JUDGMENT - S.A. BOBDE, J.:---This chamber summons is taken out by the respondents, the Food Corporation of India against whom an Award was passed by the arbitrator on 21st January, 1996. The Award was made into a Rule of the Court and a decree was passed in terms thereof on 8th March, 2000. Under the decree a total amount payable towards principal was Rs. 7,99,067.16. The total decretal amount along with interest on principal at the rate of 10% per annum from 7th February, 1989 to 8th March, 2000 including cost of Rs. 4,165.50 was in the sum of Rs. 16,39,45.66. The interest on the above principal sum of Rs. 7,99,067.16 for the period from 7th February, 1989 to 8th March, 2000 at the rate of 10% p.a. was Rs. 8,86,198/-. As per further interest on the above principal from 9th March, 2000 to 31st December, 2001 at the rate of 10% p.a. was in the sum of Rs. 1,45,145.62. Thus the total interest at the rate of 10% p.a. on the above principal from 7th February 1989 to 31st December, 2001 came to Rs. 10, 31,344/-.

2. The Food Corporation of India has an account with the State Bank of India. The decree holder M/s. Islamic Investment Company sought a garnishee order against the State Bank of India which was granted on 12th September, 2001. On the granishee order being served on the State Bank of India, that bank informed the Food Corporation of India which accordingly paid the decretal amount as per decree along with interest amounting to Rs. 10,31,344/- to the Sheriff of Bombay. The aforesaid amount is not in dispute.

3. By this chamber summons the Food Corporation of India claims that it is entitled to withdraw a sum of Rs. 2,06,269/- being 20% of the interest paid by it towards satisfaction of the decree, on account of TDS, which it is liable to pay under section 195 of the Income Tax Act. Whether it is in law entitled to do so is the question.

4. Mr. Desai, learned Senior Counsel for the Food Corporation of India, the Judgment Debtor, submitted that since the payment is being made to a non-resident and it is on account of interest the Food Corporation of India is liable to deduct the interest thereto at the rate in force. Applying the current rate in force, it is entitled to deduct as aforesaid a sum of Rs. 2,06,269/- under the said provisions. Learned Counsel further submits that in any case since the person entitled to receive any interest i.e. Islamic Investment Company has not made any application in the prescribed form to the Assessing Officer for receiving such interest without deduction of tax, the tax as required by section 195 must be ordered to be deducted. In other words, the Food Corporation of India therefore seek liberty to withdraw or be refunded in the sum of Rs. 2,06,296/- from the amount paid over by it to the Sheriff of Mumbai in execution of this decree.

5. Section 195 read as follows:---

“195(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest (not being interest on securities) or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries” 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 the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force:

(2) Where the person responsible for paying any such sum chargeable under this Act (other than interest on securities and salary) to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the Assessing Officer to determine, by general or special order, the appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted under sub-section (1) only on that proportion of the sum which is so chargeable.

(3) Subject to Rules made under sub-section (5), any person entitled to receive any interest or other sum

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