TMI Blog2022 (8) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... ed within a period of one month, thereafter. - CR-527-2019 (O&M) - - - Dated:- 6-8-2022 - New India Assurance Company Limited Versus Rajvinder Kaur and others , New India Assurance Company Limited Versus Annpurna and others, National Insurance Company Limited Versus Babli Devi and others , The New India Assurance Company Limited Versus Paramjit Kaur Sekhon and others , The National Insurance Company Limited Versus Usha Sud and others , The New India Assurance Company Limited Versus Pooja Devi and others , The New India Assurance Company Limited Versus Sandeep Kumar (Deceased) through LRs and Another , The Oriental Insurance Company Limited Versus Anju Yadav and others, New India Assurance Company Limited Versus Gurudutt Sharma and others CR-4687-2019 (O M) CR-3442-2019 (O M) CR-4389-2019 (O M) CR-6862-2019 (O M) CR-7547-2019 (O M) CR-634-2021 (O M) CR-1382-2021 (O M) CR-1686-2021 (O M) CR-814-2021 (O M) HON'BLE MR. JUSTICE ARVIND SINGH SANGWAN Mr. R.C. Kapoor, Advocate for the petitioner (in CR-527, 3442, 4687 and 7547-2019 and CR-634, 814 1382-2021). Mr. Sandeep Suri, Advocate for the petitioner (in CR-4389-2019) Mr. Rajesh K. Sharma, Advocate for the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,21,000/- along with interest @ 7.5% per annum. Challenge in this revision petition filed by the New India Assurance Company is to an order dated 19.3.2019, passed by the MACT, Chandigarh, whereby the Insurance Company was directed to deposit the deducted amount of TDS of Rs.29,820/- and Rs. 85,266/- along with interest @ 7.5% per annum from the date of order dated 28.1.2016 till it realisation. CR-4389-2019 As per the MACT award dated 3.11.2015, the claimants were awarded an amount of Rs.36,05,648/-. along with interest. However, appeal filed by the Insurance Company was dismissed by this Court. Challenge in this revision petition filed by the National Insurance Company is to an order dated 16.7.2018, passed by the MACT, Chandigarh whereby the Insurance Company was ordered to release the amount of Rs.98,309/- to the claimant deducted under the head of TDS. As per the MACT award dated 17.2.2007, the claimants were granted an amount of Rs.17,25,000/-, being 50% of the assessed amount of Rs.34,50,00/- on account of findings having been returned that it was a case of contributory negligence. However, on appeal, this Court has enhanced the amount of compensation to Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was directed to deposit the balance amount as per the calculation filed by the claimants. CR-814-2021 As per the MACT award dated 10.8.2018, the claimants were awarded compensation of Rs.3,00,000/- along with interest @ 7% per annum. However, on appeal, this Court enhanced the compensation amount to Rs.6,30,000/-. Challenge in this revision petition filed by the New India Assurance Company is to an orders dated 4.12.2020 passed by the MACT/Executing Court, Kaithal, whereby the Insurance Company was directed to deposit the deducted amount of TDS of Rs.16,160/- within fifteen days from the date of order. On 24.1.2019, the following order was passed :- Mr. Kapoor has brought to the notice of this Court two judgments passed by a coordinate Bench of this Court New India Assurance Company Ltd. v. Rajbala and others (CR No.5223 of 2016, decided on March 23, 2018) and in The New India Assurance Co. Ltd. v. Savitri Devi and others, passed in CR no.6784 of 2016 along with three other petitions, on April 04, 2018. Vide the order dated March 23, 2018, the order of the Commissioner, Employee's Compensation Act, 1923, Hisar Circle, was set aside and the claimants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or, as the case may, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees. He also brings to the notice of this Court clause (b) of Section 145A of the said Act, by which interest received on either compensation or enhanced compensation, would be deemed to be so received as part of the income of the year in which it is actually received. Since the issue is with regard to refund of the amount already paid as TDS to the Department of Income Tax, it is considered appropriate that at this stage the Department of Income Tax, through the Commissioner, TDS Circle Mumbai, (with whom the amount is stated to have been deposited through the HDFC Bank Limited, Mohali), is impleaded as respondent No.4 in the present petition. Ordered accordingly. Thereafter, again, on 27.2.2019, the following order was passed :- Pursuant to notice issued on the last date of hearing to the newly added respondent no. 4, i.e. the Department of Income Tax through its Commissioner, TDS Circle, Mumbai, Mr. Yogesh Putney, Advocate, puts in appearance and has supplied a copy of the judgment of a co-ordinate Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the parties have addressed the arguments. Mr. Yogesh Putney, Senior Standing Counsel for the Income Tax Department has argued that under Section 194-A Sub-Section IX, it is provided as under :- Interest other than Interest on securities . 