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2016 (6) TMI 240 - HC - Income TaxTDS on compensation and interest awarded by the Motor Accident Claims - whether the deduction of TDS on interest accrued on deposits in terms of Orders passed by the Courts in Motor Accident cases is legally sustainable or not? - Held that:- Compensation cannot be categorized or even described as income as the intention of the legislature in awarding compensation to the victims of Motor Accident cases is to restitute them and rehabilitate them. If there is a conflict between a social welfare legislation and a taxation legislation, then, this Court is of the view that a social welfare legislation should prevail since it subserves larger public interest. The Motor Vehicle Act is one such legislation which has been passed with a benevolent intention for compensating the accidient victims who have suffered bodily disablement or loss of life and the Income Tax Act which is primarily intended for Tax collection by the State cannot put spokes in the effective and efficacious enforcement of the Motor Vehicles Act. In fact, if one might deeply analyse, it could be seen that there is no direct conflict between any provisions of the Income Tax Act and the Motor Vehicles Act and it is only by the interpretation of the provisions the concept of compulsory payment of TDS has crept into the realm of compensation payment in Motor Vehicle Accident cases. This Court arrives at the conclusion that the compensation awarded or the interest accruing therein from the compensation that has been awarded by the Motor Accident Claims Tribunal cannot be subjected to TDS and the same cannot be insisted to be paid to the Tax Authorities since the compensation and the interest awarded therein does not fall under the term 'income' as defined under the Income Tax Act, 1961. - Decided in favour of assessee.
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