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TMI Blog2023 (7) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... as compensation for wrongful termination of employment, arrears of salary and interest. The Court passed a decree on 17th July, 1953 for Rs. 42,359/- which included compensation for termination, salary and costs. The respondent applied for execution of the decree. The Income Tax Officer, Nagpur, served a notice under the Indian Income Tax Act upon the respondent that the appellant company be permitted to deduct tax at source and to pay Rs. 15,956/- as income tax, surcharge and super tax on the sum of Rs. 50,972/- awarded to the respondent into Government Treasury. The executing Court directed the appellant to pay the amount to the Income Tax Department and to pay the balance amount to the respondent. The High Court of Judicature at Nagpur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of Rs. 38,98,848/- (Rs. 3,88,98,848 - Rs. 3.50 crores) to the award-holder within three weeks from date. This direction is also in terms of the recording in the order passed by the Court on 20th April, 2023. - EC 272 of 2022 - - - Dated:- 10-7-2023 - HON BLE JUSTICE MOUSHUMI BHATTACHARYA For the petitioner : Mr. Mainak Bose, Adv. Mr. Sabyasachi Sen, Adv. For the respondent UOI : Ms. Aparna Banerjee, Adv. Ms. Saswati Ghosh Sinha, Adv. MOUSHUMI BHATTACHARYA, J. 1. The question which falls for adjudication in the present case is whether the award-debtor, being the Union of India represented by the Chief Engineer, Metro Railway, can deduct 10% of the amount awarded to the award-holder and pay the balance amount t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 38 lacs was a result of the award-debtor deducting TDS on the said amount. This was the express stand taken on behalf of the award-debtor. 5. Learned counsel appearing for the award-debtor/Metro Railway produced a Sanction Memorandum dated 19th April, 2023 which records that an amount of Rs. 3,88,98,848/- was released by the respondent in favour of the petitioner. Counsel also produced a Memo dated 5th March, 2008 of the Railway Board, Ministry of Railways, on the applicability of TDS provisions in respect of certain transactions/ payments made by the Railways. Item 18 of the document relates to Arbitration Award which provides for a corresponding deduction of 10% under section 194A of the Income Tax Act, 1961. 6. Therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment-debtor cannot satisfy the claim of a third party against the judgment-creditor and pay only the balance to the latter in the absence of a direction in the decree to that effect. The Supreme Court further held that there is nothing in the Income Tax Act, as it then stood, which permits the debtor to deduct income tax which may become due and payable by the judgment-creditor. The ratio of the decision is that the amount payable by the appellant (employer who terminated the contract) to the respondent (employee) was no longer to be viewed as salary but as judgment-debt and that the appellant hence could not deduct tax at source before making payment of the decretal amount to the respondent. 9. The dictum in All India Reporter was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner/award-holder is hence contrary to the settled position of law. The award-debtor s reliance on the Notification dated 5th March, 2008 is also contrary to law and the award-debtor cannot seek recourse to the same for depriving the petitioner of the balance amount of approximately Rs. 38 lacs. 12. EC 272 of 2022 is accordingly disposed of by directing the award-debtor Union of India/Metro Railway to make payment of the balance amount of Rs. 38,98,848/- (Rs. 3,88,98,848 - Rs. 3.50 crores) to the award-holder within three weeks from date. This direction is also in terms of the recording in the order passed by the Court on 20th April, 2023. Urgent photostat certified copies of this judgment, if applied for, be supplied to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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