TMI Blog2020 (5) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of TDS on interest in Motor Accident Claims atleast in sofar as Tamil Nadu is concerned. Going by the above discussion and the obvious and apparent disagreement between two learned single judges on the issue and unnecessary pendency of EPs and CRPs and difficulties faced by all the stakeholders, I am more than satisfied that it is a fit case to order a blanket stay of all Execution Petitions pending before all Motor Accident Claims Tribunals in Tamil Nadu in relation to and confined to the issue of Tax Deduction at Source vide 194 A of the Income Tax Act, 1961. In respect of EPs which may include the TDS issue and not solely confined to it, only the dispute relating to TDS issue will stand suspended, awaiting a verdict from the larger bench. TDS is in application in millions of motor accident cases since 01.06.2003. Huge sums may have accumulated in the coffers of Income Tax Department. Not all victims may have sought and/ or obtained refunds. Many victims may belong to such strata of society that they may not be in a position to pursue the refund. I deem it fit to leave it to the larger bench to allude to this issue also, and examine the possibility of proper utilizat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny submitted that under normal circumstances, he would have withdrawn this appeal. However he was compelled to bring to the notice of this Court, a vexed issue which has its origins in an Insertion by Finance Act, 2003 W.E.F. 01.06.2003 to Sec. 194 A of Income Tax Act, 1961. The learned counsel pointed out that while satisfying this award in MCOP No.79/2018, the interest liability would be subject to Tax Deducted at Source (TDS) under Sec. 194 A. But the Insurer submitted that they were facing a situation akin to facing between the devil and the deep sea. The present factual and legal position in Tamil Nadu postulates that in cases where the Insurer satisfies the award and deducts TDS, they face the prospect of attachment by way of execution petitions. As live examples 4 CRPs in CRP Nos. 587/2017, 3622/2017 and 3623/2017 and CRP SR No.136671/2019 which are pending before this Court against orders of attachment in Execution Petitions by the respective Tribunals was brought to the notice of this court. 3. Per contra, if the Insurer does not apply TDS, they run the risk of facing penal consequences under Sec. 201 of Income Tax Act, 1961 as per which the Principal Officer of the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med it proper to amend 194 A of Income Tax Act, 1961 to specifically provide for TDS in relation to interest liability of over ₹ 50,000/-. 7. Hence, on and from the date of said amendment, TDS is being applied Pan India. In so far as Tamil Nadu is concerned, TDS was being applied as a matter of course wherever applicable. However, a victim in Erode chose to file EP challenging the TDS applied. The Tribunal ruled that the claim petition was pending for several years and as such spread over if applied TDS was avoidable. The New India Assurance Co. Ltd., a Public Sector Insurer, was directed to pay the TDS deduction amount to the Claimant in the EP proceedings. The Insurer challenged this direction and by orders made in New India Assurance Vs. Mani reported in 270 (2004) ITR 394 Mad, the order of attachment and direction to pay the TDS amount were set aside. The High Court pointed out Sec. 194 A was a specifically intended introduction and it was not under challenge and the benefit of spread over was also with the Department and cannot be usurped by the Claims Tribunal. This was the legal position for over a decade since 2005. 8. While so, scanning the entire nation, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court did not have the benefit of hearing the Income Tax Department, which has vital interest in the issue. More importantly, the earlier decision of this Court in New India Assurance Vs. Mani in CRP No. 2628/2003 dated 07-07-2004 appears to have been brought to the notice of this Court and the same is evident from Para 18 of the judgement. In spite of the same, the learned single judge chose not to follow the same and took an independent path by placing reliance upon the judgements of certain other high courts. 11. It is the submission of all the Amicus that there is an apparent disagreement between the 2005 decision in Mani and the 2016 decision in Chinnadurai. The Counsel for the Income Tax Department was unable to contradict the same. The Department Counsel only highlighted that there was no judgment of a larger bench on this tax issue. It was therefore submitted that a clarity is required with regard to the interpretation and applicability of Sec 194 A of the Income Tax Act and it would help not only the claimants but also the respective insurance companies and other entities and also the Income Tax department for a consistent and uniform approach. 12. It is also brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and the obvious and apparent disagreement between two learned single judges on the issue and unnecessary pendency of EPs and CRPs and difficulties faced by all the stakeholders, I am more than satisfied that it is a fit case to order a blanket stay of all Execution Petitions pending before all Motor Accident Claims Tribunals in Tamil Nadu in relation to and confined to the issue of Tax Deduction at Source vide 194 A of the Income Tax Act, 1961. In respect of EPs which may include the TDS issue and not solely confined to it, only the dispute relating to TDS issue will stand suspended, awaiting a verdict from the larger bench. 17. It is also brought to my notice that TDS is in application in millions of motor accident cases since 01.06.2003. Huge sums may have accumulated in the coffers of Income Tax Department. Not all victims may have sought and/ or obtained refunds. Many victims may belong to such strata of society that they may not be in a position to pursue the refund. I deem it fit to leave it to the larger bench to allude to this issue also, and examine the possibility of proper utilization of the unrefunded amounts for the benefit of motor accident victims. The Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, without setting a precedent. The insurance company has readily agreed to do so, in compliance with the orders of this court. 22. On such deposit by the insurance company, the entire award sum with interest and costs without applying TDS also, the claimant would be at liberty to withdraw the same, upon identification by the Counsel for petitioner, as per the practice before the said claims tribunal. 23. For the reasons stated supra, this Court further directs that all Execution Petitions relating to and confined to the issue of Tax Deduction at Source under Sec 194 A of Income Tax Act, 1961 pending on the files of all Motor Accident Claims Tribunals in Tamil Nadu at whatever stage, shall stand stayed to await orders from the larger bench on the applicability of Sec. 194 A of Income Tax Act, 1961 and the mode and manner of application of the same, in terms of the orders deemed fit and proper by the larger bench in the circumstances of the case in the interest of justice. At the risk of repetition, it is made clear that the stay shall be confined only to the issue of tax deduction at source under Sec 194 A of Income Tax Act, 1961 and the execution petition can be proceeded fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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