By TIOL News Service

AHMEDABAD , DEC 02, 2017: THE ISSUE BEFORE THE COURT IS - Whether an insurance company should deduct TDS u/s 194A(3)(ix) from the award passed by MACT, before paying the same to the insured. NO is the verdict.

Facts of the case:

The Insurance Company preferred the present writ petition challenging the order passed by the Motor Accident Claims Tribunal (MACT) wherein it had awarded an amount of Rs.1,20,701/to be paid by the petitioner to the claimant alongwith interest@9% and the respective cost. However, the petitioner did not prefered any appeal and therefore, decided to satisfy the award amount of to the claimant. The petitioner calculated the interest portion for claimant as per the award amount. Accordingly, paid the same after deducting TDS@20% since, the claimant's pancard was not available.

High Court held that,

++ in the present case, the petitioner deducted TDS amount from the interest accrued to awarded amount and deposited the TDS amount with I-T Department. The claimant filed Execution Application before the MACT wherein it issued attachment warrant against the Insurance Company. The insurance company is not justified in deducting at source in view of the guideline issued in Hansaguri’s case. Therefore, it is for the Insurance Company to approach the I-T Department for refund and not the original claimants.

(See 2017-TIOL-2506-HC-AHM-IT)