MACT compensation interest is not TDS-bearing "interest" where payment discharges a decree, not a borrowing or debt.

Interest component paid with Motor Accident Claims Tribunal compensation was not "interest" arising from a borrowing, debt, or similar credit transaction under section 2(28A). Applying ejusdem generis, the inclusive references in that definition could not extend to a decretal amount paid in discharge of an MACT award through court. Section 194A therefore did not require tax deduction at source on these facts, and the resulting orders under sections 201(1) and 201(1A) were unsustainable.

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Issues: Whether the amount described as interest paid along with Motor Accident Claims Tribunal compensation was "interest" within section 2(28A) of the Income-tax Act, 1961, so as to attract tax deduction at source under section 194A of the Income-tax Act, 1961.

Analysis: The payment made by the insurance company was pursuant to awards of the Motor Accident Claims Tribunal and represented the decretal amount payable to the claimants through court. The definition of "interest" in section 2(28A) speaks of interest on moneys borrowed or debt incurred, and the inclusive words such as deposit or claim must take colour from that core expression. Applying the rule of ejusdem generis, the interest component attached to MACT compensation did not arise from borrowing, debt, or a similar credit transaction. The amount was paid in discharge of the decree and the assessee had no discretion to split or withhold tax from the decretal amount. The provisions of section 194A therefore did not apply on these facts.

Conclusion: The assessee was not liable to deduct tax at source on the amount paid as interest on MACT compensation, and the orders under sections 201(1) and 201(1A) were unsustainable.

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