TaxTMI 
TaxTMI 
2018 (4) TMI 526
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....re the different orders passed by Motor Accident Claims Tribunal, Bathinda, whereby the J.D.-Insurance Company was directed to deposit within 15 days the TDS amount, which has been deducted at source. The J.D. was given liberty to withdraw the TDS amount from Income Tax Department. I have heard learned counsel for the parties and also examined the matter with the valuable assistance rendered by Mr. Yogesh Putney, Amicus Curiae, appointed by this Court and the learned counsel for the parties. The point for determination before this Court is "whether Insurance Company can deduct income tax at source (TDS) on the interest paid on the compensation paid under Motor Vehicles Act, 1988?" The learned Amicus Curiae has argued that ....
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....ection 2(28A) of the Act defines the interest as under: "interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised;" Under Section 4 of the Act, the income tax is to be deducted at source. Under Section 56(2)(viii) of the Act, the income by way of interest received on the compensation or enhanced compensation referred to Clause (b) of Section 145A of the Act is to be treated as income from other sources. Section 145 A(b) of the Act provides that the interest re....
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....he interest of compensation is to be deducted at source in the financial year, in which it is received. Secondly, in a case pertaining to interest on the compensation awarded by the Motor Accident Claims Tribunal, no tax is payable on the interest up to Rs. 50,000/- and beyond Rs. 50,000/- the tax is to be deducted source on the aggregate of the amount of such income paid during the financial year. Learned counsel counsel for the respondent(s) has also referred to the judgment of Madras High Court delivered in case of "The Managing Director, Tamil Nadu State Transport Corporation (Salem) Ltd., Bharathipuram, Dharmapuri -05 vs Chinnadurai", 2016 AIR (Madras) 146, and has referred to para No.8 of the said judgment to show that the provi....
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....ion cannot be categorized or even described as income as it has already been stated that the intention of the legislature in awarding compensation to the victims of Motor Accident cases is to restitute them and rehabilitate them. ----------- 17. If there is a conflict between a social welfare legislation and a taxation legislation, then, this Court is of the view that a social welfare legislation should prevail since it subserves larger public interest. The Motor Vehicle Act is one such legislation which has been passed with a benevolent intention for compensating the accident victims who have suffered bodily disablement or loss of life and the Income Tax Act which is primarily intended for Tax collection by the State cann....
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.... in deducting the tax at source. It is observed that usually when a person makes a motor accident claim before the Insurance Company, ordinarily, it does not happen that the Insurance Company readily admits the claim and pays the compensation. Usually, the victim has to move the Tribunal and many times, it takes years and some time decades either before the Tribunal or before the higher Court to finally determine the compensation payable to him. For the delayed payment of compensation, the victim is not liable. Therefore, when the compensation is actually paid, interest on compensation on account of delay in payment is also payable. There can be two scenarios. One is when interest is paid as a part of the compensation and the second is w....