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2021 (8) TMI 1009 - HC - Income TaxDeduction of TDS - Interest u/s 2(28A) - Refund amount with interest to the flat purchasers/Petitioners as per the decree of the High Court - whether the Respondent Nos. 4 to 7 are entitled to deduct TDS on the “interest” payable under the Recovery Warrant dated 15th October 2018, the Consent Terms and the Order of this Court both dated 4th March 2021? HELD THAT:- The amount so payable is in the nature of a judgment debt or akin to a judgment debt, the payment of which cannot establish a debtor-creditor relationship between the parties. As such, the said sum or any part thereof cannot be liable to tax deducted at source under the relevant provisions of the IT Act. This is in line with the decision of the Hon’ble Supreme Court in ALL INDIA REPORTER LIMITED VERSUS RAMCHANDRA D. DATAR [1960 (11) TMI 21 - SUPREME COURT] as also the judgment of our Court in MADHUSUDAN SHRIKRISHNA VERSUS EMKAY EXPORTS [2010 (1) TMI 1200 - BOMBAY HIGH COURT]. In the present case, the amounts payable being in effect a refund of the amounts paid by the Petitioners to the Respondent No. 4 to 7, along with compensatory interest thereon, such a relationship does not spell out a debtor-creditor relationship nor is the payment made by the Respondent Nos. 4 to 7 to the Petitioners one in discharge of any pre-existing obligation, so as to attract Section 2(28A) of the IT Act. The compliance of the Respondent Nos. 4 to 7 with the Schedule of Payments under the Consent Terms dated 4th March, 2021 and our Order dated 4th March 2021, is to be made without making any deduction of tax at source. The Respondent Nos. 4 to 7 are directed to pay to the Petitioners the balance sum of ₹ 5,05,989/- deducted from the 5th instalment which became due on 20th July 2021, in compliance with the Consent Terms, within a period of one week from today. Place the Interim Application No. 2545 of 2020 and Interim Application No. 1151 of 2021 on 25th August 2021 for consideration.
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