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TMI Blog2020 (3) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... e deducted. Hence, in the present case, the issue in regards to the deduction of TDS on the interest components payable to respondent No.1 is not liable to be considered again. This Court in the aforesaid three cases i.e. Ramlal [ 2010 (11) TMI 1118 - MADHYA PRADESH HIGH COURT] ; Smt. Swaroopi Bai [ 2019 (6) TMI 1669 - MADHYA PRADESH HIGH COURT] ; and Draupadibai [ 2010 (9) TMI 738 - MADHYA PRADESH HIGH COURT] has consistently held that the tax is payable on the interest accrued on the the amount of compensation under Motor Vehicle Act with a rider that the interest should not be more than Rs.50,000/- per claimant per financial year. After the aforesaid award, the Insurance Co. has calculated the interest payable on entire the amount of compensation and deducted the TDS @ 20%. At the most, the Insurance Co. can file the details of calculation of the the amount of interest, payable to each claimants and explain to the MACT that the same is exceeding Rs.50,000/- per month and the deduction of TDS was justified. If such details are filed, then the direction given in the case of Ramlal (supra) shall apply and it would be the discretion of claimants to claim a refund from the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of compensation before the Tribunal. (iv) In compliance of the aforesaid award, the petitioner deposited the the amount of compensation i.e. Rs. 49,84,000/- and Rs.6,93,118/- towards interest component. As the the amount of interest was exceeding 50,000/- per claimant per financial year, Insurance co. has deducted TDS and deposited in the Income Tax Department as per the requirement of Section 194-A of the Income Tax Act. (v) Vide order dated 23.10.2019, learned MACT has returned the TDS certificate to the petitioner and directed to deposit the deducted the amount before the Tribunal. The petitioner obtained the opinion from the Chartered Accountant, which is filed as Annexure M-4 with this petition. The Chartered Account has opined that when the interest component exceeds 50,000/-, the person making the payment has to deduct TDS, hence, the insurance company was under a legal obligation to make a deduction because the interest component was exceeding 50,000/- per claimant per year. (vi) Meanwhile, respondents No.1 to 6 claimants preferred the execution case before the MACT, in which, the MACT has passed the order dated 6.11.2019 by directing the petitioner t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educting tax at source cannot govern the taxability of the the amount which is being paid. However, the Division Bench has clarified that these observations would apply to the interest on compensation or enhanced compensation awarded by the MACT or High Court from the date of claim petition till passing of the award or the judgment and the further interest which may be paid for delay in depositing the awarded the amount, would not form part of the compensation and, therefore, would fall in the bracket of interest income and would be exigible to tax under the normal provisions. 6. Mr. Nema ld. Senior counsel has also placed a copy of the judgment passed by the Division Bench of High Court of Himachal Pradesh in the case of Court ion its own motion V/s. H.P. State Cooperative Bank Ltd. (CWPIL No.9/2014 decided on 15.10.2014) in which scope of circular No.8/2011 dated 14.10.2011 issued by Income Tax authorities directing deduction of income tax on the interest periodically accruing on the deposits made on the court orders to protect the interest of the litigants was considered. The Division Bench came to the conclusion that the provisions of Section 194A of the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch legislation. In case of victims, they have already been subjected to the rigors of law by taking rounds of the courts for a year or some time decades to get the compensation for the loss they have already suffered. Therefore, the interest paid on account of delayed the payment of compensation cannot be subjected to TDS and dismissed the revisions. 10. The High Court of Judicature at Madras in the case of The Managing Director V/s. Chinnadurai [CRP (PD) No.1343/2012 and M.P. No.1/2012 decided on 2.6.2016] has held that the compensation awarded or the interest accruing therein from the compensation that has been awarded by the MACT 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. 11. On the other hand, Shri S.V. Dandwate, learned counsel appearing for the petitioner/Insurance Co., has also placed reliance over the judgment passed by this Court in the case of United India Insurance Co. Ltd. V/s. Ramlal others : 2012 ACJ 1157, in which, the deduction made by the Insurance co. has been uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion may be different when no such apportionment is done by the Tribunal in the award and interest payable to each claimant separately is not ascertainable at the time of depositing the interest the amount before the Tribunal. In sum and substance, this Court has held that if the the amount of interest exceeds Rs.50,000/-, then it is obligatory on the part of the Insurance Co. to deduct the TDS. 14. Shri Sumeet Neema, learned sr.counsel being amicus curiae has also produced the copy of the judgment of High Court of Rajasthan, Jaipur Bench in the case of Kailash Narain Gupta V/s. Commissioner of Income Tax : [1996] 89 TAXMAN 532 (Raj.) in which it has been held that the Tribunal was justified in holding that the interest the amounting to Rs.5,757/- awarded u/s. 110CC was a revenue receipt and, thus, exigible to tax and answered the reference in favour of the revenue and against the assessee. 15. In one of the case of Smt. Sharda Pareek V/s. Assistant Commissioner (SLP Nos. 20629-20631 of 2017 against the judgment of Division Bench of High Court of Rajasthan in IT Appeal Nos. 156 and 162 of 2012 and 199 of 2015 decided on 26.4.2017), in which it was held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that it is the responsibility of the Insurance Co. to obtain declaration in Form 15-G of rule 29-C of the Income Tax Rules from the claimants at the time of the payment of compensation in order to get relieved of obligation of the payment of TDS. In the case of Draupadibai(supra) also, this Court has held that after distribution of the amount between the claimants and if the interest payable to each claimants comes below Rs.50,000/-, then the Insurance Co. is not entitled to deduct the TDS while depositing the the amount of interest before the Tribunal. In the present case, the MACT has only directed the Insurance Co. to ascertain the interest payable to respondent No.1 only and if it exceeds Rs.50,000/-, then only the deduction of TDS be made. Learned MACT in its order dated 6.11.2019 has also directed the Insurance Co. to deduct the TDS if the the amount of interest payable to each claimant exceeds Rs.50,000/-. The Insurance Co. ought not to have challenge said order dated 6.11.2019 because it has been passed as per the judgments passed by this Court in the case of Ramlal; Smt. Swaroopi Bai; and Draupadibai (supra). At the most, the Insurance Co. can file the details of c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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