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2008 (10) TMI 230 - HC - Income TaxTDS – Insurance Claim - Compensation paid to victim along with Interest – Held that - It is pertinent to note that most of the victims in the motor vehicle accident who get compensation belong to poorer strata of the society. They may not incur any tax liability. The Tribunal has rightly directed that the interest paid above Rs. 50,000 is to be split and spread over the period from the date interest is directed to be paid till its payment. If the spread over is given in majority of cases the respondent may not incur liability to pay any TDS. In the event, the respondent remits TDS amount as directed by the Tribunal, the Revenue is directed to hold suo mottu enquiry by issuing notice to the persons who have received compensation to find out their tax liability on the interest received. If it is found that there is a tax liability on the person concerned, the Revenue should collect the tax from the person concerned and refund the amount to the respondent. So also, if there is no tax liability on the person concerned, the TDS collected should be refunded to the respondent.
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