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2019 (3) TMI 1538 - AT - Income TaxApplication u/s 158A - special provision for avoiding repetitive appeals - interest income received from the insurance company on MACT claim - Procedure when assessee claims identical question of law is pending before High Court or Supreme Court - Taxability of interest on compensation awarded by the Motor Accident Claims - as per assessee payment of interest received by the assessee cannot be taxed pending finalization of the dispute regarding accident insurance compensation on which the said interest was granted - claim not accepted by the AO for the reason that the said interest income has already been credited in favour of the assessee and TDS has been deducted therefrom - HELD THAT - The question relating to taxability of interest on compensation awarded by the Motor Accident Claims Tribunal is identical to the question of law framed for adjudication before the Hon ble Supreme Court in assessee s own case. Therefore, we admit the claim of the assessee in terms of section 158A(3) of the Act. Given that the matter is currently pending adjudication before the Hon ble Supreme Court, the Assessing officer is directed to apply the directions of the Hon ble Supreme Court as soon as the same is pronounced in the present case. The matter is accordingly set-aside to the file of the AO with the above directions. - Appeal of the assessee is allowed for statistical purposes.
Issues:
Taxability of interest income received from insurance company on MACT claim for Assessment Year 2009-10. Analysis: Issue 1: Taxability of interest income The assessee filed her return showing income of ?1,38,970, but the Assessing Officer assessed the income at ?15,19,186 by taxing the interest income received from the insurance company on MACT claim. The assessee contended that the interest income should not be taxed until the dispute regarding the accident insurance compensation was finalized. The ld. CIT(A) ruled in favor of the assessee, stating that the interest received on account of delay in compensation is not taxable in the current year but will be taxed in the year of finality. The Assessing Officer's addition towards interest income was deleted, and the TDS credit on such interest was also directed to be withdrawn. Issue 2: Grounds of appeal The assessee appealed against the findings of the ld. CIT(A) on two grounds. Firstly, challenging the action of the ld. AO in not accepting that the interest, as part of compensation on account of death in a road accident, is not income and hence not taxable. Secondly, disputing the ld. CIT(A)'s decision to allow TDS credit only when compensation and interest reach finality, arguing that the interest is not taxable under the Income Tax Act. The assessee requested relief by accepting the interest as non-taxable and allowing the TDS credit to be refunded. Issue 3: Pending adjudication before Supreme Court The questions of law raised in the present appeal were found to be identical to those pending before the Hon’ble Supreme Court in a Special Leave to Appeal related to Assessment Year 2006-07 and 2007-08. The Hon’ble Supreme Court issued notices and stayed the operation of the judgment passed by the Rajasthan High Court. The ld. AR requested that the present appeal be kept in abeyance until the final decision by the Supreme Court, and agreed to abide by the Supreme Court's decision. Conclusion Considering the identical nature of the legal questions pending before the Supreme Court, the Tribunal admitted the claim of the assessee under section 158A(3) of the Act. The Assessing Officer was directed to apply the Supreme Court's directions once pronounced. Therefore, the appeal of the assessee was allowed for statistical purposes, and the matter was set aside to the file of the AO with the specified directions. This detailed analysis of the legal judgment highlights the key issues surrounding the taxability of interest income received from an insurance company on a MACT claim for the Assessment Year 2009-10. The judgment reflects the importance of legal interpretations and pending adjudications before higher authorities in resolving complex tax matters.
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