National Insurance Co. Ltd. V. Commissioner Of Income Tax and Anr

CWJC/5352/2013

AI Insights

The case revolves around a dispute concerning the deduction of tax at source by the National Insurance Company Ltd. from the interest paid on a compensation award to a claimant, Saraswati Devi, following a motor accident. The Additional District and Sessions Judge-III-cum-Motor Accident Claim Tribunal, Patna, had ordered the Insurer to pay Rs. 68,992 to the claimant, which represented the amount deducted by the Insurer from the interest. The Insurer challenged this order in the Patna High Court, arguing that the deduction was in compliance with Section 194(1) of the Income Tax Act, which mandates tax deduction at source on interest payments. The High Court agreed with the Insurer's position, leading to the quashing of the Tribunal's order.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 751482 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 20-09-2013
• Assessment Year: misc
• Laws Referred To: Articles 226 and 227 of the Constitution of India, Section 194(1) of the Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: HARSHWARDHAN PRASAD; ARCHANA SINHA; NAWAL SINGH; JITENDRA TIWARI
• Assessee Lawyers: PRAKASH KUMAR
• Keywords: Deduction at Source; Income Tax; Interest payment; Insurer; Motor Accident Claim Tribunal
• Section: 226; 194-1; 227

Judgement Text

"IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.5352 of 2013 ====================================================== National Insurance Co. Ltd. Regd. Office at 3rd Middleton Street, Kolkata- 700071 through its Deputy Manager posted at its Patna Regional Office, Sone Bhawan, 4th Floor, Birchand Patel Marg, R-Block, Distt/Town-Patna. .... .... Petitioner Versus 1. Commissioner of Income Tax, Ayakar Bhawan, Central Revenue Building, Birchand Patel Marg, Patna. 2. Saraswati Devi, w/o Late Mangleshwar Sharma, resident of village- Kharagpur Kanchanpur, P.O. + P.S.-Bihta, District- Patna. .... .... Respondents ====================================================== Appearance : For the Petitioner : Mr. Prakash Kumar, Advocate. For the Respondent No. 1: Mr. Harshwardhan Prasad, Sr. S.C. Mrs. Archana Sinha, Jr. S.C. For the Respondent No. 2: Mr. Nawal Kishore Singh, Advocate. Mr. Jitendra Nath Tiwari, Advocate. ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE ASHWANI KUMAR SINGH ORAL ORDER (Per: HONOURABLE THE CHIEF JUSTICE) 7 20-09-2013 This Petition under Articles 226 and 227 of the Constitution of India has been filed by an Insurer, the National Insurance Company Ltd. against the order dated 5th December 2012 made by the Additional District and Sessions Judge-III-cum- Motor Accident Claim Tribunal, Patna (hereinafter referred to as ‘the Tribunal’) in Claim Case No. 111 of 1998. Under the order under challenge, the Tribunal has directed the Insurer to pay to the claimant a sum of Rs. 68,992/-, the amount deducted by the Insurer from the amount of interest paid in accordance with the compensation award passed in favour Patna High Court CWJC No.5352 of 2013 (7) dt.20-09-2013 2 / 3 2 of the claimant, the respondent no. 2 herein. It appears that against the total award of Rs. 3,33,400/-, the Insurer was required to pay interest of Rs. 3,50,708/- as directed by this Court. Out of the amount of interest of Rs. 3,50,708/-, 20% of the said Rs. 3,50,708/- i.e. 70,142/- has been deducted at source towards the income tax. Withholding of the said sum of Rs. 70,142/- was the root cause for complaint made by the claimant in above Claim Case No. 111 of 1998 and the order for payment of Rs. 68,992/-was made by the Tribunal. It appears that the Tribunal below has ignored the statutory duty conferred upon the Insurer under Section 194(1) of the Income tax Act. Under the said provision, the Insurer is obliged to deduct the tax at source from the amount of interest paid by the Insurer to the claimant. The said amount has to be deposited with the Government of India as the income tax deducted at source. The Tribunal below has grossly erred in directing the Insurer to pay the said sum to the claimant. Learned advocate Mr. Nawal Kishore Singh has appeared for the respondent-claimant. He candidly admits that there is statutory liability upon the Insurer to deduct the tax at source from the amount of interest payable to the claimant. He also admits that the respondent claimant has filed the income tax return and has claimed refund of the aforesaid amount deducted by the Insurer. For the aforesaid reasons, this Petition is allowed. The impugned order dated 5th December 2012 made by the Additional District and Sessions Judge-III-cum-Motor Accident Claim Tribunal, Patna in Claim Case No. 111 of 1998 is quashed and set aside. Patna High Court CWJC No.5352 of 2013 (7) dt.20-09-2013 3 / 3 3 Claim Case No. 111 of 1998 is rejected. Sujit/- (R.M. Doshit, CJ) (Ashwani Kumar Singh, J) "