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TMI Blog2017 (4) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... ute in the context what Section 56 and 145A would provide in respect of tax to be paid on interest directed to be paid on the compensation awarded by the Tribunal, as these provisions would stipulate and secondly, in view of the above clear position in law as laid down by the Division Bench of this Court in Gauri Deepak Patel & Ors. (supra) interpreting Section 194(3)(ix) of the Act, relevant in the present context. Resultantly the action of the Petitioner deducting tax at source on the interest awarded by the Tribunal, without following the mandate of the Division Bench of this Court in Gauri Deepak Patel & Ors. Vs. New India Assurance Co.Ltd. & Anr. (supra) was wholly unjustified and illegal. - WRIT PETITION NO.1770 OF 2015 - - - Dated:- 15-11-2016 - G.S.KULKARNI, J. For The Petitioner : Mr. Devendranath S.Joshi For The Respondent : Mr.Samir A.Vaidya, Mr.Suresh Kumar Judgment : 1. The Petitioner New India Assurance Company Limited has filed this petition challenging the order dated 21 November 2014 passed by the learned member of the Maharashtra Accident Claims Tribunal, Mumbai (for short the Tribunal ) whereby an application of Respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner produced a TDS certificate and contended that in view of the TDS certificate, Respondent No.1 can approach the Income Tax Authorities if so permissible and make a claim for the said amount. 6. The learned member of the Tribunal relying on the decision of the Division Bench of this Court in Gauri Deepak Patel Ors. Vs. New India Assurance Co.Ltd. Anr. (2011 ACJ 1782) observed that the Petitioner has not followed the guidelines as contained in the decision for depositing the TDS amount. It is observed that the Petitioner having knowledge of the provisions of the Income Tax Act and the law laid down by the Division Bench ought not to have deducted a lumpsum TDS and deposited the same with the Income Tax department. It was observed that the Petitioner by deducting the TDS amount has actually deprived Respondent No.1 from receiving the award amount, and as the Petitioner was not ready to deposit the amount, warrant of attachment was directed to be issued by passing the following order: ORDER Application is allowed. Issue attachment warrant under Order 21 rule 43 of CPC on process fee for attachment of three computers in the office of the insurance co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered from the point of view of Deductor and not Assessee. It cannot be seen whether the Assessee is liable to pay tax or not.; (e) The AssessesClaimant can always claim refund of amount from Income Tax department if he is not liable to pay tax. 9. In support of his submissions, the learned Counsel for the Petitioner has relied on the decision of The New India Assurance Co.Ltd. Vs. Mani S.Nachimuthu, N. ( 270 ITR 394 Mad.), decision of the Supreme Court in the case of Bikram Singh Ors. Vs. Land Acquisition Collector ( (1997)10 SCC 243 ) and the decision of the learned Single Judge of Andhra Pradesh High Court in the case of The National Insurance Company Ltd. Vs. Yeliminti Appanna Anr. ( Civil Revn.Petition No.994/12 decided on 22.4.2014). 10. On the other hand, the learned Counsel for Respondent No.1 has supported the impugned order of the Tribunal principally on the ground that the impugned order is in consonance with the decision of this Court in Gauri Deepak Patel Ors. (supra) and the decision of the Gujarat High Court in the case New India Assurance Co.Ltd. Vs. Bhoyabhai Haribhai Bharvad (2016)72 Taxmann.com335 (Gujarat). It is sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment thereof in cash or by issue of a 6 (2016)5 MLJ 105 cheque or draft or by any other mode, whichever is earlier, deduct income tax thereon at the rates in force: (2) .. (3) The provisions of subsection (1) shall not apply (i) to (viii) . . (ix) to such income credited or paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty thousand rupees. (emphasis supplied) A plain reading of the above provision would indicate that when any person not being an individual or Hindu undivided family who becomes 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. Subsection (3) excludes the application of subsection (1) and subclause (ix) thereof and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing the claim petition till the date of deposit. (b) thereafter, if the interest for any particular financial year exceeds ₹ 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 Income Tax Act,1961. Such amount shall not, however, straightaway be paid over to Income Tax Department. (c) produce before the Claims Tribunal a statement of computation of interest by spreading the amount over the relevant years from the date of claim application till the date of deposit if the interest for any particular financial year exceeds ₹ 50,000 and also request the Tribunal to treat the amount as a separate deposit. (ii) The Tribunal shall ensure that the amount of interest accrued each year is apportioned amongst claims on year to year basis. (iii) If the interest payable to any claimant during any particular financial year exceeds ₹ 50,000, Claims Tribunal shall permit the insurance companies/owners to pay over the amount liable to be deducted at source under Section 194A(3)(ix) to the Income Tax Department in respect of that particular claimant for the particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 compensation therefore, would fall in Clause (ix) as it stands currently. Under Clause (ixa) would fall, any 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 subsection (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 subsection (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 pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recent decision, in New India Assurance Company Ltd. Vs. Sudesh Chawla and others, CR.No.430 of 2015 (O M), reiterating the reasoning 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 accordingly 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 leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions on behalf of the Petitioner relying on a cumulative reading of Sections 56, 145A and 194A(3)(ix) of the Act cannot be accepted for two reasons, firstly there cannot be any dispute in the context what Section 56 and 145A would provide in respect of tax to be paid on interest directed to be paid on the compensation awarded by the Tribunal, as these provisions would stipulate and secondly, in view of the above clear position in law as laid down by the Division Bench of this Court in Gauri Deepak Patel Ors. (supra) as also reiterated in the decision of the Division Bench of the Gujarat High Court in the this Court in New India Assurance Co.Ltd. Vs. Bhoyabhai Haribhai Bharvad (supra) interpreting Section 194(3)(ix) of the Act, relevant in the present context . Thus, the reliance on behalf of the Petitioner on the decision of the learned Single Judge of the Madras High Court in The New India Assurance Co.Ltd. Vs. Mani S.Nachimuthu, N. and the decision in the case Bikram Singh Ors. Vs. Land Acquisition Collector Ors. ( JT 1996(8) SC 678) may not assist the Petitioner. 16. Resultantly the action of the Petitioner deducting tax at source on the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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