The Divisional Controller vs Kumari Anju Mathew
2022 Latest Caselaw 970 Kant

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

    DATED THIS THE 21ST DAY OF JANUARY 2022

                      BEFORE

       THE HON'BLE MR.JUSTICE ASHOK S. KINAGI

 WRIT PETITION NO.35477 OF 2018 (GM-CPC)

BETWEEN:

1 . THE DIVISIONAL CONTROLLER
    KSRTC
    CHICKBALLAPUR DEPOT.,
    CHIKKABALLAPURA-562 101

2 . INTERNAL INSURANCE CO.,
    KSRTC
    CHICKBALLAPUR DEPOT,
    CHIKKABALLAPURA - 562 101

   BOTH THE PETITIONERS ARE
   REP. BY ITS CHIEF LAW OFFICER,
   KSRTC CENTRAL OFFICES,
   K.H.ROAD
   BENGALURU-560 027.
                                      ...PETITIONERS
(BY SRI. F S DABALI, ADVOCATE)

AND:

1 . KUMARI ANJU MATHEW
    D/O MATHEW SAMUEL,
    AGED ABOUT 39 YEARS
    NOW R/AT OLD NO.25, (NEW NO.49)
                              2




   GANDHI ROAD,
   GILL NAGAR EXTENSION,
   CHOOLAIMEDU
   CHENNAI - 600 094.

2 . NARASIMHA
    S/O MUNISWAMAPPA,
    AGED ABOUT 58 YEARS
    KSRTC DRIVER,
    BADGE NO.5000
    KGF DEPOT,
    K.G.F - 563 122.
                                        .....RESPONDENTS

(BY SRI. BENEDICT ANAND, ADVOCATE FOR R-1
    VIDE ORDER DATED 27.8.2018 NOTICE TO R-2 IS
    DISPENSED WITH)


     THIS WRIT PETITION IS FILED UNDER ARTICLE 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH
THE IMPUGNED ORDERS PASSED BY THE COURT OF CIVIL
JUDGE   (SR.DN.)   &   CJM   AT   CHICKBALLAPUR   DATED
20.7.2016 AND THE ORDER DATED 6.4.2018 IN EX. NO.
37/2010 VIDE ANNEX-D AND ANNEX-J RESPECTIVELY BY
DECLARING    THE   SAME      AS   CLEARLY   ILLEGAL   AND
ARBITRARY; AND ETC.


     THIS WRIT PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 30.08.2021, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE
FOLLOWING:
                              3




                         ORDER

The petitioners-Corporation has filed this writ

petition being aggrieved by the orders passed by the

Court of Civil Judge (Sr.Dn.) & CJM at Chickaballapur

dated 20.7.2016 and the order dated 6.4.2018 in

Ex.No.37/2010 vide Annexure-D and Annexure-J

respectively.

2. Brief facts leading to filing of this petition are

as under:

[Respondent No.1 has sustained injuries in the

road accident occurred on 2.5.1993 due to rash and

negligent driving of the driver of the bus belonging to

the Corporation. Respondent No.1 filed a claim

petition in MVC No.291/1995 before MACT,

Chikkaballapur claiming compensation of

Rs.75,00,000/- from the Corporation. The Tribunal

vide judgment and award dated 24.8.2002 awarded a

compensation of Rs.11,30,200/- with interest at the

rate of 9% p.a. from the date of petition till the date

of realisation and liability was saddled on the

Corporation.

2.1. The Corporation aggrieved by the judgment

and award filed appeal in MFA No.6655/2002 before

this Court. Respondent No.1 also filed MFA CROB

No.18/2003 seeking for enhancement of

compensation amount. This Court vide judgment and

award dated 24.8.2007 dismissed the appeal filed by

the Corporation and also the cross objection filed by

respondent No.1.

2.2. After the disposal of the appeal and cross

objection, respondent No.1 filed a Execution Petition

in Ex.No.37/2010 for recovery of compensation

amount as awarded by the MACT. The Corporation

had deposited the amount of Rs.6,00,000/- on

13.12.2002 in pursuance of the conditional interim

order of stay granted in the aforesaid appeal. The

Corporation filed a memo of calculation showing the

balance amount of Rs.32,357/- after deducting the

amount deposited before the Tribunal and income tax

TDS amount of Rs.2,54,860/- which has been

deposited in the Central Government Account on

4.5.2011.

2.3. The Executing Court directed the CMO of the

Executing Court to file a memo of calculation.

Accordingly, memo of calculation was filed showing

the balance amount of Rs.9,30,039/- as on 29.4.2014.

The Corporation have filed calculation memo vide

Annexure-B. It is contended that the CMO has not

deducted the TDS amount deposited by the

Corporation in the memo of calculation. The

Executing Court has passed an order dated 20.7.2016

holding that the Corporation have to pay balance

amount of Rs.7,25,492/-. The Corporation filed I.A.3

for review of order dated 20.7.2016 and also

application for condonation of delay in filing I.A.No.3

which is numbered as I.A.No.4. The Executing court

dismissed I.A.Nos. 3 and 4 vide order dated 6.4.2018.

Hence, the Corporation have filed this writ petition

challenging the impugned orders .

3. Heard learned counsel for Corporation and

learned counsel for respondent No.1

4. Learned counsel for the Corporation submits

that Corporation have deducted TDS amount of

Rs.2,54,860/- and deposited in the Central

Government Account on 4.5.2011 and the Corporation

have specifically mentioned about deducting TDS in

the memo of calculation dated 4.6.2016 and further

submits that the Executing Court is not justified in

calculating the balance amount without excluding TDS

amount. He further contends that as per Section 194-

A of the Income Tax Act (for short hereinafter referred

to as 'the IT Act' for brevity), it is mandatory on the

part of the Corporation to deduct TDS Amount on the

interest amount paid when it exceeds Rs.50,000/-.

