1. Advocate Mr. Divyang A.Joshi along with Mr. Chintan S.Popat, learned advocate for the petitioners submitted that the Motor Accident Claims Tribunal, Gir-Somnath, Veraval by order dated 02.07.2022 in Execution Application No.56 of 2018, declined to pay the amount, which has been deducted as TDS, and submitted that the order becomes erroneous in view of the judgment of the Division Bench of this Court in case of Oriental Insurance Company Ltd. Vs. Chief Commissioner of Income Tax (T.D.S. ), reported in Page 1 of 8 Downloaded on : Wed May 01 21:06:50 IST 2024 NEUTRAL CITATION C/SCA/2755/2024 ORDER DATED: 30/04/2024 undefined 2023 (2) GLR 1019.

2. Advocate Mr. Tanmay B.Karia for the Insurance Company submitted that since T.D.S. amount has already been deducted and Form-16 has been sent to the claimant, the cause does not remain, and submitted to reject the application.

3. The claimant had moved the Tribunal under section 163A of the Motor Vehicle Act and by judgment dated 01.01.2016 the appellants were ordered to receive Rs.2,44,500/- at the rate of 9%. Against the said order, First Appeal No.1505 of 2017 was filed, and by judgment and order dated 11.07.2018, this Court was pleased to grant additional compensation of Rs.1,92,000/- with 9% interest.

4. Advocate Mr. Divyang A.Joshi submitted that the Execution Application No.56 of 2018 was filed before the Motor Accident Claims Tribunal, Page 2 of 8 Downloaded on : Wed May 01 21:06:50 IST 2024 NEUTRAL CITATION C/SCA/2755/2024 ORDER DATED: 30/04/2024 undefined (Main) Gir-Somnath, Veraval praying for the payment of additional compensation of Rs.1,92,000/- with 9% interest awarded by this Court as well as the T.D.S. amount of Rs.56,550/-, which is deducted by the insurance company. Advocate Mr. Joshi submitted that the enhanced amount was already received, but the prayer with regard to payment of the T.D.S. amount of Rs.56,550/- was declined by the Executing Court.

5. In the case of Managing Director, Tamil Nadu State Transport Corpn. (Salem) Ltd. v. Chinnadurai, reported in [2016] 70 taxmann.com 53 (Madras), the Madras High Court while answering the question whether the provisions of the Income Tax Act, 1961 and more specifically whether the compensation awarded by the Motor Accident Claims Tribunal to the victim can be classified as taxable income under the Income Tax law concluded that compensation awarded or interest accruing Page 3 of 8 Downloaded on : Wed May 01 21:06:50 IST 2024 NEUTRAL CITATION C/SCA/2755/2024 ORDER DATED: 30/04/2024 undefined therein from the compensation that had been awarded by the M.A.C.T. cannot be subject to T.D.S. and the same cannot be insisted to be paid to the Tax authorities since the compensation and interest awarded therein does not fall under the term 'income' as defined under the Income Tax Act, 1961 .

6. The Division Bench of this Court in Oriental Insurance Company Ltd. Vs. Chief Commissioner of Income Tax (T.D.S .) (supra) has dealt with the said issue and concluded as under :-

[b] The interest awarded in the Page 4 of 8 Downloaded on : Wed May 01 21:06:50 IST 2024 NEUTRAL CITATION C/SCA/2755/2024 ORDER DATED: 30/04/2024 undefined motor accident claim cases from the date of the Claim Petition till the passing of the award, or in the case of Appeal, till the judgment of the High Court in such appeal, would not be exigible to tax, not being an income. This position would not change on account of clause (b) of Section 145A of the Act as it stood at the relevant time amended by Finance Act, 2009 , which provision now finds place in sub-section (1) of Section 145B of the Act. Neither clause (b) of Section 145A , as it stood at the relevant time, nor clause (viii) of sub-section (2) of Section 56 of the Act make the interest chargeable to tax, whether such interest is income of the recipient or not. Section 194A of the Act is only a provision for deduction of tax at source. Any provision for deduction of tax at source in the said section would not govern the taxability of the receipt. The question of deduction Page 5 of 8 Downloaded on : Wed May 01 21:06:50 IST 2024 NEUTRAL CITATION C/SCA/2755/2024 ORDER DATED: 30/04/2024 undefined of tax at source would arise only if the payment is in the nature of income of the payee.

[c] The Insurance Companies or the owners of the motor vehicles depositing the requisite amount in due compliance with the awards of the Motor Accident Claims Tribunals shall deposit the full amount with the Tribunal and shall not deduct tax u/s 194A of the Income Tax Act on the interest awarded by the Motor Accident Claims Tribunal."

7. The Division Bench in case of Oriental Insurance Company Ltd. Vs. Chief Commissioner of Income Tax (T.D.S .) (supra), thus, considered that the interest on compensation awarded in motor vehicle claim cases are not taxable under the Income Tax Act , hence, there would not be any question of deduction of T.D.S. under section 194A of the I.T. Act. It was observed that Page 6 of 8 Downloaded on : Wed May 01 21:06:50 IST 2024 NEUTRAL CITATION C/SCA/2755/2024 ORDER DATED: 30/04/2024 undefined section 145A(b) only creates deeming fiction as to the year of taxability of interest on compensation. It was noted that even after insertion of section 145A(b) interest on compensation under Motor Vehicles Act being exempted, does not become taxable by operation of section 145A(b) . Hence, it was held that guidelines in Hansagauri Prafulchandra Ladhani V. Oriental Insurance Company Ltd. , 2007 ACJ 1897, are no longer applicable.

8. In view of the position of law, the claimant would be entitled for the total awarded amount along with cost and interest. Thus, amount deducted by way of T.D.S., which in this case, as stated, is Rs.56,550/-, be paid to the applicant claimant. The claimant would be entitled for the amount as per the accrued interest thereupon in accordance to the award, which is at the rate of 9% interest from the date of application till realization. It would be open for the insurance Page 7 of 8 Downloaded on : Wed May 01 21:06:50 IST 2024 NEUTRAL CITATION C/SCA/2755/2024 ORDER DATED: 30/04/2024 undefined company to claim the same from the Income Tax Department.

9. In view of the above, the application stands disposed of.

(GITA GOPI,J) Pankaj Page 8 of 8 Downloaded on : Wed May 01 21:06:50 IST 2024