The High Court
Case Details
IN THE HIGH COURT OF ORISSA, CUTTACK W.P.(C) No.5103 of 2024 Sulochana Pradhan ….... Petitioner -Versus- The Divisional Manager, New India Assurance Co. Ltd. & Anr. ....... Opposite Parties For Petitioner : Mr. P.K. Mishra Advocate For Opposite Party No.1 : Mr. G.P. Dutta, Advocate For Opposite Party No.2 : Mr. S.C. Mohanty, Sr. Standing Counsel ................... CORAM: JUSTICE SANJAY KUMAR MISHRA Date of Hearing and Judgment: 16.07.2024 _____________________________________________________________ S.K. MISHRA, J. 1. The Petitioner, who was the claimant before the Claims Tribunal in M.A.C. No.157 of 2002, has preferred the present Writ Petition with the following prayer: PRAYER “Under the circumstance, the Petitioner most humbly prays that this Hon'ble Court be graciously pleased to issue Rule Nisi calling upon the Opposite Party to show- cause as to why the provisions contained the provisions of the Income Tax Act shall not be enforced, declaring the amount deducted towards TDS from the compensation amount to be illegal further direction shall not be issued to the Opposite Party no.1 to pay the amount deducted towards TDS from the compensation amount amounting to Rs. 57,672/- to be paid to the Petitioner within a stipulated period with accrued interest thereon; And be pleased to pass any other order/orders as deemed fit and proper in the circumstances of the case;” 2.
Legal Reasoning
The brief background facts, which led to filing of the present Writ Petition, are that the Petitioner, who is the legal heir of late Tuku Pradhan, preferred MAC Case No.157 of 2002 before the Court of 2nd MACT Northern Division, Sambalpur claiming compensation on account of the accidental death of the deceased Tuku Pradhan, impleading the owner of the offending Autorickshaw as Opposite Party No.1 and the present Opposite Party No.1-Insurance Company as Opposite Party No.2. The Tribunal, on contest, allowed the said claim application directing the Insurance Company to pay compensation of Rs.2,45,000/- with interest @ 6% per annum from the date of application till the date of actual realization. Being aggrieved by the said judgment, the Insurance Company Page 2 of 10 preferred MACA No.779 of 2015 before this Court. However, on contest, the said Appeal was disposed of by order dated 05.01.2022 and the award was confirmed. Pursuant to such order passed by the this Court, the Opposite Party No.1- Insurance Company, vide letter dated 12.04.2022, though deposited the cheque drawn in the name of the claimant, the present Petitioner, but an amount of Rs.57,672/- was deducted from the interest accrued on the compensation amount and deposited with the Income Tax Department towards Tax Deducted at Source (TDS). It is the case of the Petitioner that the said deduction is
Legal Reasoning
not permissible in view of the provisions enshrined under Sections 145A(b), 56(2)(viii), 194-A(3)(ix) of the Income Tax Act, 1961, shortly, the Act, 1961. The said deduction is permissible only if the interest payable on any awarded amount exceeds Rs.50,000/-. It is further case of the Petitioner that as the interest accrued on the compensation amount awarded in favour of the claimant during any of the financial year did not exceed Rs.50,000/-, TDS is not at all permissible and such act of Opposite Party No.1 is illegal. Since the Insurance Company did not pay any heed to the request of the Petitioner, so also the Page 3 of 10 Court below did not act on the application filed by the present Petitioner, being remediless, she has approached this Court invoking the extra-ordinary writ jurisdiction under Articles 226 and 227 of the Constitution of India. 3. On being noticed, though the Opposite Party No.1- Insurance Company has appeared, but no Counter Affidavit has been filed. Similarly, the Department has also not filed any Counter Affidavit opposing to the prayer made in the Writ Petition. 4. Heard Mr. Mishra, learned Counsel for the Petitioner, Mr. Dutta, learned Counsel for the Insurance Company and Mr. Mohanty, learned Senior Standing Counsel for the Income Tax Department (O.P. No.2). 5. To substantiate the prayer made in the Writ Petition, Mr Mishra, learned Counsel for the Petitioner, relying on the judgment dated 30.01.2023 in W.P.(C) No.8462 of 2020 (Smt. Kuni Sahoo and others vs. Union of India and others) passed by the 1st Division Bench of this Court and judgment of this Court dated 18.12.2023 in W.P. (C) No.16241 of 2019 (Sanghamitra Sahoo & ors. Vs. Divisional Manager, National Insurance Co. Ltd. & another) submitted that the Page 4 of 10 case of the present Petitioner is squarely covered by the said judgments. Accordingly, Mr. Mishra prays for a direction to the Opposite Party No.1- Insurance Company to refund the said amount to the Petitioner, which has been illegally deducted and deposited by it with the Department (Opposite Party No.2). 6. Mr. Mishra, learned Counsel for the Petitioner
Decision
