Smt. Kuni Sahoo V. Union of India and National Insurance Co. Ltd.

WP(C)/8462/2020

AI Insights

The case involves Smt. Kuni Sahoo and her family, who filed a compensation claim under the Motor Vehicles Act, 1988, following the death of their family member in a road accident. The Motor Accidents Claims Tribunal awarded them compensation, which was later modified by the National Lok Adalat. The National Insurance Co. Ltd., the insurer, deducted TDS from the interest on the delayed compensation payment, citing provisions of the Income Tax Act. The petitioners challenged this deduction, arguing that the interest was compensatory and should not be taxed. The court examined various legal provisions and precedents, ultimately deciding that the TDS deduction was inappropriate and ordering a refund to the petitioners.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 801032 (HC-CUTTACK)
• Appeal Type: Others
• Pronouncement Date: 30-01-2023
• Assessment Year: misc
• Other Referred Cases: Rupesh Rashmikant Vrs. Union of India, Court on its own Motion Vrs. The Himachal Pradesh State Cooperative Bank Ltd., The Managing Director, Tamil Nadu State Transport Corporation (Salem) Ltd. Vrs. Chinnadurai, Oriental Insurance Co. Ltd. Vrs. Kala Bai, New India Assurance Company Ltd. Vrs. Sudesh Chawla and Others, National Insurance Company Limited Vrs. Yeliminti Appanna and Another
• Laws Referred To: Income Tax Act, 1961, Motor Vehicles Act, 1988, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SIDHARTHA MOHAPATRA; BIBEKANANDA UDGATA
• Assessee Lawyers: BISIKESAN PRADHAN
• Keywords: Compensation; Income Tax; Motor Accidents Claims Tribunal; National Lok Adalat; TDS
• Section: 56; 194A; 145B; 171

Judgement Text

" WPC No.8462 of 2020 Page 1 of 22 IN THE HIGH COURT OF ORISSA : CUTTACK. W.P.(C) No.8462 of 2020 (An Application under Articles 226 and 227 of the Constitution of India) Smt. Kuni Sahoo and Others … Petitioners VERSUS Union of India and Others … Opposite parties Advocates appeared in the case: For the Petitioners : Mr. Bisikesan Pradhan, Advocate For the Opposite Parties : Mr. Sidhartha Sankar Mohapatra, Senior Standing Counsel (Income-Tax) for the opposite party Nos.2 & 3 Mr. Bibekananda Udgata, Advocate for the opposite party No.4 CORAM: THE CHIEF JUSTICE JUSTICE MURAHARI SRI RAMAN Date of Hearing: 30.01.2023 :: Date of Judgment: 30.01.2023 JUDGMENT WPC No.8462 of 2020 Page 2 of 22 BY THE COURT.— 1. Questioning the propriety and legality of deduction of income-tax at source under Section 194A read with Section 56 of the Income Tax Act, 1961, out of gross amount payable to each of the petitioners-claimants towards interest calculated from date of application for claim on account of delay in deposit of amount of compensation as modified/reduced in the National Lok Adalat vide Order dated 13.07.2019 in the appeal bearing MACA 366 of 2018 filed under Section 173 of the Motor Vehicles Act, 1988, against the Judgment dated 17.10.2017 awarded by the learned 3rd Motor Accidents Claims Tribunal, Jagatsinghpur in MAC No.149 of 2013, the petitioners have prayed for the following reliefs by way of writ petition under Articles 226 and 227 of the Constitution of India: “*** issue Rule NISI calling upon the opposite parties to show cause as to why the TDS deducted from the interest awarded on compensation to the petitioners vide Annexure- 5 shall be held as illegal and as to why opposite party No.4 shall not be directed to pay interest of Rs.9,250/- for one month to the petitioners and if the opposite parties failed to show cause or show insufficient cause make the Rule NISI absolute and allow the writ petition with cost.” Facts of the case: 2. The petitioners, the wife and the children of the deceased, filed Motor Accident Claims Case being No.149 of 2013 WPC No.8462 of 2020 Page 3 of 22 under Section 166 of the Motor Vehicles Act, 1988 (for brevity be referred to as “MV Act”) before the 3rd Motor Accidents Claims Tribunal, Jagatsinghpur (MACT) consequent upon death of Sri Mahendra Kumar Sahoo in road accident on 07.01.2013. 2.1. The MACT vide Judgment and Order dated 17.10.2017 awarded compensation to the tune of Rs.17,90,760/- in favour of the petitioners along with interest @ 7% per annum with effect from 01.07.2013, i.e., date of application till its realization. Aggrieved, the opposite party No.4- National Insurance Co. Ltd. preferred appeal under Section 173 of the MV Act before this Court, which was referred to the National Lok Adalat, where vide Order dated 13.07.2019 the following directions were issued in MACA No.366 of 2018: “*** With consent of both parties the award is modified and reduced to Rs.15,00,000/- (rupees fifteen lakh) with interest as awarded. Insurance company is directed to make payment of the modified awarded amount with interest within eight weeks hence before the Tribunal. Learned Tribunal is to disburse the amount proportionately. On production of receipt showing payment of awarded amount, statutory deposit, if any, be returned with accrued interest. The MACA is accordingly disposed of.” WPC No.8462 of 2020 Page 4 of 22 2.2. It has been stated by the petitioners that the opposite party No.4 pursuant to aforesaid direction of the National Lok Adalat deposited cheques dated 20.09.2019 and accordingly, order has been passed by the learned MACT on 22.10.2019. 