TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: Whether compensation awarded by the Motor Accident Claims Tribunal and the interest accruing thereon could be treated as taxable income so as to justify deduction of tax at source.
Analysis: The compensation payable to a motor accident victim is intended to restitute and rehabilitate the victim for death or bodily injury and is in the nature of solatium for loss suffered. Such compensation does not partake of the character of income. Interest accruing on the award amount by reason of delayed payment does not alter the essential nature of the amount so as to bring it within the taxable net. Where a social welfare legislation confers compensation for victims of accidents, that remedial object cannot be diluted by applying the withholding machinery of the income-tax law to the award amount or the interest accrued thereon.
Conclusion: The compensation awarded by the Motor Accident Claims Tribunal and the interest accrued thereon are not liable to tax deduction at source and cannot be treated as income under the Income-tax Act, 1961; the deduction made was held unsustainable.
Ratio Decidendi: Compensation awarded for motor accident death or injury, including the interest attached to such award, is restitutive and not income, and therefore cannot be subjected to tax deduction at source.
TaxTMI 
