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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 ..... ovided for further splitting up of this ceiling of 50,000/- per claimant basis. Looked 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... visions 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 ₹ 50,000/-, only then the Tribunal would permit the insurance company or the owners to pay or allow to be deducted tax at source to the Income Tax Department in respect of that particular claimant for that year. 7. The sole ground raised by the petitioner-insurance company in this petition for deducting tax at source despite the judgement of this Court in case of Smt. Hansagauri Prafulchandra Ladhani and ors vs. The Oriental Insurance Company Ltd is that by virtue of amendment in Section 194A of the Income Tax Act ['the Act' for short] by Finance Act 2015 w.e.f. 1.6.2015 there had arisen a requirement of deducting tax at source on crediting of the interest on the compensation awarded by the Claims Tribunal. We may examine this contention more minutely. Before doing so, we may reproduce the directions of the High Court in case of Smt. Hansagauri Prafulchandra Ladhani and ors vs. The Oriental Insurance Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation awarded by the Tribunal. (iv) It is clarified that the amount other than the amount liable to be deducted at source under Section 194A(3)(ix) shall be invested/disbursed by the Tribunal. 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." 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y payment of interest on compensation awarded by the Claims Tribunal where the amount of such income or the aggregate paid during the financial year does not exceed fifty thousand rupees. 12. It would, therefore, be wholly incorrect to read the current provision of sub section (3) of Section 194A to argue that the cases of income credited by way of interest on compensation awarded by the Claims Tribunal is no longer part of sub section (3) for exclusion from purview of sub section (1) of Section 194A. In other words, worded slightly differently. The case of credit of interest on compensation awarded by the Claims Tribunal continues to find place in the exclusion clause contained in sub section (3) of Section 194A. In fact, it would prima facie appear that the ceiling of ₹ 50,000/- per annum for such exclusion is now done away with in case of crediting of interest on compensation awarded by the Claims Tribunal while retaining such limit in cases of payment of interest on such compensation. However, we need not thresh out this last part of the issue since admittedly, in the present case, for none of the years under consideration, the interest income exceeded ₹ 50,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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