The Commissioner of Income Tax vs. M/s.A.Venkateswarlu AND Co

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition No. 474 of 2012 (M/S)

National Insurance Company Ltd.

…Petitioner

versus

Smt. Suman Grover

... Respondent

Mr. Bhupinder Singh Bisht, Advocate holding brief of Mr. D.S. Patni, Advocate for the petitioner Mr. Amit Bhatt, Advocate for the respondent no.1 Mr. H.M. Bhatia, Standing Counsel for respondent nos.2 and 3.

Hon’ble Lok Pal Singh, J.

By means of present writ petition, petitioner has sought a writ of certiorari setting aside the order dated 22.02.2012 passed by M.A.C.T./F.T.C.-III, Nainital in Execution case no.48 of 2011, whereby the said court has allowed the application moved by the respondent and has directed the petitioner-Insurance Company to deposit the amount of `1,23,687/- deducted by the petitioner towards TDS, within 15 days in the court.

Learned counsel for the petitioner would submit that since the amount of interest was more than `50,000 which was payable to the respondent, therefore, it was the statutory duty of the petitioner to deduct the income tax by way of TDS under section 194-A of the Income Tax Act. He would further submit that in the present case the awarded amount is `11,75,087/- and the interest accrued thereupon is `6,18,367/- therefore the petitioner was liable to deduct TDS on the interest part @ 20% and

2 accordingly deducted TDS of `1,23,673/- and submitted with the Income Tax Department.

Learned counsel for the respondent would submit that the petitioner company has wrongly deducted TDS on the amount of interest paid to the claimants as the amount payable towards interest is to be spread over in number of years for which such interest has been awarded.

I have heard learned counsel for the parties and perused the material available on file.

A perusal of the impugned order would reveal that the Executing Court has dealt with the provisions contained in Section 194-A of the Act and has thereafter recorded a finding that TDS of `1,23,673/- has been calculated on the total interest amount of the award of compensation, whereas in fact interest is less than `50,000/- per annum. The executing Court is justified in arriving to the conclusion that the interest payable to the claimant on the amount of compensation is less than `50,000/- per annum inasmuch as the interest on compensation cannot be taken to have accrued on the date of award of the Tribunal or the date of judgment of appellate Court granting enhanced compensation but has to be taken as having accrued year after year from the date of filing of claim petition till actual payment is made, meaning thereby that the interest accrued has to be calculated on yearly basis. Thus, the petitioner - Insurance company was not justified in making

3 deduction on the lump sum amount of interest accrued.

In view of the foregoing reasons, there appears to be no illegality committed by the executing order. No interference is therefore called for. Petitioner Insurance Company is directed to pay Rs.1,23,673/- to the respondent along with interest @ 6% per annum, as per the judgment passed by this Court dated 01.11.2006 in the appeal filed by the respondent for enhancement of compensation (A.O.895 of 2001). Further, as under some misconception of law, TDS amount has been deducted by the petitioner and deposited with the Income Tax Department, petitioner would be at liberty to approach the Income Tax Department and may seek adjustment or refund of the amount so deposited in terms of TDS.

Writ petition stands disposed of, as above. No order as to costs.

(Lok Pal Singh, J.) 24.04.2019

Rajni