TMI Blog2014 (4) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... rder is set aside and the matter is remitted to the Tribunal with a direction to decide the issue involved in the execution petition afresh keeping in view the legal position enunciated and thus dispose of the execution petition on merits and in accordance with the procedure established by law. - Civil Revision Petition No. 994 of 2012 - - - Dated:- 22-4-2014 - M. Seetharama Murti, J. For the Petitioner : T. Ramulu For the Respondents : None Appeared. ORDER This revision petition is directed against the order dated 28.11.2011 passed by the learned Principal District Judge-cum-Chairman, Motor Accidents Claims Tribunal, Srikakulam ( the Tribunal, for short) in E.P. 79 of 2011 in M.V.O.P.No.144 of 2008. The issue involved in the revision is in regard to the correctness or otherwise of the income tax deducted [or to be deducted] at source, the position of law and the correct procedure that ought to be followed by the Insurance Company at the time of the deduction of tax at source from the amount of compensation/interest awarded to the claimant/s by the Motor Accidents Claims Tribunal under the provisions of the Motor Vehicles Act. 2. The facts necessary for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pronouncements of this Court in support of the case of the Insurance Company and that, therefore, the Tribunal had erred in following the decision of the High Court of Gujarat. 5. (a) I have perused the copies of the rulings in the following cases. (1) The New India Assurance Co. Limited, Ongole v. Banavat Ramadevi, Prakasam District , (2) United India Insurance Co. Ltd. V. Mitaben Dharmeshbhai Shah [of the Gujarat High Court], (3) United India Insurance Co. Ltd v. Janaki Devi [of the Madhya Pradesh High Court] and (4) Oriental Insurance Co. Ltd., Secbad v. G.S.Diwakar . The decisions in the above cases were rendered having regard to the facts peculiar to those cases. However, in the decision in Oriental Insurance Co. Ltd. (6 supra), this Court had held inter alia as follows: No doubt, the revision petitioner company could not have deducted and remitted TDS on total interest amount of all DHRs put together, but should have divided interest relating to each of the DHRs and should have remitted TDS only in respect of interest payable to that DHR whose amount exceeded ₹ 50,000/-. 5. (b) It is necessary to first refer to the provisions of law and the content of the related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the income credited or paid in respect of (a) time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or (b) time deposits with a co-operative society engaged in carrying on the business of banking; (c) deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long- term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction under clause (viii) of sub-section (1) of section 36 the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be; (ii) * * * * * (iii) to such income credited or paid to (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he financial year does not exceed fifty thousand rupees. [Emphasis supplied] (x) to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or a public sector company or scheduled bank in relation to a zero coupon bond issued on or after the 1st day of June, 2005 by such fund or company or public sector company or scheduled bank; Explanation 1. For the purposes of clauses (i), (vii) and (viia), time deposits means deposits (excluding recurring deposits) repayable on the expiry of fixed periods. (ii) Section 2 [28 A] of the I T Act, which defines interest, reads as under: Interest means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized. As per the aforesaid provisions of the Act, the income tax is deductible at source not on the awarded compensation amount, but, on the amount of interest only that becomes payable in terms of the award on the compensation amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken into consideration; and, the interest awarded and arrived at in case of each claimant need not be spread over on annual basis. In other words interest amount that had accrued on the awarded compensation is liable to be taxed in a lump sum when being paid/deposited at one time and the interest calculated and arrived at in case of each claimant need not be spread over on an annual basis over the number of years for which such interest has been awarded from the date of filing of the claim petition and till the date of payment or deposit. Considering the significance of the issue involved what has been stated in the preceding paragraph can be re-stated as follows: [1] The person paying or depositing the compensation is not obligated to deduct any income tax at source on the actual compensation amount awarded. [2] Such person is obligated to deduct tax at source from the amount of interest only, if only, the amount of interest payable to each claimant exceeds ₹ 50,000/-. However, such lump sum interest amount that had accrued up to the date of payment or deposit can be taken into consideration in case of each such claimant and such lump sum interest arrived at need not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax at source shall be at the rate of 20%. Thus, in cases where the Decree Holder/claimant concerned fails to submit the PAN or the required form to the Insurance Company or the payer, as the case may be, then the TDS shall be at the rate of 20%, at present. Be it noted that in case a claimant furnishes a declaration, on Form No. 15 G of R. 29C of the IT Rules in terms of Section 197(1A) of the IT Act or such other declaration on such Form as may be applicable, for each financial year, either to the person concerned or in the office of insurance company, in such a case the person/the insurance company is relieved of his/its obligation of payment of TDS. It is appropriate to mention that the TDS deducted on interest shall be deposited within the statutory period and the Person/the insurance company shall also file either the quarterly return or such return as prescribed and applicable to the case and shall furnish to the claimant a certificate either on Form No. 16A or on such form as may be prescribed and applicable to the case to enable the claimant to either avail the benefit of the tax deducted at source or to claim refund of the tax as the case may be. 7. Coming to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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