2.3. It is alleged in the writ petition that no disclosure was made with regard to details of interest nor was any intimation given to the petitioners with regard to tax deducted at source (TDS) on interest. However, on being asked, the opposite party No.4 replied that out of the amounts payable on account of interest of Rs.2,15,834/-, Rs.2,15,833/- and Rs.2,15,333/-, deduction of income-tax at source for sum of Rs.43,167/-, Rs.43,167/- and Rs.43,067/- have been made. Contention of the counsel for the petitioners: 3. The quantum awarded vide Judgment and Order dated 17.10.2017 of the MACT being modified/reduced in the National Lok Adalat on 13.07.2019, the opposite party No.4 was obligated to pay interest @ 7% per annum till the cheques dated 20.09.2019 are deposited with the learned MACT on 15.10.2019. Since there was a delay of around 6 years and 3 months, there has been less computation of interest for one month and thereby the opposite party No.4 is required to deposit an extra amount of Rs.9,250/-. WPC No.8462 of 2020 Page 5 of 22 3.1. It is urged by Sri Bisikesan Pradhan, learned counsel for the petitioners that since the component of interest in each case relates to the period 2013-14 to 2019-20, i.e., for six years, the interest payable to each of the petitioners by way of spreading over would come around Rs.35,944/-. This amount being less than Rs.50,000/-, in view of Section 194A(3)(ixa) of the Income Tax Act, 1961 (“IT Act” for short) as amended or Section 194A(3)(ix) as existed prior to amendment ibid. 3.2. It is further contended that the award of interest being made in terms of Section 171 of the MV Act, deduction of tax at source ought not to have been made as such an interest is awarded for delay in deposit of compensation as modified by the higher forum/Court. 3.3. To fortify aforesaid contentions, the learned counsel has cited Rupesh Rashmikant Vrs. Union of India, (2019) 417 ITR 169 (Bom); Court on its own Motion Vrs. The Himachal Pradesh State Cooperative Bank Ltd., (2015) 228 TAXMAN 151 (HP); The Managing Director, Tamil Nadu State Transport Corporation (Salem) Ltd. Vrs. Chinnadurai, AIR 2016 Mad 146; Oriental Insurance Co. Ltd. Vrs. Kala Bai, MANU/MP/0755/2020. Arguments advanced by Senior Standing Counsel for the Income-Tax Department: WPC No.8462 of 2020 Page 6 of 22 4. Referring to the counter-affidavit Sri Sidhartha Sankar Mohapatra, Senior Standing Counsel submitted that income by way of interest received on compensation or on enhanced compensation referred to in Section 145B(1) being deemed to be income of the previous year in which it is received, the same is chargeable to income-tax under the head “INCOME FROM OTHER SOURCES” as provided under Section 56(2) of the IT Act. It is submitted by learned Senior Standing Counsel that inasmuch as the National Insurance Co. Ltd.-opposite party No.4 paid Rs.6,47,000/-, i.e., exceeding Rs.50,000/-, in view of specific provisions contained in Section 194A(3) of the IT Act, the TDS has rightly been made. Contention of the counsel for the National Insurance Co. Ltd.- opposite party No.4: 5. Sri Bibekananda Udgata, learned Advocate for the opposite party No.4 supporting the case of the opposite party Nos.2 and 3, submitted that having deducted the income-tax at source in terms of Section 194A(3) read with Section 56 of the IT Act, National Insurance Co. Ltd. has deposited the amount(s) with the Income-tax Department. Issue involved for adjudication: 6. Whether the opposite party No.4-National Insurance Co. Ltd. is justified in deducting income tax at source in terms WPC No.8462 of 2020 Page 7 of 22 of Section 194A(3)(ixa), as amended or Section 194A(3)(ix), as existed prior to amendment read with Section 56(2) of the Income Tax Act, 1961 in respect of interest computed from the date of application for claim till deposit of cheques before the learned Motor Accidents Claims Tribunal on account of delay in disbursal of the amount of compensation awarded to the petitioners-claimants? Analysis of the Court: 7. Provisions of Section 2(28A), Section 56, Section 145B and 194A of the IT Act so far as they are relevant for adjudication of present case are extracted hereunder: 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 WPC No.8462 of 2020 Page 8 of 22 incomes, shall be chargeable to income-tax under the head ‘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’.