TaxTMI 
TaxTMI 
2019 (6) TMI 1682
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....sation amount as well as the interest amount after deducting TDS on interest. 4. The respondents no.1 to 5 objected to it and the Executing Claims Tribunal by impugned order has decided the objection in favour of the claimants and held that if the interest amount is spread over to the number of years from the date of filing of the claim, then in none of the financial year, the interest more than Rs.50,000/- had accrued, therefore, the Insurance Company has wrongly deducted the TDS on interest and thus, has directed the petitioner to deposit the amount of TDS, so deducted on the interest paid by it. 5. Challenging the order passed by the Executing Claims Tribunal, it is submitted by the Counsel for the petitioner, that in view of Section 145-B of Income Tax Act, the interest received by an assessee on any compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received. It is further submitted that the petitioner has rightly deducted the TDS on the interest which has been paid to the claimants and if the claimants are of the view, that excess tax has been deducted, then they can claim refund from the Inco....
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....ax Act would apply, for deduction of Tax at source in case if interest paid on the compensation amount awarded by the Motor Accidents Claims Tribunal, exceeds Rs.50,000/-. Section 194-A (3)(ix) (ix-a) of Income Tax Act reads as under : 194-A. 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: Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of Section 44-AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income tax under this section. Explanation. -- For the purposes of this section, wher....
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....guity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i....
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....fact that the said interest paid for belated payment of compensation is liable to income tax is not disputed. However, the question is as to whether the tax in respect of the said payment has to be deducted at source under Section 194-A of the Act? It has been clearly laid down in the decision cited by the learned counsel appearing for the appellants in Bikram Singh case that the said payment which is exigible to income tax regarding interest payable for the belated payment of compensation is covered under Section 194-A and has to be deducted at source. In the said case, the Land Acquisition Officer had deducted at source the tax payable in respect of the interest under Section 194-A of the Act regarding interest payable for belated payment of compensation in the land acquired and the said action on the part of the Land Acquisition Officer was challenged before the High Court of Punjab and Haryana. The writ petition was dismissed holding that the deduction of the payment of interest at source under Section 194-A by the Land Acquisition Collector was valid and perfectly justified. Being aggrieved by the same, Civil Appeal No. 12500 of 1996 was filed before the Hon'ble Supreme Court ....
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....t has been laid down by the Hon'ble Supreme Court is that the interest payable for belated payment of compensation for the land acquired is exigible to tax and the Hon'ble Supreme Court has confirmed the deduction of tax towards payment of interest under Section 194-A of the Act and has further observed, "Section 194-A of the Act has no application for the purpose of this case". In view of the fact that the Land Acquisition Officer had already deducted the amount under Section 194-A of the Act, mere fact that the assessee can spread over the income for a period in which payment came to be made would not by itself be a ground to exempt it from Section 194-A of the Act, as it is always open for the assessee to claim refund of the amount, if tax is deducted in excess or paid in excess. There is also no merit in the contention of the learned counsel appearing for the respondent that in view of the circular, instruction issued by the Government of Karnataka, no deduction has been made at source in view of the principle laid down by the Hon'ble Supreme Court in Bikram Singh case, as circular cannot override the principle laid down by the Hon'ble Supreme Court. 18. It is not out of plac....