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TMI Blog2014 (10) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued to the respondents, who filed objections. 3. Respondents No.1 to 3, in their joint reply, pleaded that initially they were not deducting the tax on the said deposits, but the objections were raised by the concerned Authorities and that is why they started deducting the tax. Respondents No.1 to 3 have specifically averred in paragraphs 3 to 9 of their reply as to how they started making tax deductions. 4. Respondents No.4 and 5 also filed the reply and pleaded that in terms of the Circular No. 8/2011, (F.No.275/30/2011-IT(B)], dated 14-10-2011, (Annexure-4, with the reply), issued by the Income Tax Authorities, the income tax is to be deducted on the interest periodically accruing on the deposits made on the court orders to protect the interest of the litigants. 5. Precisely, the case of the respondents is that they are bound to deduct tax in terms of the circular, dated 14.10.2011, (Annexure-4). 6. We have heard the learned counsel for the parties. 7. The circular, dated 14.10.2011, issued by the Income-tax Authorities, is not in tune with the mandate of Sections 2(42) and 2(31), read with Section 6 of the Income Tax Act, 1961, (hereinafter referred to as the Act). The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains;' 13. While going through the said provisions of law, 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 Vehicles Act has undergone a sea change and the purpose of granting compensation under the Motor Vehicles Act is to ameliorate the sufferings of the victims so that they may be saved from social evils and starvation, and that the victims get some sort of help as early as possible. It is just to save them from sufferings, agony and to rehabilitate them. We wonder how and under what provisions of law the Income Tax Authorities have treated the amount awarded or interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the loss of dependency to the claimants/victims of a vehicular accident. 20. The Apex Court in Ghaziabad Development Authority v. Dr.N.K. Gupta 2002 INDLAW NCDRC 189, has held that damages paid for the death of a person cannot be equated with the income and tax cannot be deducted. It is apt to reproduce the observations made by the Apex Court hereunder: 'It would, therefore, appear to us that the provisions of the Land Acquisition Act where interest is payable under Sections 28 and 34 and tax is deducted at source under section 194A of the Income-tax Act would not apply in the present case where the GDA has been asked to pay interest on the amount refunded to the complainant because of its failure to construct the promises flat and to prive necessary facilities. The amounts which were paid to the GDA by the complainant were not paid by way of any deposit or the GDA had not borrowed that money. And, as a matter of fact, interest as defined in clause (28) of Section 2 of the Income Tax Act is not that interest as was directed to be paid to the complainant by the GDA. Interest to the complainant (here Dr. Gupta) has not been awarded on the basis of any deposit made by the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Development Authority and/or the Ghaziabad Development Authority challenging Orders of the National Consumer Disputes Redressal Commission, granting to Complainants, interest at the rate of 18% per annum irrespective of the fact of each case. This Court has, in the case of Ghaziabad Development Authority v. Balbir Singh reported in (2004) 5 SCC 65, deprecated this practice. This Court has held that interest at the rate of 18% cannot be granted in all cases irrespective of the facts of the case. This Court has held that the Consumer Forums could grant damages/compensation for mental agony/harassment where it finds misfeasance in public office. This Court has held that such compensation is a recompense for the loss or injury and it necessarily has to be based on a finding of loss or injury and must co-relate with the amount of loss or injury. This Court has held that the Forum or the Commission thus had to determine that there was deficiency in service and/or misfeasance in public office and that it has resulted in loss or injury. This Court has also laid down certain other guidelines which the Forum or the Commission has to follow in future cases. ** & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable 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 "indeed the language of Section 28 does not even remotely refer to market value alone and in terms it talks of compensation or the sum equivalent thereto. Thus, interest awardable under Section 28, would include within its ambit both the market value and the statutory solatium. It would be thus evident that even the provisions of Section 28 authorise the grant of interest on solatium as well." Thus solatium means an integral part of compensation, interest would be payable on it. Section 34 postulates award of interest at 9% 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 Hindustan Housing (supra) certain lands belonging to the assessee-company, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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