194-A (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 payer 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: Provided that an individual or a Hindu undivided family, whose total sales gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the financial year immediately preceding the financial year in which such interest is credited or paid shall be liable to deduct income tax under this section. Explanation - For the purposes of this section, where any income by way of interest as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited Vs. Kala Bai and others, wherein while dealing with the similar subject and with reference to the two orders passed by this Court, which are reflected in the aforesaid order passed by the co-ordinate Bench has held that though there are divergent views on the points whether the Insurance Company can deduct the TDS if the amount of interest exceeds Rs.50,000/- or not yet has held that the tax is payable on the interest accrued on the amount of compensation under the Motor Vehicles Act with a rider that the interest should not be more than Rs.50,000/- per claimant per financial year. It has also been held that, at the most, the Insurance Company can file the details of calculation of amount amount of interest payable to each claimant and explain to the Motor Accidents Claims Tribunal that the same is exceeding Rs.50,000/- per claimant and the deducted TDS is justified. It has also been held that in a case where the details are filed then the responsibility of the Insurance Company to obtain declaration Form-15G of Rule 29C of the Income Tax Rules from the claimant at the time of payment of compensation in order to get relieved of obligation of payment of TDS. The couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and as per the stand of the counsel for respondents No.1 to 3 deduction of TDS on interest (apart from securities) is exigible to an initial deduction at source of 20% and if the income of the petitioner and her children does not exceed the taxable income she could have well sought the refund by filing a return but that is also now delayed. 5. Keeping in view the entire factual matrix, we deem it appropriate to dispose of this petition with a direction to the petitioner to file a return within two months from the date of receipt of certified copy of this order with the competent Assessing Officer along with an application for condonation of delay under Section 119 of the Income Tax Act, 1961 and the competent authority is directed to take a sympathetic view in dealing with the application for condonation of delay and hereafter the Assessing Officer may consider if the petitioner and her five children are entitled for refund as per law. 6. Petition stands disposed of. 7. Since the main case has been decided, the pending civil miscellaneous application, if any, also stands disposed of. It is worth noticing to have a look as the view taken by the different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition does not mean that the entire interest payable on the compensation is to be taken into consideration. Before making deduction, the Insurance Company must verify what is the interest income of each individual claimant and accordingly deduct tax at source. 9. Keeping in view the aforesaid discussion, the petition filed by the Insurance Company is dismissed though on totally different grounds. The Insurance Company shall deposit the amount of tax deducted at source with the Motor Accident Claims Tribunal. It is, however, made clear that on production of this order the insurance company shall be entitled to obtain refund of the tax deposited with the tax authorities, as per certificate Annexure P-2. Petition is disposed of accordingly. Copy of this judgment be circulated to all the Nationalized Insurance Companies and Motor Accident Claims Tribunals in the State. A Division Bench of the High Court of Gujarat in 2016 SCC Online Guj. 7399, New India Assurance Company Limited Vs. Bhoyabhai Hirabhai Bharvag, has held as under :- 12. It would, therefore, be wholly incorrect to read the current provision of sub section (3) of Section 194A to argue that the cases of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Ghanshyam (HUF) (supra), the Supreme Court held that interest under section 28 of the Land Acquisition Act would invite capital gain tax. This judgment was rendered before amendment in section 145A of the Act. The Gujarat High Court in Movalia Bhikhubhai Balabai (supra), held that the ratio of the Supreme Court in the case of Ghanshyam (HUF) (supra), would continue to apply post amendment in section 145A by virtue of Finance Act, 2009 also. 59. In order to ascertain the taxability of interest on compensation or enhanced compensation in motor accident claim cases, we, therefore would have to ascertain the true nature of interest. Even the Assessing Officer has proceeded on the basis that the compensation by itself is not taxable. As noted earlier, income of the deceased or the injured for earmarking compensation is ascertained after deducting income tax. We have noticed certain decisions of the Courts holding that such compensation is by way of reimbursement of the loss and cannot be treated as income. We, therefore, proceed on such basis. In the context of the nature of the interest awarded by the Claims Tribunal or the High Court on motor accident claim compensation or en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... award compensation and the time consumed in disposing of the Claim Petition. We may also recall, the interest can be awarded even though part of the compensation would comprise of future loss of income. This is so because, the multiplier method factors this aspect also. At the same time, as noted, the Courts do not award interest on future expenditure since the amount is being paid to the claimant for an expenditure which may be incurred at a later point of time. This dichotomy, thus, between awarding interest on future income while not awarding interest for future expenditure brings out the true character of the interest being awarded. 