— (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— *** WPC No.8462 of 2020 Page 9 of 22 (ix) to such income credited by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal; (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; *** 7.1. It may be stated that prior to substitution for Sections 145A and 145B, with retrospective effect from 01.04.2017 by virtue of the Finance Act, 2018, at the material period Section 145A stood thus: “145A.Method of accounting in certain cases.— Notwithstanding anything to the contrary contained in Section 145,— *** (b) interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received.” 8. The MV Act makes detailed provisions for awarding compensation for death or disablement of any person resulting from an accident arising out of the use of a motor vehicle. Essentially, such claim is in the nature of tortious liability. The concept of compulsory third party insurance has been statutorily introduced. The relationship between WPC No.8462 of 2020 Page 10 of 22 the insurer and the insured is basically a contractual relationship but interjected by a range of statutory provisions. Under such contract of insurance, the insurer undertakes to indemnify the insured to the extent agreed. The statutory provisions contained in the MV Act make third party insurance compulsory and limit the defences which the insurance company may raise to repudiate its liability. 8.1. Chapters X and XI of the MV Act provide for grant of compensation to the victims of a vehicular accident. The purpose of granting compensation under the MV Act is to ameliorate the sufferings of the victims so that they may be saved from social evils and starvation, and that the victims get some sort of help as early as possible. It is just to save them from sufferings, agony and to rehabilitate them. The Court in Court on its Own Motion Vrs. The Himachal Pradesh State Cooperative Bank Ltd. and Others, (2015) 276 CTR 264 (HP) observed that: “We wonder how and under what provisions of law the Income Tax Authorities have treated the amount awarded or interest accrued on term deposits made in Motor Accident Claims cases as income. Therefore, the said Circular is against the concept and provisions referred to hereinabove and runs contrary to the mandate of granting compensation.” WPC No.8462 of 2020 Page 11 of 22 8.2. In The Managing Director, Tamil Nadu State Transport Corporation (Salem) Ltd. Vrs. Chinnadurai (supra) it has been held as follows: “Following the Division Bench Judgment, a learned Single Judge of the Punjab and Haryana High Court, in a recent decision, in New India Assurance Company Ltd. Vrs. Sudesh Chawla and Others, C.R. No.430- of 2015 (O&M), reiterating the reasoning given by the Division Bench of Himachal Pradesh High Court, has opined that award of compensation is on the principle of restitution to place the claimant in the same position in which he would have been loss of life or injury has not been suffered and accordingly held that the orders calling upon the Insurance Company to pay TDS/deduct TDS on the interest part are not sustainable.” 8.3. In New India Assurance Co. Ltd. Vrs. Savitri Devi and Another, C.R. No. 6784 of 2016, the Hon’ble Punjab and Haryana High Court vide Judgment dated 04.04.2018 observed as follows: “Considering the object of the Motor Vehicles Act, 1988, regarding grant of compensation to the victim, it will not only be unjust but cruel to ask the hapless victim to first pay the interest received along with compensation on account of delayed payment, for which he is not responsible, and then to file the income tax return and claim the refund. As a result of the foregoing discussion, it is held that the interest paid along with the compensation as a result of the order of the Tribunal or of the superior Court is not liable for TDS.” 8.4. Section 171 of the MV Act provides that where a Tribunal allows the claim for compensation, such Tribunal may WPC No.8462 of 2020 Page 12 of 22 direct that in addition to the amount of compensation, simple interest shall also be paid at such rate and from such date, not earlier than the date of making the claim as it may specify in this behalf. 8.5. The Courts award compensation for loss of dependency benefit, loss of estate, loss of consortium in case of a spouse, loss of love and affection for the family members and funeral charges in the circumstances where the death is caused due to road accident. In case of injury, the compensation is computed under the heads of actual loss of income, future loss of income, pain, shock and suffering, loss of enjoyment of amenities of life, medical treatment, past and future, miscellaneous heads such as attendant charges, special diet, transportation, etc. 8.6. The multiplier method has been accepted to be sound and legally well-established principle vide General Manager, Kerala S.R.T.C. Vrs. Susamma Thomas, (1994) 2 SCC 176. In Sarla Verma Vrs. DTC, (2009) 6 SCC 121 and Reshma Kumari Vrs. Madan Mohan, (2013) 9 SCC 65, it has been propounded that for achieving degree of uniformity in awarding compensation in motor accident claim cases, the multiplier method is required to be standardized. 