TaxTMI 
TaxTMI 
2004 (9) TMI 324
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....the case in holding that the assessee was a person liable to deduct tax at source. The order of learned CIT(A) was contrary to law, facts and circumstances of the case and against the public interest. 2. That the learned appellate authority erred in relying on the decision pronounced by the Supreme Court in the case of Bikram Singh & Ors. vs. Land Acquisition Collector & Ors. (1997) 139 CTR (SC) 475 : (1997) 224 ITR 551 (SC) which is totally irrelevant and was clearly distinguished by the appellant during the course of appellate proceedings. In fact the above case is not applicable to the appellant's case. 3. That the learned appellate authority has failed to appreciate the fact that alleged interest does not come under the definition of interest under s. 2(28A) of the IT Act, 1961 as it is neither a debt incurred nor money borrowed. 4. That the learned appellate authority failed to appreciate the fact that such interest is nothing else but the additional compensation and is a capital receipt in the hands of the appellant. The case cited and other relevant material placed on record has not been discussed. 5. That the learned appellate authority has erred in law by ignor....
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....bsp; 34,89,939 --------------------------------------- 6. The assessee was specifically required to explain why short charge on account of non-deduction of tax on payment of interest may not be charged, since the assessee has failed to comply with the provisions of s. 194A. It was also required from the assessee to explain as to why interest under s. 201(1A) may not be charged on the amount chargeable as TDS from the assessee. The assessee filed reply dt.27th Aug., 2001, wherein it was briefly submitted: "The assessee is insurance company and carrying on the business of general insurance and pays compensation as per awards given by Motor Accident Claim Tribunal (MACT). These awards are being paid on death or injury occurred due to motor accident. Such compensation is to be made to the legal heirs or dependent in case of the death or to the injured person as the case may be." 7. It was also explained that as such the assessee is not paying interest as envisaged under s. 194A of the IT Act. It was also submitted that the claim under MACT includes the amount of compensation, interest awarded under s 171 of the Mot....
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....f s. 194A of the IT Act. The CIT(A), however, with regard to calculation of short deduction of interest directed the AO to work out separately. The appeal of the assessee with regard to application of s. 194A was dismissed. The appeal of the assessee was partly allowed with regard to calculation of the short deduction and interest. We may clarify that such calculation of short deduction of interest is not in dispute before us. The assessee felt aggrieved and filed all the appeals before us for the different assessment years challenging the orders of the authorities below with regard to application of s 194A of the IT Act. 8. We have heard the learned representatives of both the parties. The learned counsel for the assessee reiterated the same submissions made before the authorities below. The learned counsel for the assessee further argued that the assessee was to indemnify the third parties as per insurance policy and many times interest was paid on the compensation in discretion of the Court. The learned counsel for the assessee referred to ss. 169 and 171 of the IT Act. The learned counsel for the assessee submitted that the point in issue is considered by Chandigarh Bench of....
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....g out of the use of motor vehicle or damages to any property of a third party so arises. Sec. 171 of the Motor Vehicles Act provides award of the interest and provides that the Motor Accident Claim may direct that in addition to the amount of compensation, simple interest shall also be paid (sic) not earlier than filing of the claim. The counsel for the assessee has filed some of the copies of the insurance policies and copies of the awards of different Motor Accident Claims Tribunals in the paper book. As per insurance policies, the assessee shall have to indemnify the third party for losses suffered by them on account of death, bodily injury or damages to the property provided that the conditions of the policies are not violated. The interest on the compensation would be granted in the discretion of the Court. The insurance is made one of the necessary part to the suit filed by the claimants or legal heirs of the deceased persons, who have suffered bodily injury or death on account of use of motor vehicle, which is insured with the assessee-company. The assessee-company is liable to pay compensation to such persons when award/decree is passed by the Motor Accident Claims. The ass....
