The Divisional Manager V. The Joint Commissioner of Labour

WP(MD)/23538/2023

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The case involves the National Insurance Company Limited, which filed a writ petition challenging the refusal of the Joint Commissioner of Labour, Madurai, to accept a deposit of compensation amount and interest due to the non-acceptance of TDS deducted from the interest amount. The petitioner had suffered an award in a previous employee compensation case and was directed to pay a specified compensation amount with interest. The insurance company deducted TDS from the interest amount and deposited it with the Income Tax Department, but the first respondent refused to accept the deposit, leading to this writ petition. The court's decision was influenced by ongoing similar cases and clarifications provided by the Assistant Solicitor General in the Supreme Court regarding the uniformity of TDS deductions in such cases.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 744223 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 27-09-2023
• Assessment Year: misc
• Other Referred Cases: W.P.No.7693 of 2020, writ petition (Civil) No. 534 of 2020
• Laws Referred To: Article 226 of the Constitution of India, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: N
• Assessee Lawyers: D RAMAN
• Keywords: Employee compensation; Interest deposit; TDS; Writ of Certiorarified Mandamus
• Section: 194A

Judgement Text

"W.P.(MD).No.23538 of 2023 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 27.09.2023 CORAM THE HONOURABLE MRS.JUSTICE L.VICTORIA GOWRI W.P.(MD).No.23538 of 2023 The Divisional Manager, National Insurance Company Limited, Divisional Office, No.3, North Veli Street, Madurai-625 001. ... Petitioner Vs. 1.The Joint Commissioner of Labour, Employee Compensation Act Commissioner, Madurai. 2.Guruvammal 3.Mahadevi 4.Kaliraj 5.Sivakumar 6.Annamalai 7.Veerachamy 8.M.Vijay Anand ... Respondents 1/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.23538 of 2023 Prayer : Writ Petition filed under Article 226 of the Constitution of India, praying this Court to issue a Writ of Certiorarified Mandamus, calling for the records relating to the impugned order passed by the first respondent herein in Ka.Mu.A.No.40/2022, dated 28.12.2022 by refusing to receive the cheques towards deposit of compensation, quash the same and further direct the first respondent herein to accept the deposit of compensation amount and interest payable in E.C No.11 of 2019 on the file of the first respondent herein by deducting TDS in accordance with section 194A of Income Tax Act, 1961. For Petitioner : Mr.D.Siva Raman For R-1 : Mr.N.Muthuvijayan Special Government Pleader ORDER The present writ petition has been filed for a Writ of Certiorarified Mandamus, calling for the records relating to the impugned order passed by the first respondent herein in Ka.Mu.A.No.40/2022, dated 28.12.2022 by refusing to receive the cheques towards deposit of compensation, quash the same and further direct the first respondent herein to accept the deposit of compensation amount and interest payable in E.C No.11 of 2019 on the file of the first respondent herein by deducting TDS in accordance with section 194A of Income Tax Act, 1961. 2/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.23538 of 2023 2. Considering the nature of the leave to be granted, the issuance of notice to the respondents 2 to 8 is dispensed with. 3. The petitioner is an Insurance Company. It suffered an award in E.C.No.11 of 2019 on the file of the Joint Commissioner of Labour, Madurai. The first respondent passed an order, dated 22.08.2022 directing the petitioner herein to pay compensation of Rs.5,89,800/- with interest at 12% per annum from the date of accident till the date of deposit to the credit of first respondent. The cheque for an amount of Rs.5,89,800/- towards the principal compensation amount was drawn in favour of the first respondent. However, towards the interest amount which stands to a tune of Rs.3,17,619/-, the TDS on the interest amount was calculated as Rs.63,524/-. Deducting the same, a cheque for an amount of Rs.2,54,095/- towards interest was credited in the name of the first respondent. However, deducted amount of Rs.63,524/- was deposited with the Income Tax Department on 21.12.2022. Since TDS on the interest amount was deducted and thereafter, the cheque has been drawn, the first respondent refused to receive the deposit of compensation and has returned the same. Challenging the same, this writ petition came to be filed. 3/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.23538 of 2023 4. This issue as to whether the person, who has suffered an award can deduct the tax as before such deposit is presently pending for consideration before the Hon’ble Division Bench in W.P.No.7693 of 2020. However, the Hon’ble Supreme Court has dealt with this matter in writ petition (Civil) No. 534 of 2020, wherein an amicus curae has been appointed and the Assistant Solicitor General was also required to clarify the aspect of tax deduction at source, wherein it has been pointed out by the learned Assistant Solicitor General, in MACT at 2 different rates from 10% to 20% tax is deducted at source. However, an uniform system whereby TDS would be uniformly deducted is yet to be arrived at. 5. In view of the said clarification which was made by the ASG before the Hon’ble Supreme Court and the Hon'ble Apex Court had taken a view that the person who has suffered an award can deposit the deducted amount with the tax authority and that disbursal of the same can await the outcome of the writ petition that is now pending before the Hon’ble Division Bench. Accordingly, this Court is inclined to observe that the deduction of tax at source from the interest amount by the petitioner and deposit of the said amount before the Commissioner of Income Tax at Madurai may not be improper. Hence, pending 4/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.23538 of 2023 adjudication before the various Courts and even before the Hon’ble Supreme Court, the first respondent is directed to accept the award amount after deduction of TDS from the interest. 6. Accordingly, this Writ Petition stands disposed of. There shall be no order as to costs. 27.09.2023 NCC : Yes / No Index : Yes / No Internet : Yes BTR To The Joint Commissioner of Labour, Employee Compensation Act Commissioner, Madurai. 5/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.23538 of 2023 L.VICTORIA GOWRI, J. BTR W.P.(MD).No.23538 of 2023 27.09.2023 6/6 https://www.mhc.tn.gov.in/judis "