8.7. Thus, be it a fatal case or an injury case, compensation includes future loss. The computation of such future loss is on the basis of the income of the deceased or the injured on WPC No.8462 of 2020 Page 13 of 22 the death or accident. This is adjusted by a reasonable future rise in income. Multiplier is applied to ascertain future loss. The method of multiplier takes into account various factors and imponderables of life and, therefore, the multiplier is not equivalent to the full length of the remainder of the expected life of the deceased. The multiplier theory proceeds on the basis that with interest that may be earned on the compensation and a portion drawn from the capital should be equivalent to what the deceased would have contributed to his family. At the end of the period, the capital should be completely utilised. While awarding compensation, though the Claims Tribunal awards future loss in praesenti, interest is awarded for the period between filing of the application for claim till passing of the award for compensation. 8.8. Taking note of Abati Bezbaruah Vrs. Geological Survey of India, (2003) 3 SCC 148 in Dharampal Vrs. U.P. State Road Transport Corporation, (2008) 12 SCC 208 it has been held as follows: “8. As per Section 171 of the Motor Vehicles Act, 1988 (hereinafter referred as “the Act”) where the claim for compensation made under the Act is allowed by the Claims Tribunal, the Tribunal may direct that in addition to the amount of compensation simple interest shall also be paid at such rate from such date not earlier than the date of making the claim. 9. In National Insurance Co. Ltd. Vrs. Keshav Bahadur, (2004) 2 SCC 370 this Court has held that the WPC No.8462 of 2020 Page 14 of 22 provisions require payment of interest in addition to compensation already determined. Even though the expression “may” is used, a duty is laid on the Tribunal to consider the question of interest separately with due regard to the facts and circumstances of the case. It was clearly held in the said decision that the provision of payment of interest is discretionary and is not and cannot be bound by rules. 10. Interest is compensation for forbearance or detention of money, which ought to have been paid to the claimant. No rate of interest is fixed under Section 171 of the Act and the duty has been bestowed upon the court to determine such rate of interest. In order to determine such rate we may refer to the observations made by this Court over the years. In the year 2001 in Kaushnuma Begum Vrs. New India Assurance Co. Ltd., (2001) 2 SCC 9, on the question of the rate of interest to be awarded it was held that earlier, 12% was found to be the reasonable rate of simple interest but with a change in economy and the policy of Reserve Bank of India the interest rate has been lowered and the nationalised banks are now granting interest @ 9% on fixed deposits for one year. Accordingly, interest @ 9% was awarded in the said case. ***” 9. The Hon’ble Bombay High Court in the case of Shri Rupesh Rashmikant Shah Vrs. Union of India, (2019) 417 ITR 169 (Bom) after taking into consideration the decisions of other High Courts taken in the context, which are cited before this Court during the course of hearing of present writ petition by the counsel for the petitioners, analysed Section 56, 145A vis-a-vis other related provisions of IT Act and came to observe as follows: WPC No.8462 of 2020 Page 15 of 22 “To summarise, the decision of the Supreme Court in the case of Rama Bai Vrs. Commissioner Of Income-Tax, (1990) 181 ITR 400 (SC) is not an authority on the question of taxability of interest on compensation or enhanced compensation in motor accident claim cases. In Ghanshyam (HUF), (2009) 8 SCC 412, the Supreme Court held that interest under Section 28 of the Land Acquisition Act would invite capital gain tax. This judgment was rendered before amendment in Section 145A of the Act. The Gujarat High Court in Movaliya Bhikhubhai Balabhai Vrs. Income-Tax Officer, (2016) 388 ITR 343 (Guj), held that the ratio of the Supreme Court in the case of Ghanshyam (HUF) (supra), would continue to apply post amendment in Section 145A by virtue of Finance Act, 2009 also.” 9.1. In Rupesh (supra), the Bombay High Court went on further to say that: “Culmination of discussion in these judgments would be that such interest is compensatory in nature and will thus, form part of the compensation itself. Compensation is computed with reference to the