What did the High Court hold?

The High Court held that the deduction of tax at source was justified, referencing a similar case and Section 194A(3)(ix) of the Income Tax Act. Consequently, the Tribunal's order was set aside.

The petitioner corporation deducted tax at source while paying compensation awarded in a Motor Vehicle Accident Claim. The Tribunal, in execution proceedings, found the deduction unjustified and directed the petitioner to pay the balance amount.

What were the issues?

Whether the tax deduction at source made by the petitioner on compensation awarded in an accident claim was justified under the Income Tax Act.

Karnataka State Road Transport… vs C D Jaya | Karnataka High Court 2015

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 21ST DAY OF JULY, 2015

BEFORE

THE HON’BLE MR. JUSTICE A S BOPANNA

WRIT PETITION NO.26768/2012 (GM-AC)

BETWEEN:

KARNATAKA STATE ROAD TRANSPORT CORPORATION SARIGE BHAVANA, K H ROAD BANGALORE BY ITS MANAGING DIRECTOR REP. BY ITS CHIEF LAW OFFICER

KARNATAKA STATE ROAD TRANSPORT CORPORATION INTERNAL INSURANCE KSRTC SRIGE BHAVANA K H ROAD, BANGALORE BY ITS MANAGING DIRECTOR REP BY ITS CHIEF LAW OFFICER

KARNATAKA STATE ROAD TRANSPORT CORPORATION MANGALORE DIVISION MANGALORE BY ITS DIVISIONAL CONTROLLER REP. BY ITS CHIEF LAW OFFICER ... PETITIONERS

(BY SMT. H R RENUKA, ADV.)

AND:

C D JAYA W/O LATE DODDAIAH AGED ABOUT 48 YEARS 1ST MONNAGERI’S VILLAGE GALIBEEDU POST MADIKERI TALUK

C M RAJAPPA S/O LATE MALLEGOWDA (DELETED V/O DT.04/06/2014) ... RESPONDENTS

(BY R1-SERVED & UNREPREENTED R2-DELETED V/O DT.04/06/2014)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, WITH A PRAYER TO QUASH THE ORDER DTD.22.5.12 PASSED IN E.P. NO.43/11 PASSED BY THE SENIOR CIVIL JUDGE, MADIKERI VIDE ANNEX-E.

THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

O R D E R

The petitioner is assailing the order dated 22.05.2012 passed in E.P.No.43/2011.

The petitioner-Corporation being liable to pay the compensation towards the amount awarded in MVC No.70/2004 had made certain tax deductions at source. In that light, when the matter was being considered in the execution proceedings in Ex.No.43/2011, the Tribunal on taking note of the memo of calculation has arrived at the conclusion that the petitioner herein was not justified in deducting the tax at source and therefore directed the

petitioner to pay the balance amount of Rs.9,521/- to the decree holder. The petitioner claiming to be aggrieved by the said order is before this Court.

Respondent No.1 though served is unrepresented. In any event, the only question that arises for consideration herein is as to whether the petitioners were justified in making the deduction towards TDS in the manner as has been done and in that light, if the Tribunal was justified in directing them to pay the amount by arriving at a conclusion that the said deduction is not reasonable. In that regard, this Court had an occasion to consider a similar situation when M/s Oriental Insurance company Ltd was before this Court in W.P.No.7690/2011. While disposing of the petition on 23.08.2011, this Court has taken note of the provision contained in Section 194A(3)(ix) of the Income Tax Act and in that circumstance has held that similar deduction of TDS made by the Insurance Company is justified. In

that light, the order impugned herein would not be sustainable.

The order dated 22.05.2012 passed in Ex.No.43/2011 is therefore set aside. Liberty is however reserved to the first respondent to file appropriate application before the Income Tax Department seeking refund of the amount, if they are entitled to do so in law keeping in view the income of the first respondent.

In terms of the above, the petition stands disposed of.

SD/-

JUDGE

akc/bms

KARNATAKA STATE ROAD TRANSPORT CORPORATION vs. C D JAYA

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