High Court Of Gujarat
United India Insurance Co. Ltd. vs. Mitaben Dharmeshbhai Shah & Ors.
Section 194A(3)(ix)
Ms. R.M. Dosit, J.
Special Civil Appln. No. 2995 of 2004
9th March, 2004
Counsel Appeared
P.V. Nanavati, for the Applicant : Zubin F. Bharda, for the Respondent
JUDGMENT
Ms. R.M. Dosit, J. :
Heard the learned advocates. Rule returnable today. Learned advocate Mr. Bharda waives service of rule. The petitioner before this Court is the insurance company against whom a decree has been passed by the Motor Accidents Claims Tribunal, Valsad. In the ensuing execution proceeding being Civil Misc. (Execution) Application No. 45/2003, the petitioner-insurance company raised objection that the petitioner was not liable to deposit the entire amount of outstanding dues since the insurance company has deducted a sum of Rs. 69,538 as tax deducted at source under s. 194A of the IT Act, 1961 (hereinafter referred to as ‘the Act’). The learned Judge, however, relied upon the judgment of the Bombay High Court in the matter of Islamic Investment Co. vs. Union of India (2002) 176 CTR (Bom) 46. Following the said judgment the Tribunal held that the amount of interest awarded to the claimants became the judgment debt and lost its character as interest. The insurance company was duty bound to deposit the entire amount of judgment debt. The Tribunal, therefore, by impugned order, directed the petitioner- insurance company to deposit the entire outstanding dues under the award of the Tribunal. Feeling aggrieved, the insurance company has preferred the present petition. Leaned advocate Mr. Nanavati has relied upon s. 194A of the Act and has submitted that the Act specifically provides for deduction of tax at source from the amount of interest due and payable by the judgment-debtor on the amount of compensation awarded by the Motor Accidents Claims Tribunal. Learned advocate Mr. Bharda has contested the petition and has relied upon the abovereferred judgment in the matter of Islamic Investment Co. (supra) and the judgment of the Hon’ble Supreme Court in the matter of All India Reporter Ltd. vs. Ramchandra D. Datar AIR 1961 SC 943. In the said judgment the Hon’ble Supreme Court has observed that, “…when the claim is merged in the decree of the Court, the claim assumes the character of a judgment debt, and to judgment debts s. 18 (of the IT Act) has not been made applicable. The decree passed by the civil Court must be executed subject to the deductions and adjustments permissible under the CPC….. The rule that the decree must be executed according to its tenor may be modified by a statutory provision. But there is nothing in the IT Act which supports the plea that in respect of the amount payable under a judgment debt of the nature sought to be enforced, the debtor is entitled to deduct income-tax which may become due and payable by the judgment-creditor on the plea that the cause of action on which the decree was passed was the contract of employment and a part of the claim decreed represented amount due to the employee as salary or damages in lieu of salary.”
8. Sec. 194A has been inserted in the IT Act, 1961, by Finance (No. 2) Act, 1967, w.e.f. 1st April, 1967. Sub-s. (1) thereof enjoins upon a person, not being an individual or an HUF, who is responsible for paying to a resident any income by way of interest other than income to deduct income-tax thereon at the rates in force. Clause (ix) of sub- s. (3) of the said s. 194A reads as under :”(ix) to such income credited or paid 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 credited or paid during the financial year does not exceed fifty thousand rupees.” Thus, the provisions of s. 194A of the Act have been specifically made applicable to the interest payable on the amount of compensation awarded by the Motor Accidents Claims Tribunal. The said clause has been inserted w.e.f. 1st June, 2003, by the Finance Act, 2003. Admittedly, the amount of interest has been deposited by the petitioner-insurance company on 2nd July, 2003, i.e., after 1st June, 2003. In view of the aforesaid specific provisions contained in the IT Act, the insurance company was duty bound to deduct the amount of income-tax from the amount of interest payable by it. The Tribunal is, therefore, not right in relying upon the aforesaid judgment in the matter of Islamic Investment Co. (supra). As stated in the matter of All India Reporter Ltd. (supra), “the rule that the decree must be executed according to its tenor may be modified by a statutory provision.” In view of the express provision as aforesaid, the decree passed against the petitioner-insurance company shall stand modified accordingly. In view of the above, discussion the petition is allowed. The impugned order dt. 23rd Feb., 2004 passed by the Motor Accidents Claims Tribunal, Valsad, in Civil Misc. (Execution) Application No. 45 of 2003 is quashed and set aside. Rule is made absolute. The parties shall bear their own costs.
[Citation : 269 ITR 63]
