2022 (2) TMI 348 - SCH - Income Tax

Motor accidents claims compensation - addition to the accident relief fund - TDS in Motor Accident Claims at two different rates from 10% to 20% - ASG points out that uniform system is being brought in place whereby TDS will be uniformly 10% for all categories - direction made on the last date of hearing to create a fund equivalent to an amount on the basis of determination for the last three financial years of compensation so disbursed - A suggestion made by learned Amicus Curiae is that where TDS is applied as per Section 194-A of the Income Tax Act, 1961, the insurance companies/transport corporations/others should file the statutory Form 16-A immediately upon filing the returns of the TDS to the Income Tax Department and the MACTs. should endeavour to handover to the claimants/counsel on proper acknowledgment, the forms to facilitate speedier disbursement - HELD THAT - We would call upon the learned ASG to examine this aspect in the conspectus of the submissions of Mr. Gaurav Banerjee, more so that possibly a solution may be to increase the level of the funds which at present is specified at ₹ 20,00,000/- in 1982. This would logically require the amendment of the statutory rules. We expect the learned ASG to get back on this issue and since we had provided a dead line of three months which expires on 15.02.2022 we would like to examine this aspect alone at an earlier date. We are not inclined to implead the two applicants as a party but have taken note of their concern and dispose of the applications with liberty to the counsel to assist us in this behalf. Amicus curiae expressing some difficulties arising from directions given for maintenance of Savings Bank Accounts instead of current accounts - In view of the inevitable time lag between deposit of the award and actual disbursement, it is stated that accrued interest arising in savings Bank Accounts (something which we intended to benefit the claimants), there appears to be a stated problem in coordinating the exact accrued interest amounts with the claims and it is submitted that the total accrued interest in 328 MACTs in the State of Tamil Nadu and Puducherry is more than ₹ 40 crores. This fund is thus stated to be just lying in the account which is not disbursed and there is lack of proper identification as to whom the amount should be disbursed. Misuse of these amounts has come to light to the extent of 1.5 crores and 33 lakhs in two MACT courts and the matter as stated above is being investigated under the supervision of the Maras High Court. On the reading of the aforesaid suggestion it thus appears that the MACT Court seems to be seeking to wash their hands off because of the amounts being deposited in the Courts. That itself cannot require a change of direction as responsibilities have to be performed. However, the alternative suggestion made is that if the amounts can be kept in a current account but with general directions that they should be placed in FDR initially for 91 days to be kept renewed (practice followed in many Courts), it will be easier to identify the interest with the claimants amount. This is an aspect which will be examined by learned ASG who would revert to us on the same. In view of the directions aforesaid, except of creating of a fund, requiring about two months time, list for further directions on 31.03.2022.

Issues:
1) Tax Deduction at Source (TDS)
2) Coordination between Local Police Stations and MACT Courts
3) Mobile App
4) Fund Pool for Non-Insured State Vehicles

Analysis:

1) Tax Deduction at Source (TDS):
The Supreme Court addressed the issue of TDS in motor accident claims compensation. Initially, different rates of TDS were applied, but a uniform rate of 10% was proposed by the learned ASG. The Amicus Curiae highlighted that many claimants were unaware of how to obtain the deducted TDS amounts, which could amount to hundreds of crores. A suggestion was made to streamline the process by filing Form 16-A promptly to facilitate quicker disbursement.

2) Coordination between Local Police Stations and MACT Courts:
The Court discussed the progress made in coordinating between local police stations and MACT courts. While significant advancements were noted, further improvements were expected within a two-month timeframe to finalize all aspects of the coordination.

3) Mobile App:
Regarding the development of a common mobile app, delays were encountered despite assurances. The GIC, represented by a senior counsel, assured the Court of progress and stated that 90% of the work was completed. Two months were granted to ensure compliance, emphasizing the importance of meeting deadlines. The appointment of a Chief Technical Officer by the GIC for all insurance companies was also directed within two weeks.

4) Fund Pool for Non-Insured State Vehicles:
The issue of creating a fund for non-insured state vehicles was discussed, with concerns raised by State Transport Corporations regarding the financial burden imposed by the Court's directions. The learned ASG was called upon to examine the matter, potentially necessitating an amendment to statutory rules. The Court acknowledged the concerns raised by the State Transport Corporations but did not implead them as parties, allowing their counsel to provide assistance.

Additional Report:
An additional report highlighted challenges in maintaining savings bank accounts instead of current accounts, leading to issues in coordinating accrued interest with claims. Misuse of funds was reported in certain MACT courts, prompting investigations. Suggestions were made to streamline disbursement processes, including direct transfers to claimants' accounts and placing funds in fixed deposits. The Court directed further examination of these suggestions and set dates for follow-up directions.

The Court emphasized the importance of timely compliance with directives and warned of imposing exemplary costs for non-compliance. The next hearings were scheduled to monitor progress and address outstanding issues comprehensively.

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