61. We, therefore, hold that the interest awarded in the motor accident claim cases from the date of the Claim Petition till the passing of the award or in case of Appeal, till the judgment of the High Court in such Appeal, would not be exigible to tax, not being an income. This position would not change on account of clause (b) of section 145A of the Act as it stood at the relevant time amended by Finance Act, 2009 which provision now finds place in subsection (1) of section 145B of the Act. Neither clause (b) of section 145A, as it stood at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity to deduct tax at source in the hands of payer cannot be fastened. In other words, the provision of deducting tax at source cannot govern the taxability of the amount which is being paid. 64. In the decision of the Gujarat High Court in the case of Hansaguri Prafulchandra (supra), the Court had no occasion to decide the taxability of interest on compensation or enhanced compensation of motor accident cases. This was also the position in the case of decision of this Court in the Gauri Deepak Patel ors. (supra). 65. We may clarify that these observations and conclusions would apply to interest on compensation or enhanced compensation awarded by the Motor Accident Claims Tribunal or High Court from the date of the Claim Petition till passing of the award or the judgment. Further interest which may be paid for delay in depositing the awarded amount, would not form part of the compensation and, therefore, would fall in the bracket of interest income and would be exigible to tax under the normal provisions. 66. Before closing we would tie a few loose ends: (i) Learned Counsel for the petitioners had not made any submissions on the vires of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the considered opinion, that the Insurance Company did not commit any mistake in deducting the TDS on the entire interest. However, each of the claimant would be entitled to claim refund from the Income Tax Department, in case, if he/she is of the view that excessive tax has been deducted. The coordinate bench of this Court in the case of Smt. Draupadibai (Supra) has held as under : 13. It is however, made clear that the aforesaid interpretation of section 194A of the 1961 Act applies only in cases were the compensation amount has been apportioned and the interest payable to each of the claimants is ascertainable but the position may be different when no such apportionment is done by the Tribunal in the award and interest payable to each claimant separately is not ascertainable at the time of depositing the interest amount before the Tribunal. Underline applied 23. Thus, this Court is of the considered opinion, that the Insurance Company is liable to deduct TDS on the interest paid by it as per the provisions of Section 194A (3)(ix)(ix-a) of the Income Tax Act, and if the assessee is of the view, that the tax has been deducted in excess, then he can always claim refund of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would pay the claimants the amount of tax it had deducted at source (and seek refund from the income tax authorities if it so desires, by filing a revised income tax return). 41. However, on the other hand, if the interest on the compensation awarded was actually paid after 01.06.2015, and such interest was of an amount above Rs. 50,000/-, the petitioner company would not be liable to pay to the respondent-claimants, the tax deducted at source and paid to the Income Tax Department. 42. In such a case, it would be the choice of the respondent-claimants in each of these petitions, to file an appropriate income tax return for the year concerned, seeking a refund of the tax deducted at source, if such tax/any part thereof, was not actually payable by them on account of them being below taxable thresholds. 43. The learned Tribunal would consequently pass an appropriate order, upon consideration of the aforesaid facts in each case. 44. Upon any such returns being filed, either by the insurance company or by the claimants before the income tax authorities, delay in filing such returns/revised returns, shall be condoned by the appropriate authority, the matter havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- in a particular year. Therefore, the Insurance Company has to pay the interest of compensation accrued to the claimants prior to 1.6.2015 even if the TDS is deposited with the Income Tax Authorities at that time and the claimants cannot be burdened with filing of return for seeking refund for any fault of the Insurance Company. Accordingly, CR No.527, 4687 and 6862 of 2019 are dismissed and the others are disposed of by setting aside the impugned orders and the cases are remanded back to the concerned Motor Accident Claims Tribunal with a direction that if the interest on compensation is paid prior to 1.6.2015, then the Insurance Company will pay the amount of tax deducted at source to claimants and the Insurance Company may seek refund from the Income Tax Authorities by filing a revised income tax return. Where the interest on the compensation is actually paid after 1.6.2015, which is exceeding Rs.50,000/- per claimant per financial year, the Insurance Company will pay on securing the Form 15-G of Rule 29-C of the Income Tax Act/Rules. The parties will appear before the Motor Accident Claims Tribunal, concerned on 31.8.2022 and fresh orders will be passed within a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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