2026 (6) TMI 505

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....on involved in this original petition is whether the petitioner/judgment debtor is liable to deduct TDS from the interest amount payable by them to a decree holder. The 2nd Additional District Court, Ernakulam by Exhibit P11 order dated 10.11.2025 in EP No.202 of 2023 directed the petitioner to pay the amount deducted as TDS under Section 195 of the Income Tax Act, 1961 to the respondents/decree holders and the said order is challenged. 2. The dispute between the petitioner and the respondents was referred to an Arbitrator and the Arbitrator by award dated 16.07.2018 directed the petitioner to refund the amount paid by the respondents with interest at the rate of 9% per annum from 05.10.2010 to 30.4.2018 and thereafter future interest at....

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....s. 4. The counsel for the petitioner submitted that there is a statutory obligation to deduct TDS from the interest payable to an NRI and since the respondents are NRIs, necessarily such amounts have to be deducted, failing which the Income Tax Department is entitled to initiate action against the petitioner. The relevant provisions of the Income tax Act, were placed before the Court. The Standing Counsel for the Income Tax Department submitted that tax is leviable on the interest accrued. Reference was made to various decisions on the said aspect. The question that is involved is not regarding the tax payable on interest in the usual course. In the case on hand, the interest is part of a decree of a court and is hence a decretal amount ....