Facts of the Case

  • The petitioner’s land was acquired by NHAI under the National Highways Act, 1956.
  • Compensation of ₹8,48,84,800 and interest of ₹22,53,517 were received.
  • TDS was deducted by NHAI on both compensation and interest.
  • However, TDS on principal compensation was initially deposited in an incorrect assessment year and later corrected via revised Form 26AS.
  • The petitioner treated the compensation and interest as exempt income.
  • Return was processed under Section 143(1), raising a demand without granting TDS credit.
  • A rectification application under Section 154 was filed and partially allowed earlier, reducing demand.
  • A subsequent rectification application dated 18.08.2022 seeking full TDS credit remained pending.

Issues Involved

  1. Whether the petitioner is entitled to TDS credit as reflected in revised Form 26AS.
  2. Whether failure to grant such credit in intimation under Section 143(1) is liable to rectification under Section 154.
  3. Whether delay in consideration of rectification application warrants judicial intervention.

Petitioner’s Arguments

  • TDS was duly deducted and reflected in revised Form 26AS; hence credit must be granted.
  • Demand raised under Section 143(1) is erroneous due to non-consideration of correct TDS.
  • Compensation and interest were claimed as exempt income.
  • Pending rectification application requires timely adjudication to avoid prejudice 

Respondent’s Arguments

  • Revenue accepted notice and chose to argue based on available records without filing a counter affidavit.
  • No substantial dispute raised against processing of rectification application at this stage.

Court Findings / Order

  • The Delhi High Court disposed of the writ petition with directions to the Jurisdictional Assessing Officer (JAO):
    • To decide the pending rectification application dated 18.08.2022.
    • To pass an order within six weeks from receipt of the judgment.
  • Liberty was granted to the petitioner to pursue appropriate remedies if the decision is adverse.

Important Clarifications

  • TDS credit must align with Form 26AS, especially when corrections are made subsequently.
  • Rectification under Section 154 is a valid remedy for errors apparent on record, including non-grant of TDS credit.
  • Courts may intervene to ensure timely disposal of rectification applications but may refrain from adjudicating merits directly.

Sections Involved

  • Section 143(1), Income Tax Act, 1961
  • Section 154, Income Tax Act, 1961
  • TDS Provisions under Income Tax Act
  • National Highways Act, 1956 (Land Acquisition Compensation)

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60824052023CW71652023_111341.pdf

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