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2010 (11) TMI 1118 - HC - Income TaxTDS u/s 194A - Motor Accident Claims - interest accrued on the amount of compensation without deduction of Tax Deduction at Source (TDS) - Whether such interest awarded by the Tribunal is to be spread over from the date from which it is payable to the date of actual payment? - HELD THAT:- It is clear from Section 194-A (3)(ix), that if the payment of interest is being made to more than one claimant then unless the interest payable to each claimant separately exceeds Rs. 50000/- in each case, the person responsible for payment is not required to deduct tax. The Apex Court in the case of KS Krishna Rao v. CIT [1989 (11) TMI 3 - SUPREME COURT] held that where a compensation awarded under the Land Acquisition Act is enhanced by the order of the Court on a reference u/s 18 of that Act or on further appeals, interest on enhanced compensation cannot be taxed all in a lump sum as having accrued on the date on which the Court passes order for enhanced compensation; the interest has to be spread over on annual basis right from the date of delivery of possession till the date of order on a time basis. This Court is of the view that the interest awarded has to be spread over in number of years from the date of filing of claim petition till the date of payment because the right to receive compensation arises immediately on occurrence of accident and the interest is awarded by the Tribunal or the Courts for the delay that occurs due to the delay in determination of the compensation and if the interest for the financial year payable to each of individual claimant exceeds Rs. 50000/- then only question of TDS will arise. So far as obligation of Petitioner/Insurance Company responsible for the payment is concerned, it is made clear that before releasing the amount of interest claimant shall be required to submit an affidavit to the effect that claimant has furnished a declaration on form No. 15-G of Rule 29-C of the Income Tax Rules in terms of Section 197-9(1-A) of the Income Tax Act for each financial year in the office of Insurance Company so that concerned Insurance Company is relieved of its obligation of payment of TDS. Hence, appeal stands disposed of.
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