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2023 (7) TMI 421 - HC - Indian LawsDeduction of 10% of the amount awarded to the award-holder as TDS and payment of the balance amount to the award-holder - award-debtor, being the Union of India represented by the Chief Engineer, Metro Railway - HELD THAT:- In All India Reporter Ltd. vs. Ramchandra D. Datar [1960 (11) TMI 21 - SUPREME COURT], the Supreme Court decided the question of whether the amount decreed in favour of the respondent would attract the statutory liability under the Income Tax Act. In the facts of that case, the respondent Ramchandra D. Datar, had filed a Civil Suit in the Court of the 5th Additional District Judge, Nagpur, for a decree of Rs. 1,30,000/- as compensation for wrongful termination of employment, arrears of salary and interest. The Court passed a decree on 17th July, 1953 for Rs. 42,359/- which included compensation for termination, salary and costs. The respondent applied for execution of the decree. The Income Tax Officer, Nagpur, served a notice under the Indian Income Tax Act upon the respondent that the appellant company be permitted to deduct tax at source and to pay Rs. 15,956/- as income tax, surcharge and super tax on the sum of Rs. 50,972/- awarded to the respondent into Government Treasury. The executing Court directed the appellant to pay the amount to the Income Tax Department and to pay the balance amount to the respondent. The High Court of Judicature at Nagpur reversed the order of the District Judge and the appellant company approached the Supreme Court - The Supreme Court held that the judgment-debtor cannot satisfy the claim of a third party against the judgment-creditor and pay only the balance to the latter in the absence of a direction in the decree to that effect. The Supreme Court further held that there is nothing in the Income Tax Act, as it then stood, which permits the debtor to deduct income tax which may become due and payable by the judgment-creditor. The dictum in All India Reporter was reiterated by a Division Bench of this Court in S.S. Miranda Ltd. vs. Shyam Bahadur Singh [1984 (8) TMI 62 - CALCUTTA HIGH COURT] where the Court went a step further and directed that the appellant, which had deducted TDS, would be at liberty to take steps for recovery of the amount from Income Tax Authority in accordance with law The action of the award-debtor Metro Railway in deducting 10% from the awarded amount of Rs. 3.88 crores as TDS and paying the balance amount of Rs. 3.50 crores to the petitioner/award-holder is hence contrary to the settled position of law. The award-debtor’s reliance on the Notification dated 5th March, 2008 is also contrary to law and the award-debtor cannot seek recourse to the same for depriving the petitioner of the balance amount of approximately Rs. 38 lacs. Application is accordingly disposed of by directing the award-debtor Union of India/Metro Railway to make payment of the balance amount of Rs. 38,98,848/- (Rs. 3,88,98,848 - Rs. 3.50 crores) to the award-holder within three weeks from date. This direction is also in terms of the recording in the order passed by the Court on 20th April, 2023.
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