2019 (11) TMI 1743 - HC - Income Tax

TDS on compensation under Motor Vehicles Act - Re-pay/refund of TDS as illegally deducted from the compensation amount awarded by the Motor Accident Claims Tribunal - As argued deduction of TDS on interest (apart from securities) is exigible to an initial deduction at source of 20% and if the income of the petitioner and her children does not exceed the taxable income she could have well sought the refund by filing a return but that is also now delayed - petitioner said actually the amount was to be divided between six dependents and therefore deducting the entire amount as if it belonged only to the present petitioner was illegal - HELD THAT - Keeping in view the entire factual matrix we deem it appropriate to dispose of this petition with a direction to the petitioner to file a return within two months from the date of receipt of certified copy of this order with the competent Assessing Officer along with an application for condonation of delay under Section 119 of the Income Tax Act 1961 and the competent authority is directed to take a sympathetic view in dealing with the application for condonation of delay and thereafter the Assessing Officer may consider if the petitioner and her five children are entitled for refund as per law.

Summary

Issues:
1. Petition for refund of TDS amount deducted from compensation awarded by Motor Accident Claims Tribunal.
2. Legality of deducting the entire TDS amount from the petitioner's compensation.
3. Eligibility for refund based on income level and delay in filing return.

Analysis:
1. The petitioner filed a petition under Articles 226/227 seeking a direction for the refund of TDS amount of Rs.1,27,633/- deducted from the compensation amount awarded by the Motor Accident Claims Tribunal. The compensation amount was initially Rs.2,57,000/-, later enhanced to Rs.12,54,000/- by the Court. The petitioner sought a refund of the TDS amount deducted from the interest component of the compensation.

2. The petitioner's counsel argued that the compensation amount was meant to be divided among six dependents, and therefore, deducting the entire TDS amount as if it belonged solely to the petitioner was illegal. Additionally, it was highlighted that the petitioner and her family members belonged to the lower strata of society with no other source of income, making the deduction unjust.

3. On the other hand, the respondents contended that TDS deduction on interest is subject to an initial deduction at source of 20%. It was mentioned that if the income of the petitioner and her children did not exceed the taxable income, they could have sought a refund by filing a return, which was delayed. The Court directed the petitioner to file a return within two months with the Assessing Officer along with an application for condonation of delay under Section 119 of the Income Tax Act, 1961. The Assessing Officer was instructed to take a sympathetic view and determine if the petitioner and her children were entitled to a refund as per the law.

4. The Court disposed of the petition with the above directions, emphasizing the need for the petitioner to comply with the filing requirements within the specified timeline. Additionally, any pending civil miscellaneous applications were also considered disposed of since the main case had been decided.