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TMI Blog2006 (10) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... to obviate such a situation in future for other claimants who may be awarded compensation with interest thereon, and the amount of interest being deposited exceeds Rs. 50,000/-, but who may not be liable to have any tax deducted at source as per the interpretation placed by us on the provisions of Section 194A of the Act. In the facts of the present case, since the Insurance Company had deducted tax on compensation u/s 194A(3)(ix) of the Act by treating the entire interest amount as one lumpsum amount, we direct that after giving the claimants the details of the amounts of interest spread over the relevant financial years and the break-up amongst several claimants, the Insurance Company shall, within one month from the date of receipt of a certified copy of this order, furnish to the claimants the certificate indicating the interest amounts computed for each year and with the break-up of the interest amounts payable to each claimant in each of those years as per the apportionment made in this order. Thereafter it will be open to the claimants to make applications/representations before the appropriate income-tax authority which shall decide the same within six months from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said deposit and thereafter claimant Nos. 1 and 6 shall be paid Rs. 3,89,000/- each as principal compensation amount and claimant Nos. 2 to 5 shall be paid Rs. 1,00,000/- each as principal compensation amount. 2.3 Being aggrieved by the above award, Oriental Insurance Co. Ltd., insurer of both the vehicles, has filed First Appeal No. 1392 of 2006. This Court admitted the appeal on 4.5.2006 and also directed the Tribunal to make investment of the amounts deposited before it. Pursuant to the said direction the Insurance Company has deposited an amount of Rs. 25,27,812/- before the Tribunal by cheque dated 5.7.2006. The detailed calculations given by the Insurance Company in the purshis dated 12.7.2006 is as under: 3. Civil Application No. 10031 of 2006 has been filed by the original claimants for various prayers including the prayer that the amount awarded Page 2104 by the Tribunal as compensation and the interest which has accrued on the said compensation amount be apportioned equally amongst all the claimants i.e. the widow, four daughters and one son of the deceased and thereafter disbursed. It is also submitted that the TDS certificate should be prepared on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability of the claimants for all the years. A separate statement dated 22.9.2006 is produced giving Permanent Account Numbers and the total income as per the returns filed for some of the relevant years 1999-2000 to 2005-06. It is also stated that claimant No. 5 is not filing any return. It is, therefore, submitted that the question of liability to pay income-tax would arise only where the interest (on compensation payable to the Page 2105 concerned claimant) together with the income already returned as per the income-tax returns filed earlier for the relevant year exceeds the taxable income. It is also submitted that if at all any tax liability arises, it would be dependent upon the rate of income-tax chargeable for the relevant year. In short, Mr. Sheth for the original claimants has submitted that the tax deduction of Rs. 1,70,269/- should not have been made by the Insurance Company and that in any view of the matter, since the tax is already deducted at source and paid to the Income-tax Department, the claimants may be given liberty to move the Income-tax Department for refund of the excess tax recovered from the claimants. Mr. Sheth has also relied on the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany, it cannot be overlooked that income-tax is ultimately a tax on income. In a similar case arising under the Land Acquisition Act, 1894, in Rama Bai v. Commissioner of Income-tax, AP , the Apex Court has held that interest on enhanced compensation for land compulsorily acquired under the Land Acquisition Act, 1894, awarded by the Court on a reference under Section 18 of the Act or on further appeal has to be taken to have accrued not on the date of the order of the Court granting enhanced compensation but as having accrued year after year from the date of delivery of possession of the land till the date of such order, and that such interest cannot be assessed to income-tax in only lump sum in the year in which the order is made. 11. The same principle will apply to interest on compensation awarded by the Motor Accident Claims Tribunal in a claim petition under the Motor Vehicles Act, 1939 or Motor Vehicles Act, 1988 or on further appeal by this Court or the Apex Court. Section 171 of the Motor Vehicles Act, 1988 reads as under: 171. Award of interest where any claim is allowed.- Where any Claims Tribunal allows a claim for compensation made under this Act, such Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also stated that claimant No. 5 (respondent No. 5 in the appeal) has not received any income and, therefore, he has not filed any return. It also appears that the returns were filed for the year 1999-2000 and/or thereafter. 13. Accordingly, the income-tax liability of the concerned claimants to pay tax on the interest accrued on the compensation awarded to them shall arise if such interest income accrued in the concerned financial year together with other income of the respective claimants in that financial year exceeds the chargeable limit as specified in the provisions of the Income-tax Act, 1961 in force for the relevant years. It will, therefore, be open to the claimants to make appropriate applications/representations before the concerned income-tax authority for refund of such amount/s as may be due to them out of the amount of Rs. 1,70,269/- which has already been deducted by the Insurance Company as tax deducted at source under the provisions of Section 194A of the Act. 14. It is necessary to obviate such a situation in future for other claimants who may be awarded compensation with interest thereon, and the amount of interest being deposited exceeds Rs. 50,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. III. When the claimants make applications/representations before the authority under the Income-tax Act, 1961 for refund of the amount deducted under the provisions of Section 194A(3)(ix) of the Act, the concerned authority shall decide such applications/representations within six months from the date of receipt of the applications/representations. 15. In the facts of the present case, since the Insurance Company had deducted tax on compensation under Section 194A(3)(ix) of the Act by treating the entire interest amount as one lumpsum amount, we direct that after giving the claimants the details of the amounts of interest spread over the relevant financial years and the break-up amongst several claimants, the Insurance Company shall, within one month from the date of receipt of a certified copy of this order, furnish to the claimants the certificate indicating the interest amounts computed for each year and with the break-up of the interest amounts payable to each claimant in each of those years as per the apportionment made in this order. Thereafter it will be open to the claimants to make applications/representations before the appropriate income-tax authority w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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