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HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU (through virtual mode)
OWP No.741/2017 IA No.1/2017
Bajaj Allianz General Insurance Company Ltd.
...Petitioner(s)
Through: Mr. Sunny Mahajan, Advocate V/s
M.A.C.T.,Kathua and others
...Respondent(s)
Through: None Coram: HON’BLE MR. JUSTICE SANJEEV KUMAR, JUDGE
ORDER
The respondents were sent notices under registered cover on 22nd May, 2017 but the same have not been received back served or un-served. Statutory period is long back over and there is no representation on behalf of the respondent Nos. 1 to 4. They are, therefore, set ex-parte. 2. The order dated 29.03.2017 passed by the Motor Accident Claims Tribunal, Kathua [“the Tribunal”] in execution petition titled Ravan Kumar and others v. Bajaj Allianz General Insurance Company Limited is subject matter of challenge in this petition filed by the Bajaj Allianz General Insurance Company Limited [“the Insurance Company”]. 3. The dispute pertains to deduction of a sum of Rs.44,662/-, deducted as TDS on the interest component of the compensation paid to the claimants- respondents by way of an award passed by the Tribunal. The Tribunal, in terms of the order impugned, has directed the Insurance Company to deposit the said amount so that same is paid and released in favour of the claimants- respondents. 4. The Insurance Company is aggrieved of order dated 29.03.2017 and has challenged the same, inter alia, on the ground that in terms of Clause (ix) of S.No.59
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Section 194-A of the Income Tax Act, 1961, the Insurance Company is duty bound to deduct the tax at source on the interest component of the compensation awarded by the Tribunal where it exceeds Rs.50,000/- in any financial year. It is submitted that in the instant case the interest component was exceeding Rs.50,000/- and, therefore, in terms of Section 194-A of the Income Tax Act, the Insurance Company deducted a sum of Rs.44,662/- on account of TDS and deposited the same with the Central Government. Learned counsel for the petitioner, therefore, submits that the Tribunal could not have directed the Insurance Company to pay the said amount yet again for its payment to the claimants. 5. Having heard learned counsel for the petitioner and perused the material on record, it is necessary to set out the provisions of Section 194-A of the Income Tax Act, 1961, which read 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: (3) The provisions of sub-section (1) shall not apply:- (i") to (viii) (ix) to such income credited or paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees."
From a perusal of Section 194-A of the Income Tax Act, it is abundantly clear that the person making payment is bound to deduct tax at source (TDS) on the interest component of the compensation awarded by the Tribunal where the amount of such interest paid in a financial year exceeds Rs.50,000/-. 7. Indisputably, the interest component in the instant case was exceeding Rs.50,000/- and, therefore, in the absence of any pan card provided by the
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claimants, the Insurance Company deducted income tax at the rate of 20% as TDS and deposited the same in the government treasury. 8. That being the position, the petitioner-Insurance Company has carried out the mandate of Clause (ix) of Section 194-A of the Income Tax Act and has not committed any illegality. 9. Interestingly, the Tribunal has taken note of the fact that the TDS deducted by the petitioner has been deposited and Form-16-A too has been produced, yet the Tribunal has called upon the Insurance Company to deposit the amount again with it so that same is disbursed to the claimants. The approach adopted by the Tribunal is not countenanced by law. The amount deducted at source as a tax on the interest component is deposited with the government treasury is the money deposited for and on behalf of the income tax payee i.e. claimants and, therefore, there cannot be unjust enrichment by making payment twice. 10. For the foregoing reasons, I find merit in this petition. Therefore, the same is allowed. The impugned order passed by the Tribunal is set aside. The amount of Rs.44662/-, which has been deposited by the Insurance Company with the Tribunal in terms of interim order shall be released in favour of the Insurance Company alongwith interest, if any accrued thereon.
(Sanjeev Kumar) Judge
JAMMU: 01.02.2022 Vinod, Pvt. Secy.
Whether the order is speaking: Yes/No
Whether the order is reportable: Yes/No