NEW INDIA ASSURANCE CO LTD Vs. MANI

JUDGEMENT

(1.) THE New India Assurance Company Ltd, aggrieved by the order of the trial Court, that the Insurance Company is not entitled to deduct the Income Tax at source,and further direction directing to deposit the entire amount, has challenged the same by way of this Revision.

(2.) THE first respondent in this revision as claimant, has filed a claim petition in M. C. O. P. No. 311 of 1993 before the Motor Accident claims Tribunal, at Erode for compensation for the permanent disability, said to have been sustained by him, in the road accident. After contest, on 8. 9. 99, compensation was ordered, directing some of the respondents, including the Insurance company, to pay a sum of Rs. 75,000/- with interest thereon at 12% per annum from the date of petition till the date of payment. THE claimant, not satisfied with the amount awarded, had preferred an appeal before this Court in a. A. O. 211/2000 and this Court had enhanced the compensation to Rs. 1,50,000/-, thereby the claim had come to an end. THE Insurance Company, which is liable to pay the compensation amount as per the contract of the Insurance, has not paid the amount and therefore, Execution Petition was filed, for releasing the amount. At that time, the Insurance Company, after deducting the income tax for the income derived by way of interest, as per Section. 194-A of Income Tax, deposited the balance. THE Executing Court has not accepted the same and issued a direction, holding that the Insurance Company is not entitled to deduct Income tax at source and it should pay the balance of the amount so deducted within 15 days from the date of the said order, which is now under the challenge in this Revision.

(3.) THE stand taken by the revision petitioner and the act performed by them, are supported by a ratio laid down by the Apex Court in bikram Singh and others Vs Land Acquisition Collector and others. (224 ITR 551)THE Apex Court in the above ruling had considered the payment of interest, on delayed compensation, whether it is a revenue receipt, exigible to income-tax, and it is observed: "interest received on delayed payment of the compensation under the Land Acquisition Act, is a revenue receipt exigible to income tax. THE amended definition of interest in Section 2 (28a) of the Income tax Act,1961, was not intended to exclude the revenue receipt of interest on delayed payment of such compensation from taxability. Once it is construed to be a revenue receipt, necessarily, unless there is an exemption under the appropriate provisions of the Act, the revenue receipt is exigible to tax. THE amendment is only to bring within its tax net, income received from the transaction covered under the definition of interest. "