CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194L — Payment of Compensation on Acquisition of a Capital Asset (Omitted) (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Omitted with effect from 1 June 2000. Spent.
Finance Act, 2026: No amendment (long omitted).
Mechanism: Historically required deduction on compensation for compulsory acquisition of a capital asset; no current operation. Successor for immovable property: section 194LA.
Litigation profile: None. Omitted and spent — the candour rule applies.
A. SECTION COMMENTARY
Section 194L provided for deduction of tax at source from payment of compensation (or the enhanced compensation) on the compulsory acquisition of a capital asset. It was a short-lived provision: inserted in the mid-1990s, it was omitted with effect from 1 June 2000. The field it occupied — deduction on compensation for compulsory acquisition — was later taken up, in respect of immovable property, by section 194LA (inserted with effect from 1 October 2004).
A spent, omitted provision
Because section 194L has long been off the statute book, it has no current operation; it survives only as a matter of legislative history and for any assessment of a long-past year. Its successor for immovable-property compensation is section 194LA, and the substantive taxability of compensation/enhanced compensation (and the interest thereon) is governed by the capital-gains provisions and section 2(28A)/section 56, as the case may be.
No authority — candour
There is no body of section 194L case law of present relevance. In candour, the provision is noted for completeness; the live law on compensation deduction is in section 194LA, and the cognate chargeability principles (e.g. that interest on delayed compensation is taxable) are set out in the section 194A commentary (Bikram Singh).
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194L. Omitted by the Finance Act, 2016, w.e.f. 1-6-2016.
C. AUTHORITIES
Candour rule strictly observed: section 194L is omitted (w.e.f. 1 June 2000) and spent. Noted for completeness; the live successor is section 194LA.
Principle: Deduction on compensation for compulsory acquisition of immovable property is now governed by section 194LA (w.e.f. 1 October 2004); section 194L (omitted w.e.f. 1 June 2000) has no current operation.
Use: Directs the reader to the operative provision.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194L — Payment of Compensation on Acquisition of a Capital Asset (Omitted) (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Omitted with effect from 1 June 2000. Spent.
Finance Act, 2026: No amendment (long omitted).
Mechanism: Historically required deduction on compensation for compulsory acquisition of a capital asset; no current operation. Successor for immovable property: section 194LA.
Litigation profile: None. Omitted and spent — the candour rule applies.
A. SECTION COMMENTARY
Section 194L provided for deduction of tax at source from payment of compensation (or the enhanced compensation) on the compulsory acquisition of a capital asset. It was a short-lived provision: inserted in the mid-1990s, it was omitted with effect from 1 June 2000. The field it occupied — deduction on compensation for compulsory acquisition — was later taken up, in respect of immovable property, by section 194LA (inserted with effect from 1 October 2004).
A spent, omitted provision
Because section 194L has long been off the statute book, it has no current operation; it survives only as a matter of legislative history and for any assessment of a long-past year. Its successor for immovable-property compensation is section 194LA, and the substantive taxability of compensation/enhanced compensation (and the interest thereon) is governed by the capital-gains provisions and section 2(28A)/section 56, as the case may be.
No authority — candour
There is no body of section 194L case law of present relevance. In candour, the provision is noted for completeness; the live law on compensation deduction is in section 194LA, and the cognate chargeability principles (e.g. that interest on delayed compensation is taxable) are set out in the section 194A commentary (Bikram Singh).
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194L. Omitted by the Finance Act, 2016, w.e.f. 1-6-2016.
C. AUTHORITIES
Candour rule strictly observed: section 194L is omitted (w.e.f. 1 June 2000) and spent. Noted for completeness; the live successor is section 194LA.
No current authority — legislative note
Successor provision — section 194LA
Principle: Deduction on compensation for compulsory acquisition of immovable property is now governed by section 194LA (w.e.f. 1 October 2004); section 194L (omitted w.e.f. 1 June 2000) has no current operation.
Use: Directs the reader to the operative provision.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.