IMPORTANT POINT
No TDS can be deducted on interest on compensation.

J.M. Malik, Presiding Member—The key controversy revolves around the question, “Whether the T.D.S. is deductible on the compensation paid to the unfortune parents, whose child dies in an escalator maintained by an Airport Authority”. This Commission vide its order dated 5.8.2004 allowed the complaint of the complainants/decree holders and directed the opposite party No. 1(AAI) to pay Rs.2,50,000/- French Francs or its equivalent in Rupees alongwith interest @10% per annum from January 1, 2000 till the date of payment. The appeal was preferred before the Hon’ble Supreme Court, which was also dismissed on 31.1.2008. Thereafter, the instant execution petition was filed.

2. The said compensation was granted because the young child Jyotsna Jethani met with a horrifying accidental death while getting out of escalator maintained by Airport Authority of India (AAI). Some amount was shown to have been deducted towards TDS. It was contended that opposite party No. 1 is not entitled to deduct the said amount towards TDS. As per the decision of the Supreme Court in the case of Haryana Urban Development Authority v. Dev.1 During the pendency of this case, it also transpired that the opposite party, Airport Authority of India contended that once the TDS has been deducted, the opposite party, Airport Authority of India, is left with no option over the amount and the complainant can seek the refund of the same from the concerned authority.

3. Consequently, notice was issued to the opposite party-Income Tax authority. Smt. Shashi Bala, Inspector, Income Tax appeared on behalf of Income Tax Authority.

4. We have heard the learned counsel for the parties and Smt. Shashi Bala, Inspector, Income Tax. She has invited the attention of the Commission towards Section 41 clause (1) part VIII which deals with ‘Refunds’. Rule 41(1) is reproduced as follows:-

“41.(1) A claim for refund under Chapter XIX shall be made in Form No. 30.

(2) The claim under sub-rule (1) shall be accompanied by a return in the form prescribed under Section 139 unless the claimant has already made such a return to the [Assessing Officer].

She also invited our attention towards Form No. 30 under Rule 40 (1) and (2).

FORM NO. 30

[See Rule 41 ]

Claim for refund of tax

I________,of_______ do hereby state that my total income computed in accordance with the provisions of the Income-tax Act, 1961, during the year ending on________being the previous year for the assessment year commencing on the 1st April,________, amounted to Rs.________; that the total income-tax chargeable in respect of such total income is Rs.________ and that the total amount of income-tax paid, or treated as paid under Section 199, is Rs.________

I, therefore, request for a refund of Rs.__________ ________

Signature

I hereby declare that I was resident/resident but not ordinarily resident/non resident during the previous year relevant to the assessment year to which this claim relates and that what is stated in this application is correct.

Dated ________

Signature ___________

Notes :

1. The claim should be accompanied by a return of income in the prescribed form unless the claimant has already made such a return to the [Assessing Officer].

2. Persons who are non-resident and whose total income is made up only of income taxed at source should make the claim for refund to the [Assessing Officer], Non-resident Refund Circle, Bombay.

She contended that even for NRI, so far recovery of TDS is concerned, he will have to file a return.

5. All these arguments have to be eschewed out of consideration. First of all the respondent should not have deducted the T.D.S. An information to the Income Tax Authority would suffice. In the instant case, the compensation is by way of damages. The damages paid for the death of a person cannot be equated with income as such. The ratio of the following authority applies to this case on all fours. In Ghaziabad Development Authority v. Dr. N. K. Gupta2 wherein it was held as follow