The Branch Manager V. The Deputy Commissioner of Labour

WP(MD)/20209/2023

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The case involves the National Insurance Company Ltd., which filed a writ petition challenging the refusal of the Deputy Commissioner of Labour, Dindigul, to accept the deposit of compensation and interest in a workmen's compensation case (EC No.119 of 2006). The insurance company had deducted TDS from the interest amount before depositing it, which was not accepted by the Deputy Commissioner. The court's decision was influenced by ongoing considerations of similar issues in the Hon'ble Supreme Court and other benches, leading to the directive that the award amount, after TDS deduction, should be accepted.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 689990 (HC-MADURAI)
• Appeal Type: Others
• Pronouncement Date: 21-08-2023
• 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, Section 194A of Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P DURAI
• Assessee Lawyers: D SIVARAMAN
• Keywords: Interest on compensation; TDS Deduction; Workmen Compensation Act; Writ of Certiorarified Mandamus
• Section: 194A

Judgement Text

"W.P.(MD).No.20209 of 2023 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 21.08.2023 CORAM THE HONOURABLE MRS.JUSTICE L.VICTORIA GOWRI W.P.(MD).No.20209 of 2023 The Branch Manager, National Insurance Company Ltd., 12-A, Surveyte Convent Building, Opposite to District Court, Dindigul. ... Petitioner Vs. 1.The Deputy Commissioner of Labour, Workmen Compensation Act Commissioer, Dindigul. 2.Raman @ Ramasamy 3.Malliga @ Leelavathi 4.Ravichandran ... Respondents Prayer : Writ Petition filed under Article 226 of the Constitution of India, praying this Court to issue a Writ of Certiorarified Mandamus, to call for the records relating to the impugned order passed by the Respondent No.1 herein in EC No.119 of 2006, dated 19.06.2023 by refusing to receive the cheques towards deposit of compensation, quash the same and further direct the Respondent No.1 herein to accept the deposit of compensation amount and 1/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.20209 of 2023 interest payable in EC No.119 of 2006 on the file of Respondent No.1 herein by deducting TDS in accordance with Section 194A of Income Tax Act, 1961. For Petitioner : Mr.D.Sivaraman For R1 : Mr.P.Thambi Durai Government Advocate ORDER The present writ petition has been filed to call for the records relating to the impugned order passed by the Respondent No.1 herein in EC No.119 of 2006, dated 19.06.2023 by refusing to receive the cheques towards deposit of compensation, quash the same and further direct the Respondent No.1 herein to accept the deposit of compensation amount and interest payable in EC No.119 of 2006 on the file of Respondent No.1 herein by deducting TDS in accordance with Section 194A of Income Tax Act, 1961. 2. Considering the nature of the leave to be granted, the issuance of notice to the respondents 2 to 4 are dispensed with. 3. The petitioner is an insurance company. It suffered an award in W.C.No.119 of 2006 on the file of the 1st respondent. The petitioner insurance 2/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.20209 of 2023 company has challenged the same by preferring C.M.A(MD)No.1020 of 2013 wherein this Court directed the petitioner to deposit the entire amount of Rs.4,47,920/- along with the interest at the rate of 12% per annum from the 31st day of accident till the date of deposit to the credit of W.C.No.119 of 2006 on the file of the 1st respondent. The cheque for an amount of Rs.4,47,920/- towards the principal compensation amount was drawn in favour of the 1st respondent. However, towards the interest amount which stands to a tune of Rs.9,94,456/-, the TDS on the interest amount was calculated as Rs.1,98,891/-. Deducting the same, a cheque for an amount of Rs.7,95,565/- towards interest was credited in the name of the 1st respondent. However, deducted amount of Rs.1,98,891/- was credited in the account of E.C.No.119 of 2006 with the income tax Department. Since TDS on the interest amount was deducted and thereafter, the cheque has been drawn, the 1st respondent refused to receive the deposit of compensation and has returned the same. Challenging the same, this writ petition came to be filed. 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 3/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.20209 of 2023 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 adjudication before the various Courts and even before the Hon’ble Supreme Court, the 1st respondent is directed to accept the award amount after deduction of TDS from the interest. 4/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.20209 of 2023 6. Accordingly, this Writ Petition stands disposed of. No costs. 21.08.2023 NCC : Yes / No Index : Yes / No Internet : Yes/ No gbg To The Deputy Commissioner of Labour, Workmen Compensation Act Commissioer, Dindigul. 5/6 https://www.mhc.tn.gov.in/judis W.P.(MD).No.20209 of 2023 L.VICTORIA GOWRI, J. gbg W.P.(MD).No.20209 of 2023 21.08.2023 6/6 https://www.mhc.tn.gov.in/judis "