2019 (10) TMI 1516 - HC - Income Tax

TDS u/s 194A - deposits in regard to TDS amount from the Insurance Company - HELD THAT - This Court is inclined to accept the submissions from the learned counsel for the petitioner. It appears that the directions contained in Para 14 in relation to TDS are for smooth discharge of the liability u/s 194A of the Income-tax Act as also the convenience of the claimant to apply for refund if necessary. The permission in terms of Para 14 II(ii) thus seems to be of a formal nature and not adjudicatory, inasmuch as adjudication can be done only by the income-tax department when the refund is claimed. It is, therefore, needless to say that unless the computation of the interest liable to tax is questioned; normally permission under the said directions should be given as a matter of course. It is, therefore, directed that the Tribunal will consider permission (supra) within 10 days of the receipt of the application accompanied with statement as indicated in Hansagauri 2006 (10) TMI 383 - GUJARAT HIGH COURT This petition succeeds and is allowed. The impugned orders are quashed and set aside. The petitioner shall, make a fresh application to the Tribunal in accordance with the observations made in Hansagauri (supra) as also observations made herein.

Summary

Issues:
Interpretation of directions for TDS deposit in motor accident compensation cases.

Analysis:
The petitioner, an Insurance Company, sought to quash and set aside orders of the Motor Accident Claims Tribunal related to TDS deposit in a compensation case. The Tribunal initially refused a cheque for TDS amount, stating lack of direction to accept it. Subsequently, when TDS was deducted and cheques were provided, the Tribunal again refused to accept them, citing various grounds, including lack of justification for TDS deduction and the insurer's legal obligation to deduct tax. The High Court analyzed the directions given in previous judgments and clarified the obligations regarding TDS deposit. The Court emphasized that the initial obligation to deduct tax at source lies with the insurer, and compliance with Section 194A of the Income-tax Act is crucial. The Court directed the Tribunal to consider applications for TDS deposit permission promptly, within 10 days of receipt, in line with the previous judgments' guidelines. The petitioner's plea was allowed, and they were instructed to make a fresh application to the Tribunal following the clarified observations.

In conclusion, the High Court's judgment focused on interpreting and applying previous directions regarding TDS deposit in motor accident compensation cases. The Court clarified the obligations of the Insurance Company concerning TDS deduction and emphasized the importance of complying with the Income-tax Act provisions. The Court directed the Tribunal to promptly consider applications for TDS deposit permission, ensuring smooth compliance with the law and facilitating potential refund claims by claimants. The petitioner's petition was allowed, and they were instructed to reapply to the Tribunal following the clarified guidelines, with the order to be circulated to all Motor Accident Claims Tribunals in the State of Gujarat for uniform application of the directions.