TMI Blog2023 (8) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on compensation or enhanced compensation awarded by MACT or this Court from the date of filing of the claim petition till the date of passing of the award or judgment by High Court will not fall in the bracket of income and would not be exigible to tax. In view of provisions of Section 194-A (3) (ix-a) of the Act, 1961, only that part of the interest component which is treated as income and which when received exceeded Rs. 50,000/- and did not form part of compensation would be exigible to tax. Respondents in this case have already charged tax on the amount of interest which was received by the petitioner along with the amount of compensation granted by MACT and by this Court in FAO filed by the petitioner, by treating the same as income of the petitioner. Since the upshot of the discussion as made above is that no tax was exigible and could be deducted from the amount of interest awarded to the petitioner by MACT from the date of filing of claim petition till the date of passing of the award and interest awarded on enhanced amount of compensation by High Court in the appeal filed by the petitioner, till the judgment of the High Court, the same not being income, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t source and the credit thereof had been given to her while processing her return under Section 143 (1) of the Act, 1961 and, therefore, no cause of action survived in her favour. Accordingly, the respondents prayed for dismissal of the petition. 3. Learned counsel for the petitioner argued that she was entitled to refund of the amount deducted as tax on the interest amount received by her along with compensation as awarded by this Court and the MACT as interest was awarded under a social welfare legislation which in case of conflict with taxation legislation, was to prevail. He submitted that the interest paid on compensation which was in the nature of capital receipt was to be treated at par with the compensation for the purpose of taxability and could not be regarded as income liable to tax. In support of his contention, learned counsel relied upon authorities cited as The New India Assurance Co. Ltd. v. Savitri Devi and another, CR No.6784 of 2016, decided on 04.04.2018; National Insurance Company Limited v. Janki, CR No. 6320 of 2016, decided on 08.08.2019 and Drawing and Disbursing Officer v. Income Tax Officer, ITA No. 495 of 2009, decided on 30.03.2011 by Co-ordinate B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 suggests that the interest received by an assessee on any compensation or enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received. 6. It will also be relevant to refer here to the provisions of Section 194-A of the Act, 1961. As per Sub Section (1) of this Section, any person not being an individual or a Hindu Undivided Family, who is responsible to pay a resident, any income by way of interest other than income by way of interest on securities, shall deduct tax at the time of credit of such income to the account of the payee. Sub Section 3 (ix) of this Section is also important which says that tax shall not be deducted to such income, credited by way of interest on the compensation amount awarded by MACT. Sub Section 3 (ixa) says that tax to such income paid by way of interest on compensation amount awarded by MACT shall not be deducted where such income received during financial year does not exceed Rs. 50,000/-. The rival contentions of the parties are to be taken into consideration keeping in view the above discussed provisions of law. 7. Let us now ponder over the question as to whether the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to nature of receipt of compensation as per award under the MV Act, compensation is in the nature of capital receipt for death or injury and cannot be held to be in the nature of income. Reference can also be made to The Oriental Insurance Company Limited s case (Supra) which is a recent citation of the High Court of Gujarat and wherein similar observations were made after discussing pronouncements of different High Courts. 8. In view of ratio of law as laid down in the above cited authorities, there is no hesitation to hold that the compensation awarded under MV Act by MACT or the interest on the said compensation amount cannot be termed as income. However, at this juncture, the contention as raised by the respondents that the interest received on compensation amount is liable to TDS under Section 194-A (3) (ix-a) of the Act, 1961 in view of provisions of Section 145-B (1) of the Act, 1961 is to be considered. A bare reading of Section 145-B (1) reveals that it says that the interest received by an assessee on any compensation or enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received. However, in our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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