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TMI Blog2023 (9) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of interest accrued on compensation amount deposited by insurance company on account of injury or death in accident cases. Recently, High Court of Gujarat at Ahmedabad, in Oriental Insurance Co. Ltd. [ 2022 (5) TMI 282 - GUJARAT HIGH COURT] has also held that compensation as well as interest thereupon is not income but damages as such, same cannot be subjected to TDS as per 194A(3)(ix) of the Income Tax Act. Thus it can be safely concluded that compensation and interest thereupon awarded by Motor Accident Claims Tribunal, by no stretch of imagination, can be said to be income rather same being damages granted by court on account of injury or death in accidental cases, cannot be subjected to S. 194A of Income Tax Act, which otherwise mandates for Tax Deduction at Source for the interest amount beyond Rs. 50,000/-. - HON BLE MR. JUSTICE SANDEEP SHARMA, JUDGE. For the petitioner: Mr. B.M. Chauhan, Senior Advocate with Ms. Kamakshi Tarkokta and Mr. Amit Himalvi, Advocates. For the Respondent: Mr. R.L. Chaudhary and Mr. H.R. Sidhu, Advocates. SANDEEP SHARMA, J. (ORAL) Being aggrieved and dissatisfied with order dated 1.3.2021 pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fiscal statute and provisions thereof are to be strictly construed, failing which petitioner shall be liable for penalty contemplated under S. 271 of Income-Tax Act. 5. Aforesaid claim put forth by the petitioner came to be refuted by the claimant, who stated that claim petition was filed on 31.5.2014 and petitioner deposited the award amount on 18.2.2019, whereafter, the claimant earned interest amounting to Rs. 8,62,870/- from the date of filing petition i.e. 31.5.2014 till deposit of amount on 18.2.2019. Claimant claimed that since interest of Rs. 8,62,8370/- was not earned by him in single financial year and the same has to be spilt over 5 financial years, no tax deduction at source could have been done by petitioner. Apart from above, claimant also claimed that the provision, as taken into consideration by the petitioner does not apply to accident claim cases and compensation received under Motor Vehicles Act cannot be said to taxable income as compensation in injury or death of suffered in accident is damages and not an income . 6. On the basis of aforesaid pleadings adduced on record by respective parties, learned executing Court vide order dated 1.3.2021, rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to attach movable property of respondent-petitioner herein for realization of ₹75,017/- (₹47,248/- + interest). 5. Section 194-A of Income Tax Act, 1961, clearly provides that any person, not being an individual or a Hindu undivided family, responsible for paying to a resident any income by way of interest, other than income by way of interest on securities, shall deduct income tax on such income at the time of payment thereof in cash or by issue of cheque or by any other mode. Compensation awarded under Motor Vehicles Act or Employees' Compensation Act in lieu of death of a person or bodily injury suffered in a vehicular accident, is a damage and not an income and cannot be treated as taxable income. 6. It is well settled that interest awarded by the Motor Accident Claims Tribunal on a compensation is also a part of compensation upon which income tax is not chargeable as also held by the Division Bench of this Court in Court on its own motion vs. The H.P. State Cooperative Bank Ltd. and others, reported in 2014 (Suppl.) Him.L.R. (DB) 2575 and reiterated in CWP No. 460 of 2014, titled Shiv Ram Sharma vs. Union of India and others , and other con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to S. 194 of Income Tax Act, which otherwise mandates for Tax Deduction at Source for the interest amount beyond Rs. 50,000/-. 14. Similarly, this Court in National Insurance Company Ltd. v. Prabha Vati Ors, Latest HLJ 2021 (HP)(2)1338 , has held as under: 3. Section 194-A of Income Tax Act, 1961, clearly provides that any person, not being an individual or a Hindu undivided family, responsible for paying to a resident any income by way of interest, other than income by way of interest on securities, shall deduct income tax on such income at the time of payment thereof in cash or by issue of cheque or by any other mode. Compensation awarded under Motor Vehicle Act cannot be said to be taxable income. Compensation is awarded in lieu of death of a person or bodily injury suffered in a vehicular accident, which is damage and not income. 4. It is well settled that interest awarded by the Motor Accident Claims Tribunal on a compensation is also a part of compensation upon which income tax is not chargeable as also held by the Division Bench of this Court in Court on its own motion vs. The H.P. State Cooperative Bank Ltd. and others reported in 2014 (Suppl.) H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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