TMI Blog2018 (4) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... some time decades to get the compensation for the loss they have already suffered. Therefore, interest paid on account of delayed payment of compensation cannot be subjected to TDS. Considering the object of the Motor Vehicles Act, 1988, regarding grant of compensation to the victim, it will not only be unjust but cruel to ask the hapless victim to first pay the interest received along with compensation on account of delayed payment, for which he is not responsible, and then to file the income tax return and claim the refund. Thus the interest paid along with the compensation as a result of the order of the Tribunal or of the superior Court is not liable for TDS. - Decided in favour of assessee - CR No. 6784 of 2016 (O&M), CR No.465 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 50,000/- is exempted, whereas beyond that it is to be deducted at source. Learned counsel for the respondent(s) has argued that at the first instance, the tax on the interest is payable in the year in which it was credited and payable and secondly, TDS on interest part is not payable. Learned counsel for the respondent(s) has relied upon the Single Bench judgment of this Court delivered in case of New India Assurance Company Ltd. vs Sudesh Chawla and others , 2016(1) PLR 505. A perusal of the said authority shows that in the said case, circular dated 14.10.2011, issued by the Income Tax Authorities, was quashed. However, Section 56(2)(viii) and Section 194 (ixa) of the Act were not discussed and decided. Moreover, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on securities (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident 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, whichever is earlier, deduct income-tax thereon at the rates in force: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx As per sub Section 3, the provisions of sub-section (i) shall not apply. (i) ------------------------------------------------------ (ix) Section 194 (ixa) to such income paid by way of interest on the compensation amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the deduction was justified and to canvass his case, he relied upon two judgments of different High Courts and a judgment of this Court. Reference is also made to the following observations: 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, will the law be doing a service or disservice to the victims?. With all due respect, I find that the three decisions cited by the Petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on payment in Motor Vehicle Accident cases. 18. Hence, with due respect I am unable to concur with the findings of the Karnataka High Court, the Chattisgarh High Court and this Court cited by the Revision Petitioner. This Court is of the view that the Division Bench judgment of the Himachal Pradesh high Court and the judgment of the Single Judge of the Punjab and Haryana High Court lay down the right law and hence, this Court arrives at the conclusion that the compensation awarded or the interest accruing therein from the compensation that has been awarded by the Motor Accident Claims Tribunal cannot be subjected to TDS and the same cannot be insisted to be paid to the Tax Authorities since the compensation and the interest awarded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l compensation is paid after a prolonged litigation to the victim along with interest, the question would arise whether the same is part of compensation or is to be treated as a separate component, so as to be liable for TDS? I am of the view that the view taken by the Division Bench of Himachal Pradesh High Court in case of Court on its Motion vs. H.P. State Co-operative Bank Ltd., 2014 SCC Online HPS 4273, Single Bench of this Court in Sudesh Chawla's case (supra), and by the Madras High Court in Chinnadurai's case (supra), lay down the correct law. It is observed when there is conflict between the Social Welfare Legislation and Taxation Legislation, then the Social Welfare Legislation should prevail, since, it sub-serve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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