Mrs. Gauri Deepak Patel & Ors vs New India Assurance Co. Ltd. & Anr
2009 Latest Caselaw 131 Bom

                                             1

             IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                        CIVIL APPELLATE JURISDICTION




                                                                                
                      CIVIL APPLICATION NO. 4923 OF 2009




                                                        
                                      IN
                        FIRST APPEAL NO. 1857 OF 2009.

     Mrs. Gauri Deepak Patel & Ors.             ..Applicants.




                                                       
           v/s.
     New India Assurance Co. Ltd. & Anr.        ..Respondents.
                                      ....
     Mr. M. B. Kotak for Applicants. 




                                          
     Mrs. Bhakti Barve i/b. Mrs. Arati Barve for Respondent No.1.
                          ig          ....

                                        CORAM : S.A. BOBDE &
                                                 S.J.KATHAWALLA, JJ.

                                        DATE      : 17TH DECEMBER 2009.

     ORAL ORDER
      

1. The applicants are the widow, two minor children and

the mother of the deceased. This Court had directed the

respondents to deposit the amount of money awarded to the

applicants and has further directed the applicants to withdraw the

amount of Rs.13,00,000/- from the amount deposited by the

respondents.

2. It appears that the respondent no.1 called upon the

applicants to furnish the pan card and a photo copy since the

respondent no.1 wants to deduct the income tax at source before

deposit of decretal amount.

3. Mr. Kotak, the learned Advocate for the applicants has

submitted that the applicants are the widow, children and the

widow mother of the deceased. They are otherwise not liable to

income tax and in any case, the respondents are not entitled to

deduction of TDS, since the amount of interest on which the

respondent no.1 wants to deduct TDS, has merged into the award.

Mr. Kotak relies on a judgment of this Court in Islamic

Investment Company v/s. Union of India and Others, 2002 (4)

Bom. C. R. 585, where this Court has held that the interest on the

decretal amount becomes a part of the Judgment and no

deduction can be made therefrom except such deductions as are

permissible under the Civil Procedure Code, 1908. However, this

decision shall not apply to the present case since in that case, the

decretal amount along with interest had already been paid to the

Sheriff of Bombay in execution and had assumed the character of

a judgement debt and the Income Tax Act did not provide for the

deduction in question in that case. We find that a deduction from

an award of the Motor Accidents Claims Tribunal is contemplated

by section 194-A(3)(ix) of the Income Tax Act, 1961.

4. Mr. Kotak also relies on a Judgment of Division Bench

of the Gujarat High Court in Hansaguri Prafulchandra Ladhani

and Others V/s. Oriental Insurance Company Limited and

Others, 2007 ACJ 1897 where the issue arose before the Gujarat

High Court pertaining to the interpretation of the provisions of

section 194-A(iii) (ix) of the Income Tax Act, 1961, regarding

deduction at source of income tax payable on the interest received

by the claimant on the compensation received by them pursuant to

the Award of the Motor Accident Claims Tribunal. In its said

decision, the Gujarat High Court relied on the decision of the

Hon'ble Apex Court arising under the Land Acquisition Act, 1894

in Rama Bai V/s. Commissioner of Income Tax, AP, (1990) 181

ITR 400, wherein the Apex Court has held that interest on

enhanced compensation for land compulsorily acquired under the

Land Acquisition Act, 1894, awarded by the Court on a reference

under section 18 of the Act or on further appeal has to be taken to

have accrued not on the date of the order of the Court granting

enhanced compensation but as having accrued year after year

from the date of delivery of possession of the land till the date of

such order and that such interest cannot be assessed to income tax

in only lump sum in the year in which the order is made. The

Gujarat High Court applied the same principle to interest on

compensation awarded by the Motor Accidents Claims Tribunal

and observed/held :-

"The interest on the compensation awarded by the Tribunal or enhanced compensation awarded by the appellate court cannot be taken to have accrued on

the date of the award of Tribunal granting compensation or from the date of the award of the

appellate court granting enhanced compensation, but has to be taken as having accrued year after year

from the date of filing of the claim petition till the date of deposit by the insurance company."

5. The present claim petition was filed some time in the

year 2001 and we see no reason why the amount that is sought to

be withdrawn today, should be taken to have accrued all at once

on the passing of the award and not year to year.

6. Accordingly, we direct that the following procedure as laid

down in the case of Hansaguri (supra) shall be followed in the

present case and in all the similar cases arising in future before the

Motor Accidents Claims Tribunal:-

(i) The insurance companies or the owners of the motor

vehicles depositing the amounts in compliance with the

awards of the Motor Accidents Claims Tribunal shall:

(a) first spread the interest amount over to the relevant

financial years for the period from the date of filing the

claim petition till the date of deposit,

(b) thereafter, if the interest for any particular financial year

exceeds Rs.50,000/-, separately deposit before the Tribunal

the amount liable to be deducted at source under the

provisions of section 194-A (3) to (ix) of the Income-Tax

Act, 1961. Such amount shall not, however, straightaway be

paid over to Income Tax Department,

(c) produce before the Claims Tribunal a statement of

computation of interest by spreading the amount over the

relevant years from the date of claim application till the date

of deposit if the interest for any particular financial year

exceeds Rs.50,000/- and also request the Tribunal to treat

the amount as a separate deposit.

(ii)The Tribunal shall ensure that the amount of interest

accrued each year is apportioned amongst the claimants on

year to year basis.

(iii)If the interest payable to any claimant during any particular

financial year exceeds Rs.50,000/-, the Tribunal shall permit

the insurance companies/owners to pay over the amount

liable to be deducted at source under section 194-A(3)(ix)

to the Income Tax Department in respect of that particular

claimant for the particular year, without prejudice to the

claimant's case that he is not liable to pay any income tax

for that year.

(iv)For the financial year(s) for which the interest payable to

the concerned claimant does not exceed Rs.50,000/-, the

Tribunal may permit such claimant to withdraw the amount

deposited as per direction (i)(b) without producing the

certificate from the concerned income-tax authority that

there is no income-tax liability on the interest which has

accrued on the compensation awarded by the Tribunal.

(v)It is clarified that the amount other than the amount liable

to be deducted at source under section 194-A(3)(ix) shall be

invested/disbursed by the Tribunal.

(vi)When the claimants make applications before the authority

under the Income-tax Act, 1961 for the refund of the

amount deducted under the provisions of section 194-A(3)

(ix) of the Act, the concerned authority shall decide such

applications with utmost expedition.

7. Order Accordingly. The Civil application stands disposed of.

[S.A. BOBDE, J.]

[ S.J.KATHAWALLA, J. ]