2017 (4) TMI 1586

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..... ion of law: "Whether, on the facts and in the circumstances of the case the Tribunal was justified in holding penalty of Rs. 140117/- u/s 217C of the IT Act, 1961 against the appellant and treated the appellant as defaulter u/s. 194A/201(1) of the Act, such conclusion is legally sustainable?" 3. Counsel for the appellant has contended that the issue is squared covered by the decision of this Court in the case of Sr. Divisional Manager, National Insurance Co. Ltd., 61, Aerodrum Road, Alwar vs. The Commissioner of Income Tax, Alwar & Anr. in DB Income Tax Appeal No.517/2009, decided on 01.02.2017 and more particularly para 2 & 3 which reads as under: "2. Counsel for the appellant has contended that the issue is squarely covered by the d .....

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..... n of income as mentioned in Section 194A(1) read with Section 2(28A) of the Income Tax Act. Proceedings regarding claim under Motor Vehicle Act are in the nature of a garnishee proceedings under which the MACT has a right to attach the judgment debt payable by the insurance company. Even in the MAC award, there is no direction of any court that before paying the award, the insurance company is required to deduct the tax at source. In view of All India Reporter Ltd. Vs. Ramchandra D. Datar (supra), if no provision has been made in the decree for deduction of tax, before paying that debt, the insurance company cannot deduct the tax at source from the amount payable to the legal heirs of the deceased. 44. In Commissioner of Income Tax Vs. C .....

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..... nal while retaining such limit in cases of payment of interest on such compensation. However, we need not thresh out this last part of the issue since admittedly, in the present case, for none of the years under consideration, the interest income exceeded Rs. 50,000/-. In fact, this Court in case of Smt. Hansagauri Prafulchandra Ladhani and ors vs. The Oriental Insurance Company Ltd (supra) provided for further splitting up of this ceiling of Rs. 50,000/- per claimant basis. Looked from any angle, the insurance company was not justified in deducting tax at source while depositing the compensation in favour of the claimants. It therefore, cannot avoid liability of depositing such amount with the Claims Tribunal. The Claims Tribunal had commi .....

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