New India Assurance Company Ltd. Branch Office Parbhani through… — Income Tax | Bombay HC (2024)

New India Assurance Company Ltd. Branch Office Parbhani through… — Income Tax | Bombay HC (2024)

What the court decided

AI extract

Outcome

None to the petitioner; the orders at Exhibits 15 and 21 stand, i.e., the claimants remain entitled to the TDS amount of Rs. 1,31,255/-

Issue for consideration

Whether the insurance company, having deducted TDS on the interest component of the motor accident claim amount and deposited it with the tax authorities under Section 194A(3)(ix) of the Income Tax Act, is nonetheless liable to pay the TDS amount of Rs. 1,31,255/- to the claimants

Ratio / Principle

Following Balkrishna Mhaske (Writ Petition No. 496/2021), which itself relied on the Division Bench judgment in Rupesh Rashmikant Shah, the Court held that the insurance company is liable to pay the TDS amount deducted on the interest component of the claim amount up to the date of the High Court judgment; the deduction of TDS in the instant case was unlawful

Key takeaways

The Court saw no reason to interfere with the tribunal's orders at Exhibits 15 and 21 and dismissed the petition, leaving intact the direction that the TDS amount be paid to the claimantsratio¶26

Detailed headnote1 paragraphs

Motor Accident Claims - TDS on interest component of awarded compensation - Insurer (New India Assurance Co. Ltd.) deducted TDS and deposited it with the tax authorities invoking Section 194A(3)(ix) of the Income Tax Act, contesting the Motor Accident Claim Tribunal's orders in MACP R.D. No. 5/2006 (Exhibits 15 and 21) which allowed the claimants' application for the balance of Rs. 2,57,257/-, the TDS sum of Rs. 1,31,255/- and apportionment of Rs. 2,06,603/- among the legal heirs - Holding, following Balkrishna Mhaske (Writ Petition No. 496/2021, decided 08.02.2023) and the Division Bench ruling in Rupesh Rashmikant Shah (Writ Petition No. 2902/2016), that the insurance company is liable to pay the TDS amount deducted on the interest component of the claim up to the date of the High Court judgment (with 9% interest per the followed precedent), such deduction being unlawful; tax on post-judgment interest accruals may attract TDS as income from other sources - Writ petition dismissed. (Bombay HC, Aurangabad Bench; Arun R. Pedneker, J.; 09.10.2024)

2024:BHC-AUG:24697

IN THE JUDICATURE OF HIGH COURT AT BOMBAY BENCH AT AURANGABAD

1003 WRIT PETITION NO. 3076 OF 2019

New India Assurance Company Ltd Branch Office Parbhani Through Authorized Signatory

VERSUS

Kirti Alias Vijaya Vijaykumar Giram And Others

Advocate for the Petitioner : Mr. Deshmukh Mohit R. Advocate for Respondents No.1 and 3 : Mr. M. P. Kale

CORAM : ARUN R. PEDNEKER, J. Dated : October 09, 2024.

PER COURT :-

By the present petition, the petitioner challenges the order passed below Exhibits 15 and 21 in MACP R.D. No. 5/2006, wherein the application filed by the claimants seeking direction to pay the amount of Rs. 2,57,257/- as the balance amount of the claim, as well as the TDS amount of Rs. 1,31,255/-, and for the apportionment of the amount of Rs. 2,06,603/- between the legal heirs of petitioners No. 1 to 3 and 5 was allowed by order dated 04/08/2018 in Exhibit 15, while dismissing the application of the insurance company at Exhibit 21.

As for the order at Exhibit 21, it pertains to an application filed by the insurance company, wherein a prayer is made that they would deposit the balance amount; however, concerning TDS, the insurance company deposited Rs. 1,31,255/- with the tax authorities and is entitled to do so.

The present petition pertains to only the TDS amount of Rs. 1,31,255/-, which is directed to be paid to the claimants.

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1003 WP 3076-2019

It is the contention of the insurance company that they are not liable to pay the TDS, as they have deposited the amount with the tax authorities in accordance with Section 194A(3)(ix) of the Income Tax Act. Therefore, the direction issued by the Motor Accident Claim Tribunal to deposit the amount towards TDS is erroneous.

The issue raised in the present petition is squarely covered by the judgment of this Court in the case of Balkrishna s/o Babanrao

Mhaske vs. The State of Maharashtra and Others, Writ Petition

No. 496/2021, decided on 08/02/2023, wherein this Court, relying upon the judgment of the Division Bench of this Court in the case of

Rupesh Rashmikant Shah vs. Union of India and Others, Writ Petition No. 2902/2016, dated 08/08/2019 , held that the Insurance Company is liable to pay the TDS amount deducted on the interest component of the claim amount, up to the date of the High Court judgment, along with 9% interest. Accordingly, this Court passed the following order in Writ Petition No. 496/2021 :-

“I) The Insurance Company is directed to pay the TDS amount deducted on the interest component of the claim amount, uptill the date of the High Court Judgment along with 9% interest.

II) Any interest on the claim amount after the date of the High Court Judgment, tax has to be collected as income from other

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1003 WP 3076-2019

sources and, as such, the Insurance Company would be entitled to claim TDS on that component of interest, which accrues after the High Court Judgment.”

In the instant case, the deduction of the TDS amount on the interest component up to the date of the High Court judgment in the Motor Accident Claim Petition is unlawful.

I see no reason to interfere with the orders passed at Exhibits 15 and 21. The petition is accordingly dismissed.

( ARUN R. PEDNEKER, J. )

vj gawade/-.

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