AI Drafter 
TaxTMI 
TaxTMI 
2025 (5) TMI 1615
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....अथवा अन्य रिट आदेश या निर्देश जारी किया जावे की वह इजरा प्रकरण में प्रत्यर्थी से रूपये 29,896/- वसूल करके याचिकाकार को दिलावें तथा प्रत्यर्थी को भी निर्देशित किया जावे कि वह रूपये 29,896/- न्यायालय एकादशम् मोटर दुर्घट....
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....aims would be chargeable to tax as income from other sources and the point of changeability would be the actual receipt and a conjoint reading of clause (viii) of sub-section (2) of section 56, clause (b) of section 145A [145B(1)] and section 194A (3) of the Act would lead to an inescapable conclusion that interest on the compensation or enhanced compensation would be chargeable as income from other sources at the point when the same is actually received by the claimants. 5. It was further submitted that the Finance Act, 2015 has inserted new Section 194A(3) (ix-a) with effect from 1st June 2015 and the effect of the amendment is as under:- "(1) No liability for TDS shall be attracted in respect of any income credited by way of interest on the compensation amount awarded by the MACT. (2) Such liability for deduction of tax in respect of interest on compensation will be attracted, only at the time of actual payment and only if the amount of such payment or aggregate amounts of such payments during a financial year exceeds Rs. 50,000/- ." 6. To bolster his submissions, learned counsel for the petitioner placed reliance in the matters of United India Insurance ....
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.... of 2016 on 08.08.2019; New India Assurance Co. Ltd. Vs. Hussain Babulal Shaikh and others reported in 2017 ACJ 1775; New India Assurance Co. Ltd. Vs. Ravinder Kumar and others reported in 2023 ACJ 757. 9. Heard learned counsel for the parties and perused the record. 10. Before analyzing the rival stands, this Court deems it necessary to briefly refer to the applicable provisions contained in the Income Tax Act. Section 2(24) of the Act defines the income:- (i) profits and gains; (ii) dividend ; (iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or sub-clause (v) or by any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or by any hospital or other institution referred to in sub-clause (iiiae) or subclause (via) of clause (23C) of section 10 or by an electoral trust. Explanation.-For the pu....
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....tual insurance company or by a co-operative society, computed in accordance with section 44 or any surplus taken to be such profits and gains by virtue of provisions contained in the First Schedule ; (viia) the profits and gains of any business of banking (including providing credit facilities) carried on by a co-operative society with its members; (viii) [Omitted by the Finance Act, 1988, w.e.f. 1-4-1988. Original subclause (viii) was inserted by the Finance Act, 1964, w.e.f. 1-4-1964;] (ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever. Explanation.-For the purposes of this sub-clause,- (i) "lottery" includes winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangement by whatever name called; (ii) "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game ; (x) any sum received by the assessee ....
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....im 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 utilized; 12. Section 56(2)(viii) of the Income Tax Act is with regard to "income from other sources". The same reads as under:- "56. Income from other sources. - (2) In particular and without prejudice to the generality of the provisions of sub-section (1), the following incomes shall be chargeable to income tax under the head "Income from other sources", namely: - (viii) income by way of interest received on compensation or on enhanced compensation referred to in [sub-section (1) of Section 145-B]" 13. Section 145 B(1) [unamended Section 145A(b)] of the Income Tax Act reads as under:- Section 145A(b) in The Income Tax Act, 1961 (b)"recognized stock exchange" shall have the meaning assigned to it in clause (ii) of Explanation 1 to clause (5) of section 43; 18. Section 194(A)(3) (ix and ix-a) of the Act is with regard to "interest other than interest of securities." The same reads as under:- Section 194A(3) in The Income Tax Act, 1961. (3) The provisions of su....
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.... keep up with the pace, to face the challenges arising out the road accidents. The concept of compulsory third party insurance has been statutorily introduced and the relationship between insurer and insured is basically a contractual relationship but interjective range of the statutory provisions. Under such contract of insurance, the insurer undertakes to magnify the insured to the extent of aggrieved and the statutory provisions contained in the Act of 1988 makes third party insurance compulsory and limit the difference, which the insurance company may raise to its liability. 19. The statement of objects and reasons for enactment of this Motor Vehicle Act records that the need was filled for consolidation by an amendment of law relating to motor vehicle and such law should take into account also changes in the road transport technology, pattern of passenger and freight movements, developments, of the road network in the country and particularly the improved techniques in the motor vehicles management. Chapter-X of the Act of 1988 pertains to liability without fault in certain cases and chapter XI of the Act of 1988 pertains to Insurance of Motor Vehicles against third party r....
