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2023 (2) TMI 926 - HC - Income TaxValidity of deduction of TDS u/s 194A on interest - Motor Accident Claims - Enhanced Principal - TDS for the period prior to the date of Judgement of HC and after the date of Judgement - HELD THAT:- This issue has been considered by the Division Bench of this Court in the case of Rupesh Rashmikant Shah Vs. Union of India and others [2019 (8) TMI 518 - BOMBAY HIGH COURT] interest awarded in the motor accident claim cases from the date of the Claim Petition till the passing of the award or in case of Appeal, till the judgment of the High Court in such Appeal, would not be exigible to tax, not being an income - till the date of the Judgment of the High Court no TDS can be deducted on the interest component and, as such, the deduction done by the Insurance Company on the interest component of the claim amount is bad in law. Order: The Insurance Company is directed to pay the TDS amount deducted on the interest component of the claim amount, uptill the date of the High Court Judgment along with 9% interest. Any interest on the claim amount after the date of the High Court Judgment, tax has to be collected as income from other sources and, as such, the Insurance Company would be entitled to claim TDS on that component of interest, which accrues after the High Court Judgment.
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