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2024 (2) TMI 338 - HC - Income TaxTDS on interest arising from Motor Accidents Claim - Validity of the order of the Motor Accidents Claims Tribunal issuing directions to refund by the Insurance Company of amounts deducted as TDS and already credited to the Income Tax Department - directions to the Insurance Company to pay an amount being the TDS deducted with interest at the rate of 9% per annum from 29.01.2008 till payment - Insurance Company, before the Tribunal and before this Court, asserts that there can be no liability cast on the Insurance Company of a like nature - applicant is said to have died on 02.04.2015 and the order was passed on 09.02.2018, after the death - substitution petition has been filed by one Bhola Shah, aged about 41 years, son of Late Babulal Sah, the applicant before the Tribunal. HELD THAT:- As per Section 194A(1), any income by way of interest other than income by way of interest on securities shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, be liable for tax deduction at source. Hence, there can be no spread over of the interest income in the years in which it accrued after death of the person, which resulted in the compensation being awarded. We also have to notice subclause (ix) of sub-section(3) of Section 194A, which speaks of such exemption from deduction of tax, from the interest income, when the aggregate amount of such income credited or paid during the financial year exceeds Rs. 50,000/-. Hence, the income has to be found to have accrued only on the date of payment or credit. We have to caution the Tribunals, insofar as the proper procedure being the resort to refund, if at all the claimant does not have income in excess of the taxable limit under the Income Tax Act. On the above reasoning, we find that the application filed before the Tribunal was unsustainable. We, hence, set aside the order of the Tribunal and caution the Tribunals from issuing such orders directing refund for the periods prior to 01.06.2015. We specifically notice that Section 194A(3)(ix) has been substituted by the Act 20 of 2015 with effect from 01.06.2015, which reads as under:- “(3)(ix)-To such income credited by way of interest on the compensation amount awarded by the MACT.” On the above provision coming into force from 01.06.2015, no TDS can be deducted even on the interest component. The writ petition is allowed, leaving the parties to suffer their respective costs. Since, we have answered the question against the refund directed by the Tribunal, we are of the opinion that the application before the Tribunal need not be restored and the same shall stand closed as not maintainable.
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