The High Court
Case Details
IN THE HIGH COURT OF ORISSA, CUTTACK W.P.(C) No.16241 of 2019 Sanghamitra Sahoo & others ...... Petitioners -Versus- Divisional Manager, National ….. Opposite Parties Insurance Co., Ltd. & another For Petitioners : Mr. P.K. Mishra, Advocate For Opp. Parties : Mr. P.K. Mohanty, Advocate (for Opposite Party No.1) Mr. S.S. Mohapatra, Senior Standing Counsel (for Opposite Party No.2) ----- CORAM: JUSTICE SANJAY KUMAR MISHRA ________________________________________________________________ Date of Hearing and Judgment: 18.12.2023 ________________________________________________________________ S.K. Mishra, J. 1. The Petitioners, who were the claimants before the Claims Tribunal in M.A.C. No.51 of 2015, have preferred the present Writ Petition with the following prayer: “ P R A Y E R Under the circumstance, the Petitioners most humbly pray 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 W.P.(C) No.16241 of 2019 Page 1 of 10 towards TDS from the compensation amount to be paid to the Petitioners. 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 Petitioners, who are legal heirs of late Bhramarbar Sahoo, preferred MAC No.51 of 2015 before the Court of 1st MACT, Dhenkanal claiming compensation on account of the accidental death of the deceased Bhramarbar Sahoo, impleading the owner of the offending Car 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.24,32,500/- with interest @ 6% per annum. Being aggrieved by the said judgment, the Insurance Company preferred MACA No.1225 of 2018 before this Court. However, on consent of the Parties , the said Appeal was disposed of in the Lok Adalat by order dated 09.03.2019 and the awarded compensation amount was reduced to Rs. 16,00,000/- with interest, as directed by the Tribunal. Pursuant to such order passed by the Lok Adalat, the Opposite Party No.1-Insurance Company, vide letter dated 07.06.2019, though deposited the cheques drawn in the name of the claimants, who are the present writ petitioners, but an amount of Rs.93,159/- was deducted from the interest accrued on the revised compensation amount and W.P.(C) No.16241 of 2019 Page 2 of 10 deposited with the Income Tax Department towards Tax Deducted at Source (TDS). It is the case of the Petitioners that the said deduction is not
Legal Reasoning
permissible in view of the provision 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 Petitioners, as the interest accrued on modified compensation amount for each claimant, during any of the financial year did not exceed Rs.50,000/-, such 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 Petitioners, so also the Court below did not act on the application filed by the present Petitioners, being remediless, they have approached this Court invoking the extra-ordinary writ jurisdiction under Articles 226 and 227 of the Constitution of India. 3. On being noticed, the Opposite Party No.1-Insurance Company has
Decision
filed its Counter reiterating the facts detailed in the Writ Petition. However, to justify its action in deducting the TDS on interest component, in terms of Sections 194 (A) so also Section 194-A(3)(ixa) of the Act, 1961, it has been stated in the counter that the Insurance Company was justified to do so. To substantiate the stand in the Counter, the Insurance Company has appended the office Note-Sheet for payment of Tax in the said case so also the Sheet W.P.(C) No.16241 of 2019 Page 3 of 10 indicating therein as to tax deducted at source with detailed break up, so far as the present Petitioners are concerned, for the entire period from 01.07.2019 to 30.09.2020. 4. A Counter Affidavit has also been filed by the Opposite Party No.2-Department referring to the various provisions enshrined under the Act, 1961. It has further been stated that, in the instant case, the amount of interest paid by the Insurance Company admittedly exceeded Rs.50,000/-. But no such detail/ document available in the petition, disclosing there in the year-wise interest payable, for which it cannot be said that deduction of TDS is not all permissible. 5. Heard Mr. Mishra, learned Counsel for the Petitioners, Mr. Mohanty, learned Counsel for the Insurance Company and Mr. Mohapatra, learned Counsel for the Department. 6. To substantiate the prayer made in the Writ Petition, Mr Mishra, learned Counsel for the Petitioners relies 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 submits, the case of the present Petitioners is squarely covered by the said judgment. Accordingly, Mr. Mishra prays for a direction to the Opposite Party No.1- Insurance Company to refund the said amount to the Petitioners, which has been W.P.(C) No.16241 of 2019 Page 4 of 10 illegally deducted and deposited by it with the Department (Opposite Party No.2). 7. In response to the said submission of learned Counsel for the Petitioners, Mr. Mohapatra, learned Counsel for the Department submits, since the direction given by the 1st Division Bench of this Court to the Department in Kuni Sahoo (supra) could not be worked out by the Department in terms of various provisions of the Act, 1961, an application has already been filed seeking modification/clarification of the said judgment passed in W.P.(C) No.8462 of 2020, which is still pending for consideration. Accordingly, Mr.Mohapatra prays to take up the matter after disposal of the said I.A. 8. Since in the Counter filed by the Department, the said petition filed in W.P.