Back
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
RITU BAHRI, MANISHA BATRA
Nirmal Devi @ Nirmal Verma – Appellant
Versus
Union of India – Respondent
| Table of Content |
|---|
| 1. petitioner seeks refund of tax deducted. (Para 1) |
| 2. interest on compensation deemed taxable. (Para 2) |
| 3. legislative intent treats interest as capital receipt. (Para 3) |
| 4. insurance company justified in tax deduction. (Para 4) |
| 5. mv act provisions on compensation and interest. (Para 5 , 6) |
| 6. interest not considered income. (Para 7) |
| 7. interest on compensation not taxable. (Para 8) |
| 8. court orders tax refund to petitioner. (Para 9) |
JUDGMENT
MANISHA BATRA, J.
1. The instant petition invoking writ jurisdiction of this Court had been filed by the petitioner by submitting that after the unfortunate death of her husband in a motor vehicle accident on 10.05.2003, she had filed a petition seeking compensation under the provisions of MOTOR VEHICLES ACT , 1988 (for short “MV Act”). The Motor Accident Claims Tribunal, Patiala (for short “MACT”) awarded her compensation to the tune of Rs.7,60,000/-. She approached this Court for enhancement of compensation amount by filing an FAO No.2013 of 2005. Vide order dated 01.08.2018, the same was allowed and compensation amount was enhanced to the tune of Rs.14,79,221/- payable with interest @7.5% per annum. In the execution petition filed
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.
Compensation under Motor Vehicles Act for accident death is not taxable income; no income tax deduction required from deceased's gross income when computing loss of dependency, as it is remedial rest....
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.
The judgment emphasizes that income tax deductions must be based on actual tax paid and ex gratia amounts cannot be deducted from compensation unless stipulated by law.
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
