2010 (2) TMI 1242 - HC - Income Tax

Summary

Issues involved: Interpretation of income tax liability on interest accrued on compensation, jurisdiction of the executing court regarding TDS deduction, refund process for income tax component deducted earlier as TDS.

Interpretation of income tax liability on interest accrued on compensation: The petitioners filed E.P.No.24 of 2007 for attachment of movables and depositing the E.P. amount. The District Judge held that interest on compensation should be calculated yearly and apportioned among claimants based on income tax liability. The judgment debtor was directed to pay the deducted income tax amount to the decree holder. The petitioner argued that TDS was already paid to the Income Tax Department, following a similar direction by the Gujarat High Court. The Madras High Court also allowed claimants to approach authorities for spreading income over the relevant assessment years for tax computation.

Jurisdiction of the executing court regarding TDS deduction: The executing court directed the petitioner to deposit the TDS amount deducted from compensation, which the petitioner had already paid to the Income Tax Department. The petitioner claimed double liability due to the court's order. The High Court held that income tax liability arises yearly on interest accrued, and it is the claimants' responsibility to approach the Income Tax authority for tax assessment and refund if applicable. The court found the lower court's order erroneous and beyond jurisdiction, setting it aside.

Refund process for income tax component deducted earlier as TDS: The respondents argued that the petitioner had already deposited the TDS component, which they had withdrawn. They requested the High Court to direct the petitioner to claim refund from the Income Tax Department instead of leaving it to the claimants. The High Court disagreed, stating that income tax liability should be determined based on yearly interest accrual, and it was not within the executing court's authority to direct TDS deposit. The High Court allowed the revision petition, setting aside the lower court's order and advising claimants to approach Income Tax authorities for refund claims.