TaxTMI 
TaxTMI 
2019 (8) TMI 1833
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....ities; and consequently the direction by the Tribunal, vide the impugned orders, is wholly uncalled for, as the company would therefore be paying the said component of the compensation again. While issuing the aforesaid direction, the Tribunal had relied upon a judgment of a Division Bench of this court, in Drawing and Disbursing Officer v. Income Tax Officer (ITA no.495 of 2009), decided on 30.03.2011, with the Tribunal observing in its order that in the said judgment, this court had framed specific issues after referring to various authorities of the Supreme Court, and had thereafter held that the interest component in the compensation awarded by a Motor Accident Claims Tribunal, being a part of compensation so awarded, is to be treated as a capital receipt and not income, till the claimant has actually received the amount. 2. Notice of motion having been issued in both these petitions, as per the report of the Registry, the respondents in CR no.6419 of 2016, i.e. the claimants before the learned Motor Accident Claims Tribunal, stand duly served. However, despite that, they have chosen not to appear and contest the petition. In CR no.6320 of 2016, the report is to the ef....
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....xxxxx [(ix) to such income credited by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal; (ixa) to such income paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty though rupees:]" xxxxx xxxxx xxxxx 4. Learned counsel thereafter referred to a judgment of a Division Bench of the Bombay High Court in Gauri Deepak Patel v. New India Assurance Co. Ltd. 2009 (20) RCR (Civil) 515 , wherein it was held that the Tribunal while dealing with cases before it, would spread the interest accruing on the compensation amount, "over to the relevant financial years" and thereafter, if the interest in a particular financial year exceeds Rs.50,000/-, in terms of clause ix (a) of sub-section 3 of Section 194-A, the Tribunal would permit the insurance companies to deduct the tax at....
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....dents, upon payment of which tax was not deducted at source by the State/its agency, notices were issued to it (the State/its Roadways officers), by the income tax authorities. The Division Bench held, as seen hereinabove, that the interest component on the principal amount of compensation awarded by a Motor Accident Claims Tribunal, is not to be treated as income it being a capital receipt (and not a revenue receipt); and consequently, tax is not to be deducted at source even in the context of clause (ix) of sub-section (3) of Section 194-A of the Act of 1961. 7. In the present cases, the Tribunal, as already noticed, therefore relied upon the aforesaid judgment of this court, and held that the interest component being a part of the compensation awarded, does not attract tax deduction at source, it not being income till the claimant has actually received it (with it to be treated as a capital receipt till that time). 8. In this context, it must be said that, undoubtedly, Section 194-A of the Income Tax Act does stipulate that any person other than an individual or Hindu Undivided Family, who is responsible for paying any income to a resident Indian by way of interest (oth....
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....mant before the Tribunal). 10. Having answered that basic question, it was thereafter observed as follows:- "We may now consider the question whether interest on account of delay in adjudication becomes part of compensation or can be treated as a separate component of income." Towards consideration of that issue, the court referred to Section 171 of the Motor Vehicles Act, 1988, which reads as follows:- "171. Award of interest where any claim is allowed: Where any Claim Tribunal allows a claim for compensation made under this Act, such Tribunal may direct that in addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as it may specify in this behalf." Thereafter, a judgment of the Supreme Court in Commissioner of Income-tax, Faridabad v. Ghanshyam (HUF) (2009) 315 ITR 1 was also referred to, wherein it was found to have been held that interest paid by the Collector under Section 34 of the Land Acquisition Act, 1894, was part of compensation (for acquisition of land) and was treated to be at par with compensation for purposes of taxability. Another judgment ....
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....). Thus, as per what was held in that judgment, of course the contention of learned counsel for the petitioner company is correct, to the effect that tax on the interest component is deductible at source by the person that pays the compensation (if it exceeds Rs.50,000/- in any financial year), with obviously the Division Bench of this court holding to the contrary. 13. Consequently, even in the face of what has been held by the Division Bench of the Bombay High Court, I would be bound by the ratio of the judgment of the Division Bench of this court, (with it further to be noticed again that the Division Bench of this court has gone into great detail by referring to case law on what constitutes income and what does not). It needs to be also specifically noticed that at the time when that judgment was rendered by this court (on March 30, 2011), clause (ix) of subsection (3) of Section 194A of the Income Tax Act read as follows (with there being no clause (ixa) at that stage):- "The provision of sub-section (1) shall not apply xxxxx xxxxx &....
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....is not deductible at source, (even in terms of clause (ix)) as is also submitted by Mr. Yogesh Putney, Advocate, learned Amicus Curiae. 16. In the present cases, the claim petition that eventually became subject matter of Execution Case no.24 of 27.04.2015 (now subject matter of CR no.6419 of 2016), came to be filed by respondents Baljit Kaur and others, on January 17, 2013, before the Motor Accident Claims Tribunal, with the Tribunal having made its Award in favour of the claimants on 11.02.2015. Thus, if the judgment of the Division Bench of this court in Drawing & Disbursing Officers' case (supra) is to be strictly followed, as this Bench is bound to do in any case till 01.06.2015, i.e. till the amendment of clause (ix) and insertion of clause (ixa) in Section 194A(3) of the Income Tax Act, 1961, no interest would be deductible at source at all, even if such interest is beyond Rs.50,000/- in a particular year. Hence, honouring the ratio of the said judgment of the Division Bench, no tax would be deductible at source uptil 01.06.2015, even if such interest exceeds Rs.50,000/- in the financial year 2014-15, and upto 01.06.2015 in the financial year 2015-16. 17. Theref....