The Tax Publishers2020 TaxPub(DT) 5404 (All-HC)

INCOME TAX ACT 1961

Section 194A

No TDS shall be deducted from the compensation awardable to the heirs of the deceased assessee by insurance company as income-tax liability of concerned claimant to pay tax on interest or the compensation awarded to them shall arise if such interest or income is accrued in concerned financial year together with other income of the respective claimants in that financial year. It was not one-time income to them. It was compensation spread over as per the prevailing system.

Tax deduction at source - TDS under section 194A - Compensation awardable to heirs of deceased assessee -

The question arose for consideration was as to whether the Tribunal itself could have assumed and deducted income-tax from the compensation awardable to the heirs of the deceased assessee by insurance company. Held: The matter is covered by section 194A(3)(ix). The amount of income-tax slab can be deducted from the income of the deceased who was a salaried person, but ad hoc Rs. 10,00,000 and more amount by way of calculation of income-tax could not have been deducted from the compensation to be awarded. The said was without any sanctity of law. Further, income-tax liability of concerned claimant to pay tax on interest or the compensation awarded to them shall arise if such interest or income is accrued in concerned financial year together with other income of the respective claimants in that financial year. It was not one-time income to them. It was compensation spread over as per the prevailing system. The amount could not, therefore, be held to be income in one particular year. Thus, it goes without saying that no TDS shall be deducted in view of New India Assurance Co. Ltd. v. Hussain Babulal Shaikh & Ors. [2017 (1) TAC 400 (Bom.) : 2017 TaxPub(DT) 218 (Bom-HC)].

Followed:New India Assurance Co. Ltd. v. Hussain Babulal Shaikh & Ors.[2017 (1) TAC 400 (Bom.) : 2017 TaxPub(DT) 218 (Bom-HC)].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :



IN THE ALLAHABAD HIGH COURT

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