MALINI, vs. THE CHIEF COMMISSIONER OF INCOME TAX (TDS), *(CORRECTED)

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WP(C)/5040/2023HC KeralaKLHC01012160202312 September 2023Author: HONOURABLE MR. JUSTICE D. K. SINGH6 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the petitioners' submission that they are not liable to file returns of income as they are not assessees under the Income Tax Act and that no income tax is payable on the compensation awarded by the MACT is valid. The Court found no substance in the revenue's submission that the refund application cannot be processed without filing returns. Since the petitioners are neither assessees nor have income for which a return is required, the refund of TDS deducted and deposited by the Insurance Company must be processed upon a simple application. The Court directed the petitioners to file an application before the 1st respondent within ten days, and the 1st respondent was ordered to process the application and refund the TDS amount within one month of filing. The operative direction is to process the refund.

What were the facts?

The petitioners, three individuals who are not assessees under the Income Tax Act and do not possess PAN cards, were awarded compensation by the Motor Accidents Claims Tribunal (MACT). The National Insurance Company Ltd., the 3rd respondent, deducted Tax Deducted at Source (TDS) amounting to Rs. 1,89,313/- from each of the three petitioners, totaling Rs. 5,67,939/-. The petitioners filed a writ petition seeking a direction to the 1st respondent, the Commissioner of Income Tax (TDS), Kerala, to refund this TDS amount. The 1st respondent contended that the refund could only be processed if the petitioners filed their income tax returns.

What were the issues?

1. Whether the petitioners, who are not assessees under the Income Tax Act and have no taxable income from the MACT award, are entitled to a refund of the TDS deducted from their compensation. Assessee's contention: The petitioners argued that they are not assessees, do not have taxable income, and therefore, the TDS deduction is unwarranted. They submitted that since no income tax is payable on MACT compensation, and they are not required to file returns, the refund of TDS should be processed based on a simple application. Revenue's contention: The 1st respondent contended that the petitioners must file their income tax returns before their application for the refund of TDS can be processed.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 12TH DAY OF SEPTEMBER 2023 / 21ST BHADRA, 1945 WP(C) NO. 5040 OF 2023 PETITIONERS: 1 MALINI, AGED 47 YEARS, W/O DILEEP, CHARAMAYIL HOUSE, KOTHAMANGALAM VILLAGE, KUTHUKUZHY BHAGOM, KOTHAMANGALAM TALUK, ERNAKULAM DISTRICT, PIN – 686691. 2 ABHINAND, AGED 18 YEARS,S/O DILEEP, CHARAMAYIL HOUSE, KOTHAMANGALAM VILLAGE, KUTHUKUZHY BHAGOM, KOTHAMANGALAM TALUK, ERNAKULAM DISTRICT, PIN – 686691. 3 AMRUTHA, AGED 13 YEARS, D/O DILEEP, MINOR, REPRESENTED BY HER MOTHER AND NATURAL GUARDIAN THE 1ST PETITIONER MALINI, CHARAMAYIL HOUSE, KOTHAMANGALAM VILLAGE, KUTHUKUZHY BHAGOM, KOTHAMANGALAM TALUK, ERNAKULAM DISTRICT, PIN – 686691. BY ADVS. SRI. DR. V.N.SANKARJEE SRI. P. VISWANATHA MENON RESPONDENTS: 1 THE CHIEF COMMISSIONER OF INCOME TAX (TDS), *(CORRECTED) KERALA, C.R. BUILDING, I.S. PRESS ROAD, KANAYANNUR TALUK, ERNAKULAM DISTRICT * CORRECTED AS THE COMMISSIONER OF INCOME TAX(TDS), KERALA, C. R. BUILDING, I. S. PRESS ROAD, KANAYANNOOR TALUK, ERNAKULAM DISTRICT, PIN-682018. (AS PER ORDER DATED 09.08.2023 IN I.A.1/2023 IN WP(C)5040/2023, PIN – 682018) 2 THE NATIONAL INSURANCE COMPANY LTD., REGISTERED OFFICE 3, MIDDLE TOWN STREET, KOLKATA, REPRESENTED BY ITS MANAGING DIRECTOR,PIN – 700071. WP(C) NO. 5040 OF 2023 2 3 THE DIVISIONAL MANAGER, NATIONAL INSURANCE COMPANY LTD., ALUVA DIVISIONAL OFFICE, PUMP JUNCTION, ALUVA, ERNAKULAM DISTRICT, PIN – 683101. BY ADVS. SRI. CHRISTOPHER ABRAHAM, SC - INCOME TAX SMT. LATHA SUSAN CHERIAN SRI. GEORGE A.CHERIAN SRI. GEORGE CHERIAN (SR.) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 5040 OF 2023 3 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No.5040 of 2023 ------------------------- Dated this the 12th day of September, 2023

JUDGMENT

1.

The present writ petition under Article 226 of the Constitution of India has been filed for a direction to the 1st respondent to refund Rs. 5,67,939/- (Rupees Five lakh sixty seven thousand nine hundred and thirty nine only) being the total TDS amount deducted from the amount of compensation awarded to the three petitioners by the Motor Accidents Claims Tribunal (MACT), Perumbavoor vide the award dated 31.08.2017 passed in O.P.(MV) No.392 of 2014. 2. The petitioners are not the assessees under the provisions of the Income Tax Act. They don’t even possess PAN Card. The 3rd respondent Insurance Company while making the payment of compensation to the petitioners had deducted the TDS amount of Rs.1,89,313/- (Rupees One lakh eighty nine thousand three hundred and thirteen only) from each of the three petitioners.

3.

The submission of the Learned Counsel for the petitioners is that the petitioners are not liable to file return of income as they

WP(C) NO. 5040 OF 2023 4 are not the assessees under the provisions of Income Tax Act. It is not in dispute that no amount of income tax is payable on the compensation awarded by the Motor Accidents Claims Tribunal. TDS is nothing but an advance tax on the income of the assessees. It is deducted at source by the persons making payment to an assessees. When no income tax is payble and the petitioners are not assessees, there is no question of them filing the returns on their income.

4.

In the above circumstances, I do not find any substance in the submission of Mr. Christopher Abraham, Learned Counsel for the 1st respondent that unless the petitioners file return of their income, their application for return of the TDS amount cannot be processed. When the petitioners are neither assessees nor they have an income for which the return can be filed, the refund of TDS amount deducted and deposited by the Insurance Company on the compensation awarded by the MACT has to be processed on a simple application by the petitioners. Thus I grant liberty to the petitioners to file an application before the 1st respondent within a period of ten days from today and the 1st respondent Commissioner of Income Tax (TDS), Kerala shall process the said application and refund the TDS amount deducted and deposited

WP(C) NO. 5040 OF 2023 5 by the Insurance Company from the compensation paid to the petitioners. Such refund should be processed within a period of one month after filing the application by the petitioners. With the aforesaid directions the writ petition is finally disposed of. DINESH KUMAR SINGH JUDGE Svn

WP(C) NO. 5040 OF 2023 6

Appendix — schedule of exhibits
APPENDIX OF WP(C) 5040/2023 PETITIONERS’ EXHIBITS EXHIBIT P1 TRUE COPY OF THE AWARD DATED 31.8.2017 IN O.P.(MV) NO.392/2014 OF THE MOTOR ACCIDENTS CLAIMS TRIBUNAL, PERUMBAVOOR EXHIBIT P2 TRUE COPY OF THE CLAIM FILE NO. P8898 DATED 10.5.2018 OF THE 2ND RESPONDENT ISSUED TO THE 1ST PETITIONER

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