TMI Blog2004 (9) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of learned CIT(A) was contrary to law, facts and circumstances of the case and against the public interest. 2. That the learned appellate authority erred in relying on the decision pronounced by the Supreme Court in the case of Bikram Singh Ors. vs. Land Acquisition Collector Ors. (1997) 139 CTR (SC) 475 : (1997) 224 ITR 551 (SC) which is totally irrelevant and was clearly distinguished by the appellant during the course of appellate proceedings. In fact the above case is not applicable to the appellant's case. 3. That the learned appellate authority has failed to appreciate the fact that alleged interest does not come under the definition of interest under s. 2(28A) of the IT Act, 1961 as it is neither a debt incurred nor money borrowed. 4. That the learned appellate authority failed to appreciate the fact that such interest is nothing else but the additional compensation and is a capital receipt in the hands of the appellant. The case cited and other relevant material placed on record has not been discussed. 5. That the learned appellate authority has erred in law by ignoring the evidence and case laws furnished/cited by the appellant, wherein it was establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "The assessee is insurance company and carrying on the business of general insurance and pays compensation as per awards given by Motor Accident Claim Tribunal (MACT). These awards are being paid on death or injury occurred due to motor accident. Such compensation is to be made to the legal heirs or dependent in case of the death or to the injured person as the case may be." 7. It was also explained that as such the assessee is not paying interest as envisaged under s. 194A of the IT Act. It was also submitted that the claim under MACT includes the amount of compensation, interest awarded under s 171 of the Motor Vehicle Act. The interest as mentioned above is not income as it is to be paid in the form of enhanced compensation, and is outside the purview of the s. 194A of the IT Act. It was also explained that the definition or interest under s. 2(28A) of the IT Act dealt with the definition of interest which ..........(sic) to the case. It was also explained that the interest paid in MAGT claim was neither a money borrowed nor a debt and accordingly the insurance company was not liable to deduct tax at source as per provisions of s. 194A of the IT Act. It was also explained t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to application of s 194A of the IT Act. 8. We have heard the learned representatives of both the parties. The learned counsel for the assessee reiterated the same submissions made before the authorities below. The learned counsel for the assessee further argued that the assessee was to indemnify the third parties as per insurance policy and many times interest was paid on the compensation in discretion of the Court. The learned counsel for the assessee referred to ss. 169 and 171 of the IT Act. The learned counsel for the assessee submitted that the point in issue is considered by Chandigarh Bench of the Tribunal in the case of United Insurance Company, Ambala and New India Assurance Company in which the Departmental appeals on the same issue were dismissed. The learned counsel for the assessee submitted that the decision of the Hon'ble Supreme Court in the case of Bikram Singh Ors. is not applicable as it deals (with) different propositions under the Land Acquisition Act. The learned counsel for the assessee submitted that the provisions of s. 2(28A) and s. 194A of the IT Act are not applicable. The learned counsel for the assessee further submitted that the compe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party for losses suffered by them on account of death, bodily injury or damages to the property provided that the conditions of the policies are not violated. The interest on the compensation would be granted in the discretion of the Court. The insurance is made one of the necessary part to the suit filed by the claimants or legal heirs of the deceased persons, who have suffered bodily injury or death on account of use of motor vehicle, which is insured with the assessee-company. The assessee-company is liable to pay compensation to such persons when award/decree is passed by the Motor Accident Claims. The assessee-company is liable to satisfy the decretal amount by depositing the amount of the decree to the Court (MACT) as per direction of the Tribunal. The insurance company cannot deal with the claimant directly unless the claim is settled in the Lok Adalat. Even if the matter is settled in Lok Adalat, the decree is to be passed in pursuance of the compromise effected between the claimants and the insurance company through theMACT Court. Therefore, one thing is very clear from the facts available on record that the insurance company shall have to pay the decretal amount to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 4 