K. Vinod Chandran, CJ. – The Insurance Company in the above writ petition challenged the order of the Motor Accidents Claims Tribunal, Muzaffarpur (hereinafter referred to as the ‘Tribunal’) which directed the Insurance Company to pay an amount of Rs. 17,126/- being the TDS deducted with interest at the rate of 9% per annum from 29.01.2008 till payment. The Insurance Company, before the Tribunal and before this Court, asserts that there can be no liability cast on the Insurance Company of a like nature. When the amounts are deducted as TDS, from the interest amounts granted in accordance with an award of the MACT, the claimant has to approach the Income Tax Department for a refund.

2. In the present case, we find an infirmity insofar as the Tribunal having passed the order in an application in which the applicant expired when the order was passed. In the present case, a substitution petition has been filed by one Bhola Shah, aged about 41 years, son of Late Babulal Sah, the applicant before the Tribunal. The applicant is said to have died on 02.04.2015 and the order was passed on 09.02.2018, after the death. Substitution application has been filed by the Insurance Company also seeking to bring the above applicant in I.A. No. 1 of 2020 on record by I.A. No. 2 of 2023. I.A. No. 1 of 2020 is allowed and the applicant is brought on record as the legal representative of the deceased, the 2nd respondent herein. I.A. No. 2 of 2023 is closed as unnecessary. We proceed to hear the issue as agitated since the learned Standing Counsel for the Insurance Company impressed upon us the need to caution the Tribunals in such matters.

3. Both the parties are present here and even if the mater is remanded, the substituted additional second respondent will have to be heard before the Tribunal.

4. The Tribunal seems to have followed the decisions of the High Court of Bombay and Gujarat, which relied on a Division Bench judgment of the Bombay High Court in Gauri Deepak Patel & Ors. vs. New India Assurance Co. Ltd. & Anr.; 2011 ACJ 1782. Therein the widow, two minor children and mother of the deceased approached the Motor Vehicle Accident Tribunal for compensation. In the proceedings before the High Court, it was directed that the money awarded to the claimants be deposited and the claimants allowed to withdraw a certain portion of the amount. The respondent-Insurance Company then directed the applicant to furnish the Pan Card and photo copy for the purpose of deducting income tax at source, which was the liability of the Insurance Company, as per Section 194A(3)(ix) of the Income Tax Act 1961 (hereinafter referred to as the ‘Act’). The Division Bench followed a judgment of the Hon’ble Supreme Court in Rama Bai vs. Commissioner of Income Tax; [1990] 181 ITR 400, wherein it was held that the interest on enhanced compensation of land compulsorily acquired under the Land Acquisition Act, 1984, on a reference under Section 18 of the Act is deemed to have accrued year after year from the date of delivery of possession of the land and not on the date of the order of the Court. On the same principle, the High Court of Bombay directed the Insurance Companies to spread over the interest amount over the relevant financial year and deduct T.D.S. only if the interest for any particular financial year exceeds Rs. 50,000/-. However, the statutory provision insofar as the liability to tax on interest income from an award of the Motor Accidents Claim Tribunal is explicit as to the year in which taxation occurs.

5. We are told by the learned Standing Counsel appearing for the Insurance Company that the Motor Accident Claims Tribunals, across the State, have been directing such refund by the Insurance Company, of amounts deducted as TDS and already credited to the Income Tax Department. It is also pointed out that the said directions are issued in total disregard of the binding precedents of two Division Bench judgments of this Court, produced as Annexure-2 series i.e. t