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2023 (9) TMI 333 - HC - Income TaxTDS u/s 194A(3)(ix) - TDS on accrued interest on the compensation amount - claimants, filed claim petition u/s 166 of the Motor Vehicles Act, 1988 seeking compensation on account of injury sustained by him in a motor accident - award passed as claimant entitled to compensation to the tune of Rs. 20,31,000/- alongwith interest at the rate of 9% from the date of filing petition till the deposit of award amount - whether TDS can be deducted from the amount awarded as compensation as well as interest accrued thereupon in motor accident cases or not? HELD THAT:- This court finds that the aforesaid issue stands already adjudicated as titled Court On Its Own Motion v. the H.P. State Cooperative Bank Limited [2014 (10) TMI 972 - HIMACHAL PRADESH HIGH COURT] while placing reliance upon said judgment in National Insurance Company Limited v. Dil Kumari and others [2018 (6) TMI 1838 - HIMACHAL PRADESH HIGH COURT] has held that no TDS can be deducted on the amount of interest accrued on compensation amount deposited by insurance company on account of injury or death in accident cases. Recently, High Court of Gujarat at Ahmedabad, in Oriental Insurance Co. Ltd. [2022 (5) TMI 282 - GUJARAT HIGH COURT] has also held that compensation as well as interest thereupon is not ‘income’ but ‘damages’ as such, same cannot be subjected to TDS as per 194A(3)(ix) of the Income Tax Act. Thus it can be safely concluded that compensation and interest thereupon awarded by Motor Accident Claims Tribunal, by no stretch of imagination, can be said to be ‘income’ rather same being ‘damages’ granted by court on account of injury or death in accidental cases, cannot be subjected to S. 194A of Income Tax Act, which otherwise mandates for Tax Deduction at Source for the interest amount beyond Rs. 50,000/-.
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