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2014 (10) TMI 620 - HC - Income TaxTax deduction on interest accrued on term deposits on orders passed in Motor Accident Claims cases – Validity of Circular dated 14.10.2011 – Held that:- The circular, dated 14.10.2011, issued by the Income-tax Authorities, is not in tune with the mandate of Sections 2(42) and 2(31), read with Section 6 of the Income Tax Act, 1961 – the circular also is not in accordance with the mandate of Section 194A of the Act – As decided in Ghaziabad Development Authority vs. Dr. N.K. Gupta [2002 (9) TMI 292 - National Consumer Disputes Redressal Commission] - damages paid for the death of a person cannot be equated with the income and tax cannot be deducted – also in Delhi Development Authority v. ITO [1995 (1) TMI 126 - ITAT DELHI] - the amounts credited in the accounts of the allottees were not in the nature of interest within the meaning of section 2(28A) and directed that what is recovered by the DDA be refunded – in the present facts and circumstances, the Circular, dated 14.10.2011, issued by the Income Tax Authorities, whereby deduction of income tax has been ordered on the award amount and interest accrued on the deposits made under the orders of the Court in Motor Accident Claims cases, is quashed and in case any deduction has been made, they are directed to refund the same, with interest at the rate of 12% from the date of deduction till payment – Decided in favour of assessee.
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