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TMI Blog2016 (9) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... us on 23.05.2008 when another bus, which was insured by the petitioner-insurance company, dashed against it from behind resulting into fatal injuries to passenger Hakuben. Her legal heirs i.e. her husband and children, therefore, filed Motor Accident Claim Petition No. 818 of 2008 claiming compensation of Rs. 9 lacs from the drivers, owners and insurers of the vehicles involved in the accident. The Claims Tribunal, Vadodara by a judgement and award dated 28.08.2015, awarded compensation of Rs. 4,01,000/- to the claimants with interest @ 9% per annum from the date of claim petition i.e. 17.06.2008 till actual payment. 3. The petitioner-insurance company was liable to satisfy such decree and, therefore, deposited a sum of Rs. 5,45,027/- with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id order of Claims Tribunal. 6. It is undisputed that the decision of Division Bench of this Court in case of Smt. Hansagauri Prafulchandra Ladhani and ors vs. The Oriental Insurance Company Ltd. reported in 2007 (2) GLR 291 governed the situation of requirement of deducting tax at source in connection with payment of compensation and interest in motor accident claims cases. The Division Bench had interpreted the provisions of Section 194A of the Income Tax Act and come to the conclusion that the amount of interest accrued each year would have to be apportioned among the claimants on year to year basis and, if the interest payable to any claimant for any financial year exceeds Rs. 50,000/-, only then the Tribunal would permit the insurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the period from the date of filing the claim petition till the date of deposit. (b) thereafter, if the interest for any particular financial year exceeds Rs. 50,000/-, separately deposit before the Tribunal the amount liable to be deducted at source under the provisions of Section 194A(3)(ix) of the Incometax Act, 1961. Such amount shall not, however, straightaway, be paid over to the Income-tax department. (c) produce before the Tribunal a statement of computation of interest by spreading the amount over the relevant years from the date of claim petition till the date of deposit if the interest for any particular financial year exceeds Rs. 50,000/- and also request the Tribunal to treat the amount as a separate deposit. II. (i) The Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f receipt of the applications/representations." 8. This decision was rendered in the background of the provisions contained in Section 194A of the Act which pertains to interest other than interest on securities. Sub section (1) of Section 194A provides that any person not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income tax thereon at the rates in force. Thus, the requirement of deducting tax at source was attache ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Under Clause (ix) to sub section (3) of Section 194A of the Act, as it originally stood, requirement of deducting tax at source under sub section (1) would not apply in a case where any income is credited or paid by way of interest on compensation amount awarded by Motor Accident Claims Tribunal where the amount of such income or, the aggregate amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees. This provision of Clause (ix) is now divide into two parts and is replaced by Clauses (ix) and (ixa). Clause (ix), in the present form, refers to such income credited by way of interest on the compensation amount awarded by the Claims Tribunal. The case of crediting of interest on compensati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooked from any angle, the insurance company was not justified in deducting tax at source while depositing the compensation in favour of the claimants. It therefore, cannot avoid liability of depositing such amount with the Claims Tribunal. The Claims Tribunal had committed no error in insisting on the insurance company in making good the shortfall. 13. At this stage, learned counsel for the petitioner drew our attention to the order dated 05.03.2012 passed by this Court in Civil Application No. 2592 of 2012, in which, the insurance company had deposited with the Income Tax Department a sum of Rs. 7, 91, 971/- by way of tax on compensation of Rs. 34,39,070/- awarded by the Claims Tribunal. This Court allowed the claimants to seek refund of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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