The main legal point established in the judgment is that the requirement of deducting tax at source on compensation awarded by the Claims Tribunal, as per Section 194A of the Income Tax Act, was not justified in the present case.

Akil Abdul Hamid Kureshi, J.

1. This petition is filed by New India Assurance Company Ltd. challenging an order dated 18.06.2016 passed by the Motor Accident Claims Tribunal, Vadodara, below application Exh. 7 in MACP Execution Application No. 284 of 2015.

2. The petition arise in following background:

One Hakuben, wife of Bhoyabhai Haribhai Bharwad was travelling in a bus on 23.05.2008 when another bus, which was insured by the petitioner-insurance company, dashed against it from behind resulting into fatal injuries to passenger Hakuben. Her legal heirs i.e. her husband and children, therefore, filed Motor Accident Claim Petition No. 818 of 2008 claiming compensation of Rs. 9 lacs from the drivers, owners and insurers of the vehicles involved in the accident. The Claims Tribunal, Vadodara by a judgment and award dated 28.08.2015, awarded compensation of Rs. 4,01,000/- to the claimants with interest @ 9% per annum from the date of claim petition i.e. 17.06.2008 till actual payment.

3. The petitioner-insurance company was liable to satisfy such decree and, therefore, deposited a sum of Rs. 5,45,027/- with the Claims Tribunal on 14.10.2005. The petitioner has presented its computation of such amount payable to satisfy the award of the Claims Tribunal which reads as under:

4. From such calculations, it can be seen that the petitioner-insurance company has deducted Rs. 45,910/- by way of tax at source and deposited the same with the Income Tax Department on or around 21.02.2016.

5. The claimants, however, disputed the amount deposited by the insurance company and filed Execution Application No. 284 of 2015 before the Claims Tribunal complaining that the insurance company had short deposit Rs. 45,910/- and, with interest, it would come to Rs. 46,630/-. On such application, the Tribunal passed impugned order dated 18.06.2016 and has issued distress attachment warrant against the petitioner-insurance company, upon which, such insurance company has filed this petition and challenged the said order of Claims Tribunal.

6. It is undisputed that the decision of Division Bench of this Court in case of Smt. Hansagauri Prafulchandra Ladhani and Ors. vs. The Oriental Insurance Company Ltd. reported in 2007 (2) GLR 291 governed the situation of requirement of deducting tax at source in connection with payment of compensation and interest in motor accident claims cases. The Division Bench had interpreted the provisions of Section 194A of the Income Tax Act and come to the conclusion that the amount of interest accrued each year would have to be apportioned among the claimants on year to year basis and, if the interest payable to any claimant for any financial year exceeds Rs. 50,000/-, only then the Tribunal would permit the insurance company or the owners to pay or allow to be deducted tax at source to the Income Tax Department in respect of that particular claimant for that year.

7. The sole ground raised by the petitioner-insurance company in this petition for deducting tax at source despite the judgment of this Court in case of Smt. Hansagauri Prafulchandra Ladhani and Ors. vs. The Oriental Insurance Company Ltd. is that by virtue of amendment in Section 194A of the Income Tax Act ['the Act' for short] by Finance Act 2015 w.e.f. 1.6.2015 there had arisen a requirement of