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....orporation, reported in (2008) 12 SCC 208 can be looked into. 21. It can, thus, be seen that in the case of fatal accident cases, the Courts award compensation for loss of dependency benefit, loss of estate, loss of consortium in case of a spouse, loss of love and affection for the family members and funeral charges. In injury cases, generally, the compensation is computed under the heads of actual loss of income, future loss of income, pain, shock and suffering, loss of enjoyment of amenities of life, medical treatment past and future, miscellaneous heads such as attendant charges, special diet, transportation, etc. 22. It is, therefore, that while awarding compensation, though the Claims Tribunal awards future loss in praesenti, interest is awarded for the period between filing of the Claim Petition till passing of the award and, therefore, as held by the Hon'ble Apex Court in the case of Abati Bezbaruah (supra) and Dharampal (supra), such interest is considered to be part of compensation, and accretion to the compensation since the same is awarded for the compensation which is ascertained with reference to an earlier date i.e., the date of accident. At the same time, c....
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....herwise not exigible to tax, rather it merely provides for the point when it would be subjected to tax if otherwise taxable. 27. In order to ascertain the taxability of interest on compensation or enhanced compensation in motor accident claim cases, the true nature of interest would have to be ascertained. In the context of the nature of the interest awarded by the Claims Tribunal or this Court on motor accident claim compensation or enhanced compensation, decisions of the Supreme Court including in cases of Abati Bezbaruah (supra), Kaushnuma Begum (supra), Patricia G. Mahajan (supra) a n d Dharampal (supra) have been referred. These decisions suggest that the interest is awarded for delayed computation of compensation and right to award interest flows from section 170 of the Motor Vehicles Act, 1988. As it is well settled that the authority of the Court to award interest must be traced to a statutory provision or should be in agreement between the parties and in absence of section 170 of the Motor Vehicles Act, perhaps it would not be lawful for the Tribunal or this Court to award interest on compensation. Thus, from the discussion in the judgments cited above it could be very ....
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....igible to tax, not being an income. This position would not change on account of clause (b) of section 145-A of the Act as it stood at the relevant time amended by Finance Act, 2009 which provision now finds place in sub-section (1) of section 145B(1) of the Act. Neither clause (b) of section 145B(1), nor clause (viii) of subsection (2) of section 56 of the Act shall make the interest chargeable to tax whether such interest is income of the recipient or not. Section 194-A of the Act is only a provision for deduction of tax at source. Any provision for deduction of tax at source in the said section would not govern the taxability of the receipt. The question of deduction of tax at source would arise only if the payment is in the nature of income of the payee. 30. The Division Bench of the Bombay High Court in the matter of Rupesh Rashmikant Shah vs Union of India (Supra) in paragraph 58 and 59 has discussed the provisions of Section 194-A, clauses (ix) and (ixa) of subsection (3) of section 194. The relevant extract is reproduced herein below:- 58. We are not oblivion to erstwhile clause (ix) of sub-section (3) of section 194A or the newly amended clauses (ix) and (ixa) thereo....
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....tutory appeal, we think it is our duty to explain why this petition was entertained. In the present case, only question was of charging interest on compensation/enhanced compensation of motor accident to tax. This was a pure question of law. No facts were to be ascertained. It was otherwise important that such a question is decided by the High Court. We had, therefore, entertained the petition. (iii) The Assessing Officer has passed the order of assessment. He has made a bonafide assessment. With his approach, there can be no criticism. But when it comes to issuing notice for penalty, it defies logic. The petitioner despite his stand that the interest is not taxable, filed the return, offered the interest to tax and also deposited such tax under protest. What was the purpose of issuing notice for penalty is difficult to understand 63. In the result, we find that the Assessing Officer had committed an error in levying tax on the interest component of the compensation awarded to the petitioner till the date of the judgment of the High Court. On any interest paid to him post the judgment, tax had to be collected as income from other sources. This Court, therefore, set aside t....