TaxTMI 
TaxTMI 
2020 (3) TMI 1415
X X X X Extracts X X X X
X X X X Extracts X X X X
....etween Khachrod-Badnagar Road and Nagar Palika Gate, respondent No.7 driving the offending Truck bearing Registration No. GJ-05-AV-6811 coming from opposite side rashly and negligently dashed his motorcycle and ran away. Amritlal died on the spot. He was immediately taken to the hospital and postmortem was conducted. After registration of FIR, a criminal case was registered against the driver and owner of the offending Truck. At the time of accident, the offending truck was insured with the present petitioner. (iii) At the time of accident, the deceased was 44 years of age and working as a teacher in the Government School. He was getting a salary of Rs.35,751/- per month. The claimants being wife, children, father and mother were dependent on him. After recording the negligence on the part of the driver of the offending vehicle, learned Motor Accident Claims Tribunal, vide award dated 2.7.2019 awarded total compensation of Rs.49,84,000/- along with interest @ 7.5% per annum from the date of application i.e. 23.6.2017 till its the payment. Learned Motor Accident Claims Tribunal has also directed the petitioner, Insurance Co. not to deduct the TDS on the the amount of interest unl....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Had the Insurance Co. been not deduct the TDS, then the officers of the Insurance Co. would have faced the consequential effects/punitive action from the Income Tax Department, hence the impugned orders be set aside or modified to the extent of directing the claimants be directed to claim a refund from the Income Tax Department by way of filing the return. 4. No one is appearing on behalf of the respondents/claimants despite service of notice hence this Court has appointed Shri Sumeet Neema, learned Sr. Advocate, as amicus curiae to assist this Court. 5. Shri Sumeet Neema, learned amicus curiae, submitted that similar issue came up for consideration before the Division Bench of High Court of Bombay in the case of Rupesh Rashmikant Shah V/s. Union of India (W.P. No.2902/2016 decided on 8.8.2019) in which it has been held that interest awarded in Motor Accident Claim Case from the date of claim petition till the passing of the award or in case of appeal, till the judgment of the High Court in such an appeal, would not be exigible to tax, not being an income. Section 194A of the Income Tax Act is the only provision in the IT Act for deduction of tax at source. The provision of d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h Court of Punjab and Haryana in the case of New India Assurance Co. Ltd. V/s. Sudesh Chawla (C.R. Nos. 430, 3801 and 1930 of 2015 (O&M) decided on 30.11.2015) has held that the the payment of compensation on account of death and injury is not a business transaction or a receipt of any charges on account of services rendered by any other party. Award of compensation is based on the principle of restitution to place the claimant in the same position in which he would have been had the loss of life or injury not been there. Therefore, the insurance company could not be called upon to pay the TDS/deduct TDS on the interest part on such compensation. 9. The High Court of Punjab & Haryana in the case of The New India Assurance Co. Ltd. V/s. Savitri Devi & another (CR No. 6784/2016 and Other connected civil revisions decided on 4.4.2018) has considered the issue - whether the insurance company can deduct income tax at source (TDS) on the interest paid on the compensation paid under Motor Vehicles Act, 1988? and answered that, when there is a conflict between social welfare legislation and taxation legislation, then social welfare legislation would prevail since it sub-serves larger pub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons of Section 194A(3)(ix)(ix-a) of the Income Tax Act and if the assessee is of the view that the tax has been deducted in excess, then he can always claim a refund of the same from the Income Tax Department. 13. Shri Dandwate, learned counsel for the petitioner, has placed heavy reliance over the judgment of this Court in the case of National Insurance Co. Ltd. V/s. Smt. Draupadibai : 2011 (1) MPLJ 251, in which, it has been held that the interest payable to each of the claimants being Rs.20,208.33, Insurance Co. does not entitled to deduct the tax at source. While taking the aforesaid view, this Court was of the opinion that the word "such income" in sub-section (3)(ix) refer to the interest income covered by sub-section (1), therefore, a reading of sub-section (1) and sub-section (3)(ix) together makes it clear that it is the interest income of a resident in a financial year which is to be taken into account for calculating the limit of 50,000/-. This Court has made it clear that the aforesaid interpretation of Section 194-A of IT Act applies only in cases where the compensation the amount has been apportioned and the interest payable to each of the claimants is ascertainable....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it exceeds Rs.50,000/- in view of the judgment passed by this Court in the case of Ramlal (supra). The aforesaid judgment of the MACT has attained finality as neither the claimants nor the Insurance Co. has filed any appeal before this High Court . The Insurance Co. has already been directed by learned Motor Accident Claims Tribunal to examine whether the interest payable to respondent No.1 was exceeding Rs.50,000/-, then only the interest is liable to be deducted. Hence, in the present case, the issue in regards to the deduction of TDS on the interest components payable to respondent No.1 is not liable to be considered again. 18. This Court in the aforesaid three cases i.e. Ramlal; Smt. Swaroopi Bai; and Draupadibai (supra) has consistently held that the tax is payable on the interest accrued on the the amount of compensation under Motor Vehicle Act with a rider that the interest should not be more than Rs.50,000/- per claimant per financial year. After the aforesaid award, the Insurance Co. has calculated the interest payable on entire the amount of compensation and deducted the TDS @ 20% i.e. Rs.1,73,297/-. 19. In the case of Ramlal (supra), this Court has held that it is the....