Tax should not be deducted at source from compensation awarded under the Consumer Protection Act, regardless of the calculation method for compensation.

1. E.A. No. 70 of 2021 in C.C. No. 1380 of 2015
Heard
1a. C.C. No.1380 of 2015 was disposed of vide this Commission's Order dated 27.8.2019. Para 4 of the said Order details the amount paid by the decree holders to the judgement debtors. The same is reproduced below for reference:
4. Heard the learned Counsel for both the parties and examined the record. Learned Counsel for the complainants first gave a brief picture of the four complaints which is described in the following table:

Para 10 of the Order details the award made. The same is also reproduced below for reference:
10. Based on the above discussion, the complaints are disposed of with the direction to the opposite parties to refund the amounts paid by the complainants in each case along with interest @ 10% p.a. from the date of respective deposits till actual payment. The opposite parties shall also pay cost of litigation as Rs.20,000 (Rupees twenty thousand only) to the complainants in each complaint. This order be complied with by the opposite parties within a period of 10 weeks from the date of receipt / service of this order.

2. Learned Counsel for the judgment debtors submits on instructions that in compliance of the Order of 27.8.2019 the awarded amount, i.e. the deposited amount along with the interest thereon as well as the cost of litigation have been made good to the decree holders vide a cheque dated 31.8.2022. Submission is that the decree stands satisfied.
Learned Counsel for the decree holders confirms on instructions that a cheque dated 31.8.2022 in respect of the awarded amount has been received by the decree holders.

3. Learned Counsel for the decree holders however also submits that TDS has been made by the judgment debtors on the compensation paid by way of interest. Submission is that even though the same has been deposited in the decree holders" account with the Income Tax Department, tax should not have been deducted by the judgment debtors in the first place.
Learned Counsel for the judgment debtors submits that the TDS made has been deposited in the decree holders" account with the Income Tax Department and the necessary form(s) / certificate(s) have been provided to the decree holders. Submission is that nothing more is required to be paid.

4. This Commission vide its Order dated 2.3.2022 in E.A. No. 122 of 2019 in C.C. No. 2123 of 2016, Rita Bakshi v. M3M India Limited & Others, had earlier examined a similar matter. Paras 9 to 17 of the said Order are reproduced below for reference:
9. As has already been said, in cases pertaining to the 'service' of "housing construction" also, it has to be seen that if, in similar facts, in one case an order is passed by a consumer protection Forum for refund of the deposited amount along with compensation in lumpsum without involving the term "interest" in computing the compensation, and, in another case, an order is passed (by the same or different Forum) for refund of the deposited amount along with compensation in which the term "interest" has been alluded to, it does not imply that in the one case where the term "interest" has not been used tax will not be deducted at source and in the other case where the term "interest" has been used or referred to tax will be deducted at source.
10. Where compensation is quantified or computed "by way of interest" on the deposited amount, i.e. when the term "interest" is involved in the formula or yardstick for arriving at a (just and equitable) compensation under S.14(1)(d) of the Consumer Protection Act , the context and meaning of the term "interest" is distinctly different from the context and meaning of the said term as used in S.194A of the Income Tax Act . And it can in no way be treated as "interest on compensation or on enhanced compensation" as contained in S.56(2)(viii) of the Income Tax