and 5 of the IT Act in the hands of the appellant/claimants. The matter with regard to TDS was not at all considered and therefore, the observation of the Hon'ble Supreme Court with regard to applicability of s. 194A of the IT Act was correctly not relied upon by the CIT(A). Same is the position in the case of New India Assurance Company (ITA Nos. 1060 1061, dt. 21st Oct., 2002) and United Insurance Co. (ITA Nos. 1112 1113, dt. 1st Jan., 2003) as are decided by the Chandigarh Bench of the Tribunal. TheChandigarhBench of the Tribunal have placed reliance upon the observations of the Hon'ble Supreme Court with regard to s. 194A of the IT Act from the decision of Bikram Singh. However, we have already observed above that the applicability of s. 194A was not the subject-matter before the Hon'ble Supreme Court and as such, the decision of Chandigarh Bench of the Tribunal may not be helpful to the case of the assessee. We may also mention that the facts in the case of Bikram Singh as are recorded above are, therefore, clearly distinguishable to the facts of this case. Therefore, we respectfully do not place reliance upon the decision of Hon'ble Supreme Court in the case of Bikra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition is to be read with the terms "borrowed or debt incurred". On going through the submissions of the parties on this issue, it is clear that originally the definition of the interest provides interest payable in any manner in respect of any moneys borrowed or debt incurred. The inclusive definition provides interest on deposit, claim or other similar right or obligation. 14. In this connection, we would like to refer to rule of "ejusdem generis". The words "ejusdem generis" means of the same kind or nature. The rule of ejusdem generis is that where particular words are followed by general, the general words should not be construed in their widest sense but should be held as applying the objects, persons or things of the same general nature as close as those specifically enumerated, unless of course there is a clear manifestation of a contrary purpose. Or to put it in a slightly different language, where general and special words which are capable of analogous meaning are associated together, they take colour from each other and the general words are restrained and limited to a sense analogous to the less general. Where general words immediately follow as are closely assoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in which National Consumer Disputes Redressal Commission headed by the Hon'ble Mr. Justice D.P. Wadhwa considering the facts that on delay in handing over flat and that facilities not provided the allottee refused to take possession and demanded refund of the amount with interest. Interest ordered to be paid. The National Commission held that in view of the definition of interest in s. 2(28A) of the IT Act, the provisions of s. 194A were not applicable and the petitioner authority was wrong in deducting tax at source from the interest payable to the respondent (complainant). The National Commission also considered the cases relied upon by the learned Departmental Representative in the case of Smt. Rama Bai vs. CIT (1990) 84 CTR (SC) 164 : (1990) 184 ITR 400 (SC) and Dr. Shyam Lal Narula, and distinguishing those cases of the Hon'ble Supreme Court, decided the issue above. (3) CIT vs. Chiranji Lal Multanimal Rai Bahadur (P) Ltd. (1989) 79 CTR (P H) 133 : (1989) 179 ITR 157 (P H), in which the Hon'ble Punjab Haryana High Court considered the facts that the interest awarded by the Court for loss suffered on account of deprivation of the property amounts to compensation and is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the judgment debtor cannot claim to satisfy, in the absence of a direction in the decree to that effect the claim of a third person against the judgment creditor and pay only the balance. The rule that the decree must be executed according to its tenor may be modified by a statutory provision. But there is nothing in the IT Act which supports the plea that in respect of the amount payable under a judgment debt of the nature sought to be enforced, the debtor is entitled to deduct income-tax which may become due and payable by the judgment creditor on the plea that the cause of action on which the decree was passed was the contract of employment and a part of the claim decreed represented amount due to the employee as salary or damages in lieu of salary." In this case, the Hon'ble Supreme Court also observed that the amount payable by the appellant-company to the respondent was not salary but a judgment debt and before paying that debt, the appellant-company could not claim to deduct the tax at source payable by the respondent. Nor could the appellant-company seek to justify its plea on the ground that the judgment creditor was indebted to a third person. These decisions are s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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