ORIENTAL INSURANCE CO. LTD. Vs. CHENNABASAVAIAH AND ORS.

JUDGEMENT

(1.) The respondents are the claimants in MVC No.224/2003 on the file of the Civil Judge (Sr.Dn.) and Addl.MACT, Madikeri. The claim petition was allowed granting compensation of Rs.4,82,000/-. On an appeal filed by the petitioner-Insurance Company, the compensation amount was reduced to Rs.3,90,000/-. The petitioner-Insurance Company deposited the aforesaid amount with interest in a sum of Rs.1,42,802/- after deducting TDS on the interest component in a sum of Rs.28,560/-. This amount was deposited by the petitioner-Insurance Company with the Income Tax authorities and a certificate has been issued to that effect to the claimants.

(2.) The respondent/claimants have filed Ex.Case No.80/2008 against the petitioner/Insurance Company for execution of the judgment and award in MVC No.224/2003 dated 5.9.2008. The contention of the respondent/claimants is that exemption from payment of tax is available on interest component up-to a sum of Rs.50,000/-. Therefore, petitioner- Insurance Company should not have deducted TDS on the entire interest amount. Deduction of TDS on tax component of Rs.50,000/- is unauthorized. Accepting this contention, the court below by order dated 15.9.2012 has directed the petitioner- Insurance Company to deposit an amount of Rs.10,000/-, which was deducted towards TDS on Rs.50,000/-.

(3.) Having heard the learned Counsel for the petitioner- Insurance Company, I am of the view that the court below was not justified in directing the petitioner-Insurance Company to deposit a sum of Rs.10,000/- deducted by it towards TDS. Section 194-A(3)(ix) of the Income Tax Act, 1961 grants exemption from payment of tax on the interest component up-to a sum of Rs.50,000/-. This exemption has to be claimed by the respondent/claimants by filing necessary returns before the assessing authority. It is the statutory obligation of the petitioner-Insurance Company to deduct the TDS from the entire interest component and deposit the same before the competent authority, which has been done in this case. A certificate to that effect has been issued to the respondent/claimants. The respondent/claimants have to make a claim for refund of the aforesaid amount before the competent authority. With these observations, writ petition is allowed. The order dated 15.9.2012 in Ex.Case No.80/2008 passed by the court below is hereby quashed. No costs.