UNITED INDIA INSURANCE CO LTD Vs. RAMLAL

JUDGEMENT

(1.) Being aggrieved by order dated 12.8.2008 passed by MACT Shajapur in Misc. Claim Case No. 17/2006 whereby the Petitioner/Company was directed to pay a sum of Rs. 6571/- which was deducted by the Petitioner/Company out of the amount of compensation payable to Respondent No. 2 was set aside with a direction to the Petitioner/Company to pay the said amount to the Respondent No. 1, present petition has been filed.

(2.) Short facts of the case are that claim petition filed by Respondent No. 1 which was numbered as 02/2001, was allowed and compensation of Rs. 82000/- was awarded vide award dated 5.11.2001 against which appeal was filed by the Respondent No. 1 for enhancement which was numbered as MA No. 205/2002. Vide order dated 3.01.2006 this Court remanded the case back as certain documents were filed by the Respondent No. 1 alongwith an application under Order 41 Rule 27 Code of Civil Procedure. After remand, vide award dated 31.3.2006 learned tribunal enhanced the amount awarded to Rs. 1,43,000/- in addition to the amount already awarded as Rs. 82,000/-. Being aggrieved by the remanded award, Appellant and Respondent No. 1 filed appeals which were numbered as MA Nos. 206/ 2006 and 2220/2006. Appeals were disposed of by this Court by reducing the amount from Rs. 1,43,000/- to Rs. 60,000/-. While disbursing the amount a sum of Rs. 6571/- was deducted by the Petitioner/ Company towards TDS as per Section 194A of the Income Tax Act. An objection was raised by the Respondent No. 1 before the learned tribunal alleging that said amount could not have been deducted as interest amount is not exceeding Rs. 50000/- in one year. The objection was decided by the impugned order whereby action of the Petitioner/company deducting a sum of Rs. 6571/- towards TDS was quashed with a direction to the Petitioner/ Company to disburse the amount which is payable and a right was given to get back deducted amount of Rs. 6571/- from the Income Tax Department against which present petition has been filed.

(3.) Mr. SV Dandvate, Learned Counsel for the Petitioner argued at length and submits that since the amount of interest was more than Rs. 50000/- which was payable to the Respondent No. 1, therefore, it is the statutory duty of the Petitioner to deduct the amount under Section 194A of the Income Tax. Reliance is placed on a decision in the matter of Union of India Insurance Company Ltd. v. Mitahen Dharmeshbhai Shah and Ors., 2004 ACJ 1996Gujarat High Court had an occasion to take into consideration Section 194A(3)(ix) of the Income Tax Act wherein Insurance Company deducted income tax at source on amount payable as interest on the awarded amount. The tribunal found that amount of interest awarded to claimants has become judgment debt and lost character as interest and Insurance Company was duty bound to deposit the entire amount of judgment debt. It was further held that Clause (ix) of Sub-section (3) has been inserted with effect from 1.06.2003 by the Finance Act, 2003. The amount of interest has been deposited by the Insurance Company on 2.7.2003. It was held that in view of specific provisions contained in Income Tax Act, 1961, the Insurance Company was duty bound to deduct the amount of Income Tax from the amount of interest paid by it. It is submitted that in view of the aforesaid provisions of law, learned tribunal committed error in passing the impugned order. It is submitted that the petition be allowed and the impugned order be set aside.