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....on of the High Court was of the view that the interest received as income on delayed payment of compensation determined under ss. 28 to 31 of the Land Acquisition Act is a taxable event and therefore, it was held that it is revenue receipt exigible to tax under s. 4 of the IT Act. The Hon'ble Supreme Court further observed that the s. 194A of the Act has no application for the purpose of this case as it encompasses deduction of income-tax at source. The Hon'ble Supreme Court in this case has dealt with the issue of chargeability of the interest on delayed compensation under ss. 4 and 5 of the IT Act in the hands of the appellant/claimants. The matter with regard to TDS was not at all considered and therefore, the observation of the Hon'ble Supreme Court with regard to applicability of s. 194A of the IT Act was correctly not relied upon by the CIT(A). Same is the position in the case of New India Assurance Company (ITA Nos. 1060 & 1061, dt. 21st Oct., 2002) and United Insurance Co. (ITA Nos. 1112 & 1113, dt. 1st Jan., 2003) as are decided by the Chandigarh Bench of the Tribunal. TheChandigarhBench of the Tribunal have placed reliance upon the observations of the Hon'ble Supreme Cour....
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.... a deposit, claim or other similar right or obligation). The learned Departmental Representative submitted that the inclusive definition, i.e., claim would be included in the definition of the interest, and as such the claim of the claimants for the purpose of receiving interest on the compensation is also interest for the purpose of s. 2(28A) of the IT Act. On the other hand, the learned counsel for the assessee submitted that the definition of interest should and would include the interest payable in any manner in respect of any moneys borrowed or debt incurred and the inclusive definition is to be read with the terms "borrowed or debt incurred". On going through the submissions of the parties on this issue, it is clear that originally the definition of the interest provides interest payable in any manner in respect of any moneys borrowed or debt incurred. The inclusive definition provides interest on deposit, claim or other similar right or obligation. 14. In this connection, we would like to refer to rule of "ejusdem generis". The words "ejusdem generis" means of the same kind or nature. The rule of ejusdem generis is that where particular words are followed by general, the ....
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....or the assessee relied upon the following decisions: (1) Delhi Development Authority vs. ITO (1995) 52 TTJ (Del) 107, in which the Tribunal 'B' Bench, Delhi, on consideration of the fact that the interest payable to allottees for delay in construction within the stipulated period, which is adjusted at the time of payment of final instalment held that the transaction is not covered by s. 2(28A) defining the interest. Therefore, the provisions of s. 194A of the IT Act are not applicable. (2) In the case of Ghaziabad Development Authority vs. Dr. N.K. Gupta (2002) 258 ITR 337 (NCDRC) in which National Consumer Disputes Redressal Commission headed by the Hon'ble Mr. Justice D.P. Wadhwa considering the facts that on delay in handing over flat and that facilities not provided the allottee refused to take possession and demanded refund of the amount with interest. Interest ordered to be paid. The National Commission held that in view of the definition of interest in s. 2(28A) of the IT Act, the provisions of s. 194A were not applicable and the petitioner authority was wrong in deducting tax at source from the interest payable to the respondent (complainant). The National Commission ....
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....t debt, and to judgment debts s. 18 has not been made applicable. The decree passed by the civil Court must be executed subject to the deductions and adjustment permissible under the CPC. The judgment debtor may, if he has a cross decree for money, claim to set off the amount due thereunder. If there be any adjustment of the decree, the decree may be executed for the amount due as a result of the adjustment. A third person who has obtained a decree against the judgment creditor may apply for attachment of the decree and such decree may be executed subject to the claim of the third person; but the judgment debtor cannot claim to satisfy, in the absence of a direction in the decree to that effect the claim of a third person against the judgment creditor and pay only the balance. The rule that the decree must be executed according to its tenor may be modified by a statutory provision. But there is nothing in the IT Act which supports the plea that in respect of the amount payable under a judgment debt of the nature sought to be enforced, the debtor is entitled to deduct income-tax which may become due and payable by the judgment creditor on the plea that the cause of action on which t....