay HC directs BMC to refund ₹9.92 crore to real estate company as TDS cannot be levied on land acquisition compensation
Bombay HcBmcTdsLand AcquisitionReal EstateReal Estate MumbaiJul 28, 2024
The court's verdict was based on the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Section 96 of the Act clearly states that no income tax or duty shall be levied on any award or agreement made under the Act. The only exception to this rule is acquisition made under Section 46 of the Act, which does not apply to the BMC's acquisition in this case.
The BMC had taken over the land in November 2022 under an agreement with the construction company, fixing 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 Bombay Real Estate Development Company challenged the BMC's decision, arguing that TDS cannot be levied on land acquisition compensation.
The high court bench comprising Justice MS Sonak and Justice Kamal Khata upheld the company's challenge, ruling that the exemption under Section 96 of the Act would squarely apply in this case. The court 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 so as to refund the amount to the company.
Information
The Brihanmumbai Municipal Corporation (BMC) is the municipal corporation responsible for the governance of Mumbai. Bombay Real Estate Development Company is a leading real estate company in Mumbai, involved in various construction projects across the city.
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, is a landmark legislation that aims to provide fair compensation to landowners and ensure transparency in the land acquisition process.
Frequently Asked Questions
What is the amount that the BMC has been directed to refund to the real estate company?
₹9.92 crore
On what grounds did the Bombay HC direct the BMC to refund the amount?
The court ruled that TDS cannot be levied on land acquisition compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
What is the purpose of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013?
Section 96 provides that no income tax or duty shall be levied on any award or agreement made under the Act.
Why did the BMC deduct ₹9.92 crore from the compensation amount paid to the real estate company?
The BMC deducted the amount as Tax Deducted at Source (TDS).
What is the next step in the process after the BMC files a correction statement with the Income Tax authorities?
The Income Tax authorities will process the correction statement so as to refund the amount to the company.
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