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TMI Blog2016 (6) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... y analyse, it could be seen that there is no direct conflict between any provisions of the Income Tax Act and the Motor Vehicles Act and it is only by the interpretation of the provisions the concept of compulsory payment of TDS has crept into the realm of compensation payment in Motor Vehicle Accident cases. This Court arrives at the conclusion that the compensation awarded or the interest accruing therein from the compensation that has been awarded by the Motor Accident Claims Tribunal cannot be subjected to TDS and the same cannot be insisted to be paid to the Tax Authorities since the compensation and the interest awarded therein does not fall under the term 'income' as defined under the Income Tax Act, 1961. - Decided in favour of assessee. - CRP (PD) NO. 1343 OF 2012 and M.P. NO. 1 OF 2012 - - - Dated:- 2-6-2016 - <!--[if gte mso 9]> <![endif]--> M.V. MURALIDARAN, J. Ms. D. Venkatachalam and V. Raghavachari for the Petitioner. T. Pappaiah Dharmarajan for the Respondent. ORDER 'Life' does not mean a mere animal existence and this term occurring in Article 21 of the Constitution of India has been expounded and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961?. This is a crucial and important question that arises for consideration and this Court intends to clarify on this matter further as the same would have serious implications. 7. Before doing so, it is necessary to look into the facts of the present case on hand. The Respondent in the instant Revision Petiion has filed an Execution Petition R.E.P.No.146 of 2010 before the Motor Accident Claims Tribunal, Dharmapuri in M.CO.P.No.879 of 2006 wherein the amount that they are entitled to ₹ 4,23,271/- and in the memo filed before the Motor Accident Claims Tribunal, ₹ 24,017/- has been deducted for TDS. R.E.P.No.146 of 2010 that has been filed was allowed by the Court below and accordingly, the bus belonging to the Revision Petitioner Corporation was attached and the Corporation was directed to deposit the balance amount of ₹ 30,774. Aggrieved by this order, the Petitioner has approached this Court and when the matter came up on an earlier occasion before this Court an Order dated 20.04.2012, was passed and wherein it has been directed as follows: The petitioner - Transport Corporation shall deposit the amount, which was not earlier deposited, to the credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereby which a family of an individual who could have possibly lost his life or limbs in an accident has to pay TDS on the interest that has accrued on the compensation amount, will the law be doing a service or disservice to the victims?. With all due respect, I find that the three decisions cited by the Petitioner does not deal with this issue at all. 13. The question is whether the provisions of the Income Tax Act 1961, and more specifically, whether the compensation awarded by the Motor Accident Claims Tribunal to the victim can be classified as a taxable income under the Income Tax law?. The answer to this question in the opinion of this Court is in the negative. Compensation cannot be categorized or even described as income as it has already been stated that the intention of the legislature in awarding compensation to the victims of Motor Accident cases is to restitute them and rehabilitate them. 14. The Income Tax Department appears to have issued a circular dated 14.10.2011 whereby deduction of Income Tax has been ordered on the award amount and the interest accrued on the deposits made under the order of the Court in Motor Accident Cases. Taking serious view of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oning given by the Division Bench of Himachal Pradesh High Court, has opined that award of compensation is on the principle of restitution to place the claimant in the same position in which he would have been loss of life or injury has not been suffered and accordinly held that the orders calling upon the Insurance Company to pay TDS/deduct Tds on the interest part are not sustainable. 16. If we look at other jurisdictions like Australia, Unites States and United Kingdom, even there, the matters where a person has suffered an injury or there has been a loss of life and a compensation has been paid in lieu of that, then it has been held by the Courts that there cannot be any Tax deduction on such compensation. The underlying basis behind this is that a person who suffers a loss cannot be asked to part with the solatium he receives since it is the only remedy he has been provided with by the law. 17. If there is a conflict between a social welfare legislation and a taxation legislation, then, this Court is of the view that a social welfare legislation should prevail since it subserves larger public interest. The Motor Vehicle Act is one such legislation which has been passed w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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