File picture of a farmer (right) receiving cheque against his land from a Posco official

Paradip/Bhubaneswar, May 13: Landlosers, who have parted with their land for setting up industries in and around Paradip, have been caught in a wrangle between the district administration and the income tax department over deduction of tax from the compensation amount.

The law has forced them to submit 10 per cent of their compensation amount as income tax. Nearly Rs 130 crore has been disbursed among 2,380 families, whose land has been acquired for various industrial units, including the Posco project, in and around Paradip.

“Government officials and income tax personnel are locked in a blame game. We have been sandwiched in this tussle,” said Sudhir Pattnaik, a landowner from Nuagada village. Pattnaik has lost his land to the Essar steel project near Paradip.

After the Jagatsinghpur district administration deducted the tax as TDS, the landlosers stepped up demand for repayment of the tax deducted from the relief payment made out to them.

Surajit Das, additional district magistrate, Paradip, said: “It’s a flagrant violation of standing rules and notification issued by the Union ministry of rural development’s department of land resources. The income tax authorities forced us to collect TDS from the compensation award.”

“The matter has been referred to competent authorities for remedial measures. We have urged higher officials to take up the matter with the Union finance ministry,” he said. Chief income tax commissioner K.K. Mohapatra said: “There is a statutory law regarding deduction of TDS. If anything wrong happens, people can file for refund and get their money back.”

However, the income tax personnel justified levying of TDS. Income tax commissioner (TDS) Manoranjan Panigrahi said: “The TDS would only be deducted in case of non-agricultural land acquired by the government for setting up industries. The TDS will be deducted only if the compensation amount is more than Rs 1 lakh under the 194 LA of the Income Tax Act, 1961,” he said.

“They can apply for PAN card and file returns for the purpose,” said the income tax official. On the other hand, the state government officials said the law was too harsh. “Chief minister Naveen Patnaik had written a letter to Prime Minister Manmohan Singh to scrap this rule of the income tax law as it was unfair to the landlosers. However, the Prime Minister’s Office is yet to react,” said a senior official of the state government.

“We had asked the administration to submit a list of compensation receivers who had lost agriculture land. However, they did not comply. So, following standard procedure, we were forced to deduct the TDS,” said Janardan Pradhan, income tax officer, Paradip zone.

As many as 2,380 families had to give up either their homestead land or agriculture land to pave the way for setting industrial ventures in and around Paradip. These landlosers, who lost their land to the Essar steel project, the Iffco fertiliser plant, an oil refinery project, apart from the Posco steel project, were awarded Rs 130 crore relief in accordance with the rehabilitation and resettlement policy of the state government.

“The tax personnel had directed us to do so. Accordingly, we deducted TDS from the compensation receivers,” said special land acquisition officer Nrusingha Charan Swain.

“The poor landowners have been deceived and taken for a ride,” said Nirvaya Kumar Samantaray, general secretary of the United Action Committee, an outfit based in the Posco steel project areas.