In Brief
These consolidated civil appeals challenged the deduction of tax at source (TDS) on compensation paid for compulsory acquisition of agricultural land. The Land Acquisition Collectors had deducted TDS under Section 194-LA of the Income Tax Act, 1961. The High Court directed the Income Tax Department to refund the amount to the Collector. The Supreme Court held that the Collector cannot determine whether land is agricultural; instead, landowners must approach Assessing Officers to claim refund. The Assessing Officer must examine facts and apply income tax law, including the definition under Section 2(14)(iii), to determine if land is agricultural and refund TDS accordingly. The Supreme Court set aside the direction to refund to the Collector and prescribed a procedure for individual claims before Assessing Officers."
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