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2012 (9) TMI 127 - Commission - Income TaxT.D.S. deduction on the compensation paid to parents whose child dies in an escalator maintained by an Airport Authority - Held that - The respondent should not have deducted the T.D.S. as in the instant case, the compensation is by way of damages. The damages paid for the death of a person cannot be equated with income as such. As decided in Ghaziabad Development Authority. Versus Dr. N. K. Gupta. 2002 (9) TMI 292 - NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION interest to the complainant has not been awarded on the basis of any deposit made by the complainant or the GDA being the borrower of any money of the complainant. Here interest payment is by way of damages and merely describing the damages as by way of interest does not make them as interest under the Income-tax Act and thus the provisions of section 194A were not applicable and the GDA was clearly wrong in deducting the tax deducted at source from the interest payable to the complainant - thus, the opposite party-Airport Authority of India Ltd. is directed to pay the TDS amount alongwith interest @9% p.a. to the Decree Holder, within a period of 30 days and to recover the said amount form the Income Tax Department, as per law - in favour of decree holders.
Issues:
1. Whether T.D.S. is deductible on compensation paid to parents of a child who dies in an escalator accident maintained by an Airport Authority. Analysis: The key controversy in this case centered around the deduction of T.D.S. on compensation paid to the parents of a child who tragically died in an escalator accident under the maintenance of the Airport Authority of India (AAI). The National Consumer Disputes Redressal Commission had previously allowed the complaint and directed AAI to pay a specified amount along with interest. The compensation was granted due to the accidental death of the child, and a portion of it was deducted as TDS. The contention arose regarding the entitlement of AAI to deduct TDS, with reference made to a Supreme Court decision in a similar matter. AAI argued that once TDS is deducted, they have no control over the amount, and the complainant can seek a refund from the Income Tax Authority. Consequently, a notice was issued to the Income Tax authority, and arguments were presented before the Commission. The Income Tax Inspector highlighted Section 41 clause (1) part VIII, which deals with refunds, and emphasized the procedure for claiming a refund under Chapter XIX. Form No. 30 was also discussed, which is required for claiming a refund of tax. The Inspector pointed out that even for non-resident Indians (NRIs), a return must be filed for TDS recovery. However, the Commission found these arguments irrelevant in the context of the case. It was emphasized that the respondent should not have deducted TDS as the compensation was in the form of damages for the death of the child, which cannot be equated with regular income. Reference was made to a previous authority's ruling to support this stance, which clarified the distinction between interest and damages in a similar context. As a result of the analysis, the Commission directed the Airport Authority of India Ltd. to pay the TDS amount along with interest to the Decree Holder within a specified timeframe. Additionally, AAI was instructed to recover the deducted amount from the Income Tax Department in accordance with the law. This decision was based on the understanding that the compensation paid for the tragic incident should not have been subjected to TDS deduction, considering the nature of the payment as damages rather than income, as established by legal precedents.
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