date of accident. All calculations of multiplicand and multiplier are based on such reference point. But computation by the Tribunal takes time. If compensation is revised by the High Court it takes further time. Interest is awarded keeping in mind the rate of inflation. Effort thus is to award just compensation. Awarding interest for delayed computation of compensation is therefore integral part of this exercise. *** The date of passing of the award by Claims Tribunal is the date on which the compensation is determined and the right to receive interest pendente lite ceases. The interest for the period between the filing of the claim petition and passing of the award thus, is for the period when the claimant for the first time approached the Claims Tribunal asking the Tribunal to assess and award compensation and the time WPC No.8462 of 2020 Page 16 of 22 consumed in disposing of the Claim Petition. We may also recall, the interest can be awarded even though part of the compensation would comprise of future loss of income. This is so because, the multiplier method factors this aspect also. At the same time, as noted, the Courts do not award interest on future expenditure since the amount is being paid to the claimant for an expenditure which may be incurred at a later point of time. This dichotomy, thus, between awarding interest on future income while not awarding interest for future expenditure brings out the true character of the interest being awarded.” 10. Turning to IT Act, Section 194A, being not a charging provision, deals with deduction of tax at source in respect of “interest other than interest on securities”. Said provision is attracted only when the payment of interest is in the nature of income in the hands of the recipient. Clause (ix) of sub- section (3) of Section 194A prior to amendment pertains to income credited or paid by way of interest on the compensation amount awarded by the Motor Accident Claims Tribunal where such amount did not exceed Rs.50,000/-. On substitution of this provision by virtue of the Finance Act, 2015, while clause (ix) provides that the provision of sub-section (1) does not apply to such income credited by way of interest on the compensation awarded by the Motor Accident Claims Tribunal, clause (ixa) virtually retains the original provision of unamended clause (ix). 10.1. Section 145A(b) as it existed prior to amendment by virtue of the Finance Act, 2018 stood as follows: WPC No.8462 of 2020 Page 17 of 22 “Notwithstanding anything to the contrary contained in Section 145,— *** (b) Interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received”. Said provision now finds place in sub-section (1) of Section 145B of the IT Act. 10.2. Therefore, the interest awarded in the motor accident claim cases from the date of the application for claim till the passing of the award or in case of Appeal, till the Judgment of the High Court in such Appeal, would not be exigible to tax, and such interest not being an income as such interest payable on account of delay in deposit of amount awarded shall not attract TDS under Section 194A. The nature of such interest paid/credited to the petitioners does not fall within the ambit of definition of “interest” contained in Section 2(28A). 10.3. In the instant case, it is not denied that interest was paid for delay in depositing the awarded amount. Reading of clause (28A) of Section 2 of the IT Act would show that in order to fall within the connotation of the term “interest”, the money must be: i. Borrowed or debt incurred (including a deposit, claim or other similar right or obligation) WPC No.8462 of 2020 Page 18 of 22 and includes ii. Any service fee or other charge in respect of money borrowed or debt incurred or in respect of any credit facility which has not been utilized. 10.4. The marginal heading of Section 194A suggests that said provision deals with TDS in respect of “interest” definition of which term is given in Section 2(28A), but not “interest on securities” which expression is defined in Section 2(28B). The amount of “interest” deposited by the opposite party No.4 with the MACT is on account of delay in deposit of compensation, which can neither be understood as borrowed or debt incurred nor does it fall within meaning of the term “service fee” or the expression “other charge in respect of money borrowed or debt incurred or in respect of any credit facility which has not been utilized”. The interest so deposited by the National Insurance Co. Ltd.-opposite party No.4 would not, therefore, be treated as income of the petitioners. Hence, the TDS deducted by the opposite party No.4 is liable to be refunded to the petitioners. 