(C) No.8462 of 2020 has not been discloused, liberty being granted, the learned Counsel for the Department filed copy of I.A. No. No.4213 of 2023 along with its enclosures i.e. various Circulars of the Department. The prayer made in the I.A. No. No.4213 of 2013 is extracted below: “ P R A Y E R Under the above facts and circumstances, it is humbly prayed therefore that this Hon’ble Court may graciously be pleased to modify the order dated 30.01.2023 passed in the aforesaid writ petition directing the Opp-Party No-4 to take steps for claiming of wrongly made TDS to the CPC-TDS following the prescribed procedure and after getting refund of the amount pay the same to the Petitioners forthwith for compliance of the order of the Hon’ble Court or the petitioners may be directed to claim their due refunds by filing respective Income Tax W.P.(C) No.16241 of 2019 Page 5 of 10 Returns for the concerned Assessment Year before the Jurisdictional Assessing Officer.” (Emphasis Supplied) 9. Mr. Mishra, learned Counsel for the Petitioners submits, though the said application was filed on 24.03.2023 in W.P.(C) No.8462 of 2020, till date the Department has not moved the said application. Mr. Mishra further submits, the prayer made in the present Writ Petition is against the Opposite Party No.1- Insurance Company, not the Department. He further submits, the prayer made by his clients being in consonance with the prayer made in I.A. No.4213 of 2013, the Writ Petition can be disposed of in terms of the judgment dated 30.01.2023 with a direction to Opposite Party No.1-Insurance Company to refund the said deducted amount, giving it liberty to ask for refund of the said amount from the Department in accordance with law. 10. Mr. Mohanty, learned Counsel for the Opposite Party-Insurance Company reiterating the stand taken in the Counter Affidavit submits, his client was justified to deduct TDS and deposit the same with the department, as the Petitioners have received more than fifty thousand rupees towards interest in the financial year 2019-2020. Mr. Mohanty, learned Counsel for the Insurance Company further submits, though the total calculation of TDS has been detailed in the statement, appended to the Counter Affidavit as Annexure-B/1, but it needs further calculation to find out the year wise break up and it may take some time. W.P.(C) No.16241 of 2019 Page 6 of 10 11. At this juncture, it is 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; 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 thehead ‘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.— (1) Notwithstanding anything to the contrary contained in Section 145, the 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. (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 realisation is achieved. (3) *** 194A. Interest other than ‘interest on securities’.— W.P.(C) No.16241 of 2019 Page 7 of 10 (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: *** (3) The provisions of sub-section (1) shall not apply— to such income credited by way of (ix) the compensation amount awarded by the Motor Accidents Claims Tribunal; interest on (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) 12. In an identical issue, the 1st 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 the opposite parties, nonetheless, it is reasonable to follow the view expressed in favour of the claimants who are sufferers on account of loss of family member in vehicular accident. 13. This Court is, thus, inclined to hold that the tax is payable on the interest on 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 W.P.(C) No.16241 of 2019 Page 8 of 10 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 eventuality view of 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. 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) 13. In view of the pleadings so also submission made by the learned Counsel for the Parties so also in view of the provisions enshrined under the Act, 1961, as extracted above, the Opposite Party No.1 is directed to refund an amount of Rs.93,159/- (Rupees Ninety-three thousand one hundred fifty nine) to the Petitioner No.1 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 annuam on the said sum to the Petitioner No.1 for the period of delay. 14. Mr. Mohanty, learned Counsel for the Insurance Company submits, 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. W.P.(C) No.16241 of 2019 Page 9 of 10 15. In view of such submission of Mr. Mohanty, learned Counsel for the Insurance Company, this Court grants liberty to the Opposite Party No.1- Insurance Company to file revised return before the department with application for condonation of delay. On filing of such revised return so also application for condonation of delay, 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.93,159/- (Rupees Ninety-three thousand one hundred fifty nine) 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 Tax Act, 1961. 16. With the above observation and direction, the Writ Petition stands disposed of. No order as to cost. (S.K. MISHRA) JUDGE Orissa High Court, Cuttack Dated, 18th December, 2023/Padma Signature Not Verified Digitally Signed Signed by: PADMA CHARAN DASH Designation: Personal Assistant Reason: Authentication Location: orissa high court, cuttack Date: 23-Dec-2023 17:11:01 W.P.(C) No.16241 of 2019 Page 10 of 10