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2016 (5) TMI 268 - PUNJAB AND HARYANA HIGH COURT

2016 (5) TMI 268 - PUNJAB AND HARYANA HIGH COURT - [2016] 380 ITR 467 - TDS liability on compensation in view of the death or injury - insurance company has been called upon to pay the amounts of TDS deducted on the interest income which was deposited by the insurance company with the Income tax Department - Held that:- There is force in the contention raised on behalf of the petitioner that the claimants are liable to pay double the tax, one on receipt of compensation which would be added in th .....

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account of pain and suffering and such receipt is not by way of earning or profit. Award of compensation is on the principle of restitution to place the claimant in the same position in which he would have been had the loss of life or injury has not been suffered. Therefore, the impugned orders calling upon the insurance company to pay the TDS/deduct TDS on the interest part, are not sustainable and are hereby set aside. - Decided against revenue - CR No. 430, 3801 and 1930 of 2015 (O&M) - Dated .....

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partment, as per the provisions of the Income-tax Act, 1961. 2. This court had appointed Mr. Pankaj Jain, senior advocate as amicus curiae to assist the court whether in cases where the claimants are given compensation in view of the death or injury, the TDS is liable to be deducted or not. 3. Mr. Pankaj Jain, learned senior counsel assisted by Mr. Sachin Bhardwaj, advocate, in support of his contentions relied upon the judgment dated October 15, 2014, passed in CWPIL No. 9 of 2014 titled as Cou .....

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revision petitions have been filed. 4. I have heard learned counsel for the parties and appraised the paper books. 5. Paragraphs 22 and 23 of the aforementioned judgment rendered by the Himachal Pradesh Shimla High Court read thus : "22. The apex court in another case titled CIT v. Ghanshyam (HUF) reported in [2009] 315 ITR 1 (SC), laid down a similar preposition. It is apt to reproduce paragraphs 24, 25 and 27 hereunder (page 14 of 315 ITR) : '24. To sum up, interest is different from .....

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t of enhanced value of the land which is not the case in the matter of payment of interest under section 34. 25. It is clear from a reading of section 23(1A), 23(2) as also sec tion 28 of the 1894 Act that additional benefits are available on the market value of the acquired lands under section 23(1A) and 23(2) whereas section 28 is available in respect of the entire compensation. It was held by the Constitution Bench of the Supreme Court in Sunder v. Union of India [2001] 7 SCC 211, that " .....

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Section 34 postulates award of interest at 9 per cent. per annum from the date of taking possession only until it is paid or deposited. It is a mandatory provision. Basically section 34 provides for payment of interest for delayed payment. . . . 27. In the case of CIT v. Hindustan Housing and Land Development Ltd. [1986] 161 ITR 524 (SC) certain lands belonging to the assessee-company, which was in the business of dealing in land and which maintained its account on the mercantile system, were fi .....

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that additional amount on furnishing a security bond for refunding the amount in the event of the said appeal being allowed. On receiving the amount, the assessee credited it in its suspense account on the same date. The question was : whether the additional amount of ₹ 7,24,914 could be taxed as the income on the ground that it became payable pursuant to the award of the arbitrator. The Tribunal held that the amount did not accrue to the assessee as its income and was, therefore, not tax .....

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enhanced compensation would have fallen altogether. Therefore, according to this court, the extra amount of compensation of ₹ 7,24,914 was not income arising or accruing to the assessee during the previous year relevant to the assessment year 1956-57.' 23. Having said so, the Circular, dated October 14, 2011, issued by the Income-tax authorities, whereby deduction of Income-tax has been ordered on the award amount and interest accrued on the deposits made under the orders of the court .....

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