New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (6) TMI 240 - MADRAS HIGH COURT

2016 (6) TMI 240 - MADRAS HIGH COURT - [2016] 385 ITR 656 - TDS on compensation and interest awarded by the Motor Accident Claims - whether the deduction of TDS on interest accrued on deposits in terms of Orders passed by the Courts in Motor Accident cases is legally sustainable or not? - Held that:- Compensation cannot be categorized or even described as income as the intention of the legislature in awarding compensation to the victims of Motor Accident cases is to restitute them and rehabilita .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nnot put spokes in the effective and efficacious enforcement of the Motor Vehicles Act. In fact, if one might deeply analyse, it could be seen that there is no direct conflict between any provisions of the Income Tax Act and the Motor Vehicles Act and it is only by the interpretation of the provisions the concept of compulsory payment of TDS has crept into the realm of compensation payment in Motor Vehicle Accident cases. - This Court arrives at the conclusion that the compensation awarded o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

> M.V. MURALIDARAN, J. Ms. D. Venkatachalam and V. Raghavachari for the Petitioner. T. Pappaiah Dharmarajan for the Respondent. ORDER 'Life' does not mean a mere animal existence and this term occurring in Article 21 of the Constitution of India has been expounded and expanded by the Hon'ble Supreme Court of India and this Court in a long line of decisions and we have travelled a long way from Gopalan to Gandhi (A.K.Gopalan& .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ensation in Motor Accident cases and generally do not adopt a narrow, pedentic or hyper-technical approach. It is an unwritten norm that in cases of grant of compensation, the Courts have to be liberal and understand the difficulties of the vicim and compensate him appropriately so that he or his family could limp their way back to a normal life, though not entirely possible. 4. The term 'Compensation' has been explained in R.Ramanatha Aiyar law dictionary refering to Blacks Law dictiona .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

irectly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer." 5. The scope of this term has been construed differently in various enactments to convey the meaning that compensation is offered as a solace for a loss suffered by the individual. The purpose of granting compensation in Motor Accident cases as it is already been stated previously is to ensure that the victim or his family is restituted for the great suffering on account o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Respondent in the instant Revision Petiion has filed an Execution Petition R.E.P.No.146 of 2010 before the Motor Accident Claims Tribunal, Dharmapuri in M.CO.P.No.879 of 2006 wherein the amount that they are entitled to ₹ 4,23,271/- and in the memo filed before the Motor Accident Claims Tribunal, ₹ 24,017/- has been deducted for TDS. R.E.P.No.146 of 2010 that has been filed was allowed by the Court below and accordingly, the bus belonging to the Revision Petitioner Corporation was at .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, Additional District Judge, Fast Track Court, Dharmapuri, without prejudice to their contention and the Tribunal is directed not to release that much portion of the disputed amount, pending C.R.P. The remaining amount can be released in favour of the judgment holder, as per law. However, on such deposit, the vehicle, namely the bus, shall be released". 8. Mr.Venkatachalam, learned counsel for the Petitioner would submit that as per Sections 194-A and 156 of the Income Tax Act, 1961, the in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ecision of a Single Judge of this Court in CDJ 2004 NHC 1575. In all of the above three judgments, it has been held by the Courts that whenever the compensation amount earns interest by reason of delayed payment or otherwise, it is liable to TDS and the exemption could be claimedonly by way of filing the necessary returns before the assessing authority. Hence, on the basis of the above said judgments, the Counsel for the Petitioner prayed that the Revision be allowed. 10. On the contrary, learne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, I could very well follow the judgments cited by the Revision Petitioner and conclude the matter. 12. But, this Court does not choose to do the same, since the issue at hand is of larger public interest and have far reaching implications. As stated earlier, if the law has to be interpreted so technically and rigidly whereby which a family of an individual who could have possibly lost his life or limbs in an accident has to pay TDS on the interest that has accrued on the compensation amount, wil .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pensation cannot be categorized or even described as income as it has already been stated that the intention of the legislature in awarding compensation to the victims of Motor Accident cases is to restitute them and rehabilitate them. 14. The Income Tax Department appears to have issued a circular dated 14.10.2011 whereby deduction of Income Tax has been ordered on the award amount and the interest accrued on the deposits made under the order of the Court in Motor Accident Cases. Taking serious .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, one comes to the inescapable conclusion that the mandate of the said provisions does not apply to the accident claim cases and the compensation awarded under the Motor Vehicles Act cannot be said to be taxable income. The compensation is awarded in lieu of death of a person or bodily injury suffered in a vehicular accident, which is damage and not income. 14. Chapters X and XI of the Motor Vehicles Act, 1988 provides for grant of compensation to the victims of a vehicular accident. The Motor V .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e in Motor Accident Claims Cases as income. Therefore, the said Circular is against the concept and provisions referred to hereinabove and runs contrary to the mandate of granting compensation. ...23. Having said so, the Circular, dated 14.10.2011, issued by the Income Tax Authorities, whereby deduction of income Tax has been ordered on the award amount and interest accred on the deposits made under the orders of the Court in Motor Accident Claims Cases, is quashed and in case any such deduction .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

award of compensation is on the principle of restitution to place the claimant in the same position in which he would have been loss of life or injury has not been suffered and accordinly held that the orders calling upon the Insurance Company to pay TDS/deduct Tds on the interest part are not sustainable. 16. If we look at other jurisdictions like Australia, Unites States and United Kingdom, even there, the matters where a person has suffered an injury or there has been a loss of life and a com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

since it subserves larger public interest. The Motor Vehicle Act is one such legislation which has been passed with a benevolent intention for compensating the accidient victims who have suffered bodily disablement or loss of life and the Income Tax Act which is primarily intended for Tax collection by the State cannot put spokes in the effective and efficacious enforcement of the Motor Vehicles Act. In fact, if one might deeply analyse, it could be seen that there is no direct conflict between .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version