Drawing & Disbursing Officer, Office Of General Manager, Punjabroadways, Ropar v. Income Tax Officer Ward 6(5) Tds Chandigarh

1. ITA No.171 of 2010 Drawing & Disbursing Officer, Office of General Manager, PunjabRoadways, Ropar ... Appellant v. Income Tax Officer Ward 6(5) TDS Chandigarh ... Respondent(s) 2.ITA No.173 of 2010 Drawing & Disbursing Officer, Office of General Manager, PunjabRoadways, Ropar ... Appellant v. Income Tax Officer Ward 6(5) TDS Chandigarh ... Respondent(s) Date of decision: November 18, 2011. CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MR. JUSTICE G.S. SANDHAWALIA Present:Shri APS Mann, Additional Advocate General, Punjabfor the appellant. Shri Yogesh Putney, Sr. Standing Counsel for the respondent. Hemant Gupta, J. (Oral): The State is in appeal under Section 260-A of the Income TaxAct, 1961 aggrieved against the order passed by Income Tax AppellateTribunal (for short the Tribunal) arising out of the order dated 19.12.2008passed in ITA No.737/Chandi/2006, pertaining to the assessment year 1999-2000. The assessee has raised the following substantial question of law. The appellant assessee provides transport facilities to thegeneral public and some times, some of the buses are involved in accidents.The victim and/or his legal heirs claim compensation before the MotorAccident Claims Tribunal (MACT). Such compensation is deposited by theappellant/assessee along with interest in terms of the award passed by theMACT/Court. The Income Tax Officer returned a finding that theappellant/assessee is in default for not deducting the tax at source andpassed a consequential order thereon. The stand of the assessee before theIncome Tax Officer was that after preparing the draft of the payments to theclaimants, the drafts are forwarded to the court for disbursement to theclaimants and no direct payment was made to any individual. Since theassessee has not deducted the tax on the interest of such compensation, suchan order was passed. The appeal against the said order was dismissed bythe Commissioner of Income Tax (Appeals). The learned Tribunal remittedthe matter to the Assessing Officer to determine the component of intereston delayed payment of compensation of accident claims. Still aggrieved,the assessee is in appeal before this Court. Learned counsel for the assessee has relied upon a Divisionbench judgment of this Court in ITA No.495 of 2009 (Dwaring andDisbursing Officer v. Income Tax Officer), decided on 30.3.2011. It hasbeen held that the interest by the State along with amount of compensationis not taxable but the interest earned, by the victim and/or or his legal heirsstand on a different consideration on the amount so received. Learned counsel for the respondent has vehemently argued thatthe Tribunal has remitted the matter to the Assessing Officer to determinethe amount of interest, if any, earned by the claimants after the amount wasdeposited. Hence, no interference is called for. The said argument is untenable. As per the stand of theassessee before the Assessing Officer, the amount of compensation alongwith interest has been deposited in court. Such amount does not include anyinterest earned by the claimants. In view of the said fact, the order passedby the Tribunal remitting the matter to the Assessing Officer runs counter tothe judgment of this Court in ITA No.495 of 2009. Therefore, the appeals are accepted. The order of Tribunalremitting the matter to the Assessing Officer is set aside. The questions oflaw are decided in favour of the assessee and against the revenue. [ Hemant Gupta ] Judge November 16, 2011.kadyan [ G.S. Sandhawalia ]Judge