TaxTMI 
TaxTMI 
2010 (9) TMI 738
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.... The Motor Accident Claims Tribunal had passed the award dated 14-3-2005 in favour of the respondent Nos. 1 to 6 awarding a sum of Rs. 7,85,000 along with 9 per cent interest from the date of application and apportioning the amount of compensation and interest amongst the claimants. The appellant Insurance Company deducted a sum of Rs. 7,917 as TDS (tax deduction at source) under section 194A of the Income-tax Act, 1961 (hereinafter referred to as '1961 Act') while depositing the interest amount, therefore, the question about the legality of deduction arose before the Executing Court. The Executing Court by the impugned order held that since the amount of interest payable to each of the claimant is less then Rs. 50,000, therefore, the appel....
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....194A(3)(ix) deals with interest on compensation amount awarded by the Motor Accident Claims Tribunal, the relevant extract of which are as under :- "194A. Interest other than "Interest on securities".-(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 payee 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 :- (2)** ** ** (3) The provisions of sub-section (1) shall not apply - (i) to (viii)** ** ** [(ix) to such i....
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....all the claimants who are separate residents within the meaning of section 2(42) read with section 6 of the 1961 Act, cannot be clubbed together. If such a clubbing is allowed that will not only be contrary to the provisions of Section 194A of 1961 Act but it would also lead to absurd result because in such a case income-tax on interest awarded to each of the poor claimant will be deducted though his interest income may not exceed the limit prescribed for TDS and he will have to face the long process of claiming the refund of tax amount deducted at source or to forgo the said amount. It is worth noting that once the compensation amount is apportioned by the Tribunal amongst the claimants and apportionment of the interest is done, then each ....
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.... on the deposit of X and since the aggregate interest during a financial year exceeds Rs. 1,000 he may deduct the tax at the prescribed rate. The fact that the joint account may be styled as YX instead of XY will not make any difference." The Circular is in respect of the TDS on deposit in joint name and it provides that if there is definite information about the beneficial ownership of the deposit, the interest payable under a joint account cannot be aggregated. This Circular not only clarifies the position but also makes the intention behind section 194A clear. The view taken by this Court above is supported by this circular. 12. In terms of sub-section 194A(3)(ix) if income covered by section is less than Rs. 50,000, the provisions of ....