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2018 (6) TMI 1838 - HC - Income TaxTDS u/s 194A - interest payable to the claimants on compensation awarded under Employees' Compensation Act - HELD THAT:- Section 194A 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. As 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[2014 (10) TMI 972 - HIMACHAL PRADESH HIGH COURT]. The same principle will be applicable in the present case also. Deduction of income tax by petitioner/Insurance Company on the interest accrued/awarded on the compensation deposited by the petitioner/Insurance Company is illegal and is contrary to the law of land. This petition is disposed of directing Income Tax Officer, Nahan to refund the TDS to the petitioner/Insurance Company within ten weeks from date of receiving information thereof, failing which petitioner company shall also be liable to pay interest @ 9% per annum on the said amount with effect from 1st February, 2018, till payment/deposit.
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