Back
AKIL KURESHI, UMA SHANKER VYAS
Satya Narayan Son Of Shri Kharbuja – Appellant
Versus
H. D. F. C. Irgo General Insurance Company Limited – Respondent
ORDER
1. The petitioners are claimants of motor accident compensation. Their claim petition was allowed by the Motor Accident Claims Tribunal awarding compensation with interest. At the time of payment of such compensation the insurance company had deducted tax at source on the interest component. The petitioners contend that the interest is not taxable and insurance company ought not to have deducted tax at source thereon.
2. Number of decisions have been brought to our notice by the counsel for the petitioners in support of this contention. However we notice that a Division Bench of this Court in case of Sharda Pareek and Ors. Vs. Astt. Commissioner of I.T. and Ors. reported in (2019)416 ITR 441 (Raj.) has dealt with this issue in following manner:-
"9.On plain reading of Section 2(28A), it is very clear that originally compensation was received by the claimant was not income but once the amount received, it has become capital and interest on capital is liable to be taxable. In that view of the matter, the issue is required to be answered in favour of the department and against the assessee.
10. The contention of Mr. Kasliwal is that revenue income of compensation interest is also co
Compensation and interest awarded by MACT do not constitute 'income' as defined in the Income Tax Act, hence are not liable for TDS.
Interest awarded as compensation under MV Act is deemed a capital receipt, not taxable under the Income Tax Act, thus refund of incorrectly deducted tax is warranted.
Interest on compensation awarded by the Motor Accidents Claims Tribunal is taxable under the Income Tax Act, and TDS applies when interest exceeds Rs.50,000.
TDS cannot be deducted on interest awarded in motor accident claims prior to the High Court's judgment, as such interest is not classified as income under the Income Tax Act.
Compensation awarded under the Motor Vehicles Act is essentially capital in nature, serving as restitution for loss of dependency or life, and is not taxable income; therefore, deducting income tax f....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