He further submits that the Executing court without

considering Section 194-A (1) and Section 194-A

(3)(ix) of Chapter 17 of the IT Act and circulars issued

by the RBI, has committed an error in rejecting I.A.3

and 4. He further places reliance on the judgment

rendered by the Co-ordinate Bench of this Court in

The Oriental Insurance Co. Ltd. Vs.

Chennabasavaiah and others reported in 2016 ACJ

78 (Karnataka). Hence, on these grounds he prays to

allow the writ petition

5. Per contra, learned counsel for the

respondent No.1 submits that compensation to be

paid under the Motor Vehicles Act, 1988 (hereinafter

referred to as 'the M.V. Act' for brevity) is not taxable

as income. She further submits that the interest on

the compensation awarded by the Tribunal or

enhanced compensation awarded by the Appellate

Court cannot be taken to have been accrued as on the

date of award granting compensation. She places

reliance on the judgment of the Bombay High Court in

Shri Rupesh Rashmikant Shah v. Union of India

& Ors. (W.P.No.2902/2016 disposed of on 8.8.2019)

and also on the judgment of the Gujarat High Court in

the case of Smt. Hansaguri Prafulchandra v. The

Orieintal Insurance Company reported in 2007 ACJ

1897 and also the judgment of the Bombay High

Court in Mrs Gowri Deepak Patel and Ors. V. New

India Assurance Co. Ltd. & Anr. reported in 2010

(2) ALL.MR 176 and prays to dismiss the writ petition.

6. Perused the records and considered the

submissions made by learned counsel for the parties.

7. Before dealing with the submission of the

learned counsel for the parties, it is necessary to

refer first to the undisputed legal position that,

whether the compensation to be paid under the MV

Act is not taxable as income?

8. The relevant provisions of Section 194-A of

the IT Act reads as under :

"194A : (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income [by way of interest on securities], shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force: [Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed [One crore rupees in case of business or fifty lakh rupees

in case of profession] during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section]

(3) The provisions of sub-section (1) shall not apply -

(i) to (viii) xxxx

(ix) to such income paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty thousand rupees;]"

9. That, while considering the provisions may

prima facie justify the deduction of tax at source by

the Corporation. It cannot be overlooked that the

interest is ultimately a tax on income tax. In a similar

case arising under the Land Acquisition Act 1894 in

Ramabai v. Commissioner of Income Tax AP, the

Hon'ble Apex Court has held that interest on the

enhanced compensation for the land, compulsorily

acquired under the Land Acquisition Act, 1894

awarded by the Court on 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 land till the date of such order and that

such interest cannot be assessed to income tax in only

one lump sum in the year in which order is made.

10. The same principle will also apply to the

interest on the compensation awarded by the MACT in

a claim petition under the MV Act or on further appeal

before this Court or the Apex Court. Section 171 of

the MV Act 1988 reads as under :

"171 Award of interest where any claim is allowed.--Where any Claims Tribunal allows a claim for compensation made under this Act, such Tribunal may direct that in

addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as it may specify in this behalf."

11. The interest on the compensation awarded

by the Tribunal or enhanced compensation awarded

by the Appellate court cannot be taken as accrued as

on the date of award of the 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 Corporation.

12. It was in view of the above legal position,

this Court has examined the case in hand. In the

present case, respondent No.1 has filed a claim

petition in the year 1995 and the claim petition came

to be disposed of by the MACT on 24.8.2002 and

MACT awarded a compensation of Rs.11,30,200/-

with interest at the rate of 9%. The Corporation being

aggrieved by the judgment and award passed by the

Tribunal filed appeal before this Court. Respondent

No.1 also filed cross objection. This Court dismissed

the appeal as well as the cross objection. Thereafter,

respondent No.1 filed Execution Petition in

Ex.No.37/2010.

13. The Executing Court directed the CMO of the

said Court to file a memo of calculation. As per the

memo of calculation filed by the CMO, a sum of

Rs.9,30,039/- is still due from the Corporation as on

29.4.2014 without deducting amount deposited by the

Corporation. The CMO has committed an error in not

deducting the amount deposited by the Corporation

towards TDS.

14. The Corporation deducted a sum of

Rs.2,54,860/- towards TDS and the same was

deposited in the Central Government Account on

4.5.2011. The Corporation produced Form-16A to

establish that amount of Rs.2,54,860/- was deposited

towards TDS in the Central Government Account.

15. The income tax liability on respondent No.1

to pay tax on the interest accrued on the

compensation awarded to him shall arise if such

interest on income accrues in the concerned financial

year together with other income of respondent No.1

in the financial year exceeds the chargeable limit as

specified in the provisions of the Income Tax 1961 in

force for the relevant years. Therefore, it will be open

for respondent No.1 to make appropriate

application/representation before the concerned

Authority for refund of such amount as may be due to

him of Rs.2,54,860/- which has been already

deducted by the Corporation as a tax deducted at

source under the provisions of Section 194-A of the

Income Tax Act, 1961. If such a representation is

made by respondent No.1, the Authorities shall decide

the same within six months from the date of receipt

thereof.

In view of the above discussion, subject to such

liberty the writ petition is disposed of.

However parties are at liberty to file fresh memo

of calculation before the Executing Court. If memo of

calculation is filed by the parties, the Executing Court

after considering the same, shall pass appropriate

order in accordance with law.

SD/-

JUDGE

rs