submitted that the Writ Petition can be disposed of in terms of the aforesaid judgments directing the Opposite Party No.1- Insurance Company to refund the said deducted amount. 7. Mr. Dutta, learned Counsel for the Opposite Party- Insurance Company submitted that his client was justified to deduct TDS and deposit the same with the Department, as the Petitioner has received more than Rs.50,000/- (Rupees fifty thousand only) towards interest in the financial year 2022-23. 8. At this juncture, it would apt to reproduce below the relevant provisions under the Act, 1961. “ 2. Definitions.— (28A) ‘interest’ means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized; Page 5 of 10 56. Income from other sources.— (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head ‘Income from other sources’, if it is not chargeable to income tax under any of the heads specified in Section 14, items A to E. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head ‘Income from other sources’, namely: *** (viii) income by way of interest received on compensation or on enhanced compensation referred to in sub-section (1) of Section 145B;” 145B. Taxability of certain income.— in Section 145, (1) Notwithstanding anything to the contrary contained interest received by an assessee on any compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received. the (2) Any claim for escalation of price in a contract or export incentives shall be deemed to be the income of the previous year in which reasonable certainty of its realization is achieved. (3) *** 194A. Interest other than ‘interest on securities’.— (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 Page 6 of 10 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 income tax thereon at the rates in force: *** is earlier, deduct (3) The provisions of sub-section (1) shall not apply— (ix) to such income credited by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal; (ixa) to such income credited 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; (Emphasis supplied) 9. In an identical issue, the Division Bench of this Court in Kuni Sahoo (supra) came to the following conclusion and gave direction, as extracted below: “Conclusion and directions: 12. When this Court is faced with the above proposition of law laid down in various Judgments of different Courts, it is not considered proper to accept the contention of is the opposite parties, nonetheless, reasonable to follow the view expressed in favour of the claimants who are sufferers on account of loss of family member in vehicular accident. it 13. This Court is, thus, inclined to hold that the tax is payable on the interest on Page 7 of 10 the amount of compensation under the MV Act with a rider that the interest should not be more than Rs. 50,000/- per clamant per financial year. In the present case, after the award being finalised, the opposite party No.4-National insurance Co. Ltd. has calculated the interest payable on the entire amount of compensation. Had the interest in question been computed by spreading over for six years commencing from 2013-14 till the deposit is made, the interest would be less than Rs.50,000/-, in such Section 194A(3)(ix) [pre amendment]/ Section 194A(3) (ixa) [post amendment], TDS was not required to be deducted by the opposite party No.4. eventuality view of 14. In the result, the writ petition is allowed and the TDS amount wrongly deducted will be refunded to the petitioners by the Income- tax Department not later than eight weeks from today, failing which simple interest at the rate of 6% per annum on the said sum will be paid to the petitioners for the period of delay. In the aforesaid circumstances, there is no order as to costs.” (Emphasis supplied) 10. In view of the pleadings made in the Writ Petition so also submissions made by the learned Counsel for the Parties and the relevant provisions under the Act, 1961, as extracted above, as the interest calculated on the compensation amount is for the entire period i.e. from 2002 till the date of actual realization in the year 2022/2023 and the interest awarded and calculated, after bifurcation, did not Page 8 of 10 exceed Rs.50,000/- during any of the financial year in between 2002 and 2022, in view of the judgments of this Court, as detailed above, the Opposite Party No.1 is directed to refund the amount of Rs.57,672/- (Rupees Fifty seven thousand six hundred seventy two only) to the Petitioner within four weeks from the date of production of the certified copy of this order, failing which the Opposite Party No.1 shall pay 6% interest per annum on the said sum to the Petitioner for the period of delay. 11. Mr. Dutta, learned Counsel for the Insurance Company submitted that as there is a delay, his client be given liberty to file revised return with an application to condone the delay and direction be given to the Department to condone the delay and process such revised return and refund the money deposited within a stipulated period. 12. In view of such submission of Mr. Dutta, learned Counsel for the Insurance Company, this Court grants liberty to the Opposite Party No.1- Insurance Company to file revised return before the Jurisdictional Principal Commissioner of Income Tax with application for condonation of delay. On Page 9 of 10 filing of such revised return so also application for condonation of delay, the said Authority of the Department shall do well to condone the delay and process the revised return for refund of the money wrongly deposited with the Department towards TDS and refund Rs.57,672/- (Rupees Fifty seven thousand six hundred seventy two only) to the Opposite Party No.1-Insurance Company within a period of six weeks from the date of filing the revised return following due procedure, as prescribed under the Income Tax Act, 1961. 13. With the above observation and direction, the Writ Petition stands disposed of. No order as to cost. …….…………………… S.K. MISHRA, J. Orissa High Court, Cuttack. Dated, 16th July, 2024 / Banita Signature Not Verified Digitally Signed Signed by: BANITA PRIYADARSHINI PALEI Designation: SR. STENOGRAPHER Reason: AUTHENTICATION Location: HIGH COURT OF ORISSA, CUTTACK Date: 22-Jul-2024 15:07:38 Page 10 of 10