Orissa High Court
Divisional Manager vs Prafulla Kumar Mishra And Another on 13 July, 2022
IN THE HIGH COURT OF ORISSA AT CUTTACK
MACA No.320 of 2020
Divisional Manager, New India
Assurance Co. Ltd. .... Appellant
Mr. P. Sinha, Advocate
-versus-
Prafulla Kumar Mishra and Another .... Respondents
Mr. Ashok Das, counsel for Respondent No.1
CORAM:
SHRI JUSTICE B. P. ROUTRAY
ORDER
13.7.2022
Order No.
I.A. No.446 of 2022
10. 1. The matter is taken up through hybrid mode.
2. Heard Mr. P. Sinha, learned counsel for the Appellant - Insurer
and Mr. A. Das, learned counsel appearing for the claimant -
Respondent No.1.
3. In the present application the Appellant seeks modification of
the earlier order of this court dated 30th March, 2022 to the extent of
issuance of a direction setting aside the direction of the learned
Tribunal as contained in the impugned judgment to the effect not to
deduct income tax amount from the interest payable over the
compensation amount. It is further submitted that such deduction of
income tax amount from the amount of interest payable is statutorily
envisaged under Section 194-A of the Income Tax Act.
4. This court in a decision rendered today in MACA No.1 of 2019,
has dealt with similar issue and held that such direction of the learned
Tribunal not to deduct the income tax amount by the payer at the time
of payment is unwholesome. The relevant observation in this regard
as held by this court in that case is reproduced below:
"11. It is important here to refer Section 194-A of the
Income Tax Act. As per Section 194-A, tax is to be
deducted at the time of payment or credit of interest. Clause
(ix) of sub-section (3) of Section 194-A which came into
force with effect from 1st June, 2003, reads as under:-
"to such income credited or 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 amount of such income credited or paid during
the financial year does not exceed fifty thousand
rupees."
12. Thus, the provisions of Section 194-A of the Income
Tax Act have been specifically made applicable to the
interest payable on the amount of compensation awarded
by the Motor Accident Claims Tribunal. In other words,
the provision is clear to the effect regarding payment of
income tax on the interest amount payable on the
compensation amount. When tax is payable by operation
of the statutory provision, there is no illegality in
deducting the same by the payer at the time of payment.
As such, the direction of the learned Tribunal not to deduct
the income tax amount appears unwholesome and the
same is set aside."
5. Accordingly, the direction of the learned tribunal as contained
in the impugned judgment dated 12th April, 2019 to the effect not to
deduct income tax amount by the insurer on the amount of interest
payable is set aside.
6. It is further submitted by Mr. Sinha, learned counsel that
pursuant to the direction of this Court dated 30th March, 2022 though
the entire amount including interest has been deposited before the
learned tribunal, but the interest amount has been deposited by a
separate cheque only which has not yet been disbursed in favour of
the claimant in view of subsequent order passed by this court dated
27th April, 2022. As such he seeks permission to take back the said
cheque relating to interest amount and again deposit the appropriate
amount after deducting income tax amount there-from.
7. The prayer is allowed and the insurer is directed to complete
the process within a period of three weeks from today.
8. The rest part of the order dated 30th March, 2022 shall remain
unaltered.
9. The I.A. is disposed of.
( B.P. Routray)
Judge
M.K.Panda