11. Sri Bisikesan Pradhan, counsel for the petitioners has vehemently emphasized that since the interest component is relatable to period from 2013-14 to 2019-20, i.e., for six years, by method of spreading over, the quantum of interest would be less than Rs.50,000/-. In such view of the matter, tax could not have been deducted at source in terms of WPC No.8462 of 2020 Page 19 of 22 Section 194A(3)(ixa), as amended or Section 194A(3)(ix), as it stood prior to amendment. 11.1. In United India Insurance Co. Ltd. Vrs. Ramlal, 2010 SCC OnLine MP 567 it has been discussed as follows: “14. Keeping in view the principles laid down in various cases mentioned hereinabove which would apply with equal force to the claim cases this Court is of the view that the interest awarded has to be spread over in number of years from the date of filing of claim petition till the date of payment because the right to receive compensation arises immediately on occurrence of accident and the interest is awarded by the Tribunal or the Courts for the delay that occurs due to the delay in determination of the compensation and if the interest for the financial year payable to each of individual claimant exceeds Rs. 50000/- then only question of TDS will arise. So far as obligation of petitioner/Insurance Company responsible for the payment is concerned, it is made clear that before releasing the amount of interest claimant shall be required to submit an affidavit to the effect that claimant has furnished a declaration on form No. 15- G of Rule 29-C of the Income Tax Rules in terms of Section 197(1-A) of the Income Tax Act for each financial year in the office of Insurance Company so that concerned Insurance Company is relieved of its obligation of payment of TDS.” 11.2. This Court finds force in the argument of the learned counsel for the petitioners and it is found in the instant case that if the interest is spread over year to year, the amount would not exceed Rs.50,000/-. Under such premise, the deduction of tax at source in respect of interest for delay in WPC No.8462 of 2020 Page 20 of 22 deposit of compensation before the MACT would attract provisions of sub-section (3) of Section 194A of the IT Act. 11.3. It is the argument of Sri Bisikesan Pradhan, Advocate for the petitioners that before deducting TDS the opposite party No.4 should have ensured Permanent Account Number (PAN) details from the petitioners. In this regard the following observation of the Hon’ble High Court of Andhra Pradesh in the case of National Insurance Company Limited Vrs. Yeliminti Appanna and Another, 2014 SCC OnLine AP 1175, is worthy of notice: “Be it noted that in case a claimant furnishes a declaration, on Form No. 15G of Rule 29C of the IT Rules in terms of Section 197(1A) of the IT Act or such other declaration on such Form as may be applicable, for each financial year, either to the person concerned or in the office of insurance company, in such a case the person/the insurance company is relieved of his/its obligation of payment of TDS.” 11.4. The petitioners having enclosed copies of PAN card to the writ petition urged by demonstrating that had the opposite party No.4 sought for particulars, the petitioners would have furnished such details so that occasion for deduction of tax at source would not have been arisen. Relying on Section 206AA of the IT Act, the learned counsel for the petitioners submitted that if interest in question is liable to be treated as exigible to income tax and thereby attracts provisions for deduction of tax at source, by furnishing PAN, there would WPC No.8462 of 2020 Page 21 of 22 have no occasion for National Insurance Co. Ltd.-opposite party No.4 to deduct TDS. 11.5. In Oriental Insurance Co. Ltd. Vrs. Smt. Kala Bai, M.P. No.6637 of 2019, vide Order dated 20th March, 2020, the Hon’ble Madhya Pradesh High Court laid down that: “This Court in the case of The Oriental Insurance Co. Ltd. Vrs. Smt. Swaroopibai (M.P. No.5090/2018) has also held that the Insurance Co. is liable to deduct the TDS on the interest paid by it as per provisions of Section 194A(3)(ix)/(ix-a) of the Income Tax Act and if the assessee is of the view that the tax has been deducted in excess, then he can always claim a refund of the same from the Income Tax Department.” 11.6. This Court is, therefore, of the considered opinion that the amount so deducted towards tax at source, being on erroneous understanding of the opposite party No.4, said amount is liable to be refunded to the petitioners. 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 WPC No.8462 of 2020 Page 22 of 22 MV Act with a rider that the interest should not be more than Rs.50,000/- per claimant 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 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 in 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. 15. In the aforesaid circumstances, there is no order as to costs. (DR. S. MURALIDHAR) (MURAHARI SRI RAMAN) CHIEF JUSTICE JUDGE MRS/Laxmikant High Court of Orissa "