STATE CONSUMER DISPUTE REDRESSAL COMMISSION
BIHAR, PATNA
Appeal No. 70 of 2019
National Insurance Company Limited Vaishali at Hajipur through its Regional Manager and its Constituted Attorney, Regional Office, National Insurance Co. Ltd. 4th Floor, Sone Bhawan, Bir Chand Patel Marg, PS- Sachivalaya, Patna-1
… Opposite Party/Appellant
Versus
1. M/s Mishra Khad Beej Bhandar through its Proprietor Anil Kumar Mishra, at Rani Pokhar, PO and PS- Lumari, District- Vaishali at Hajipur
2. Central Bank of India, Rani Pakhar Branch, Rani Pakhar, Vaishali at Hajipur through its Branch Manager
…. Complainant/Respondents
Counsel for the Appellant: Adv. Raj Kumar Singh Vikram
Counsel for the Respondent: Adv. Rajesh Dayal
Before,
Hon’ble Mr. Justice Sanjay Kumar, President
Mr. Ram Prawesh Das, Member
Dated 14.08.2023
As per Sanjay Kumar, President.
O r d e r
- Present appeal has been filed by appellant/opposite party/National Insurance Co. Ltd for setting aside the judgment and order dated 14.10.2017 passed by the Ld. District Consumer Forum, Vaishali (Hajipur) passed in Misc. case no. 81 of 2016 (arising out of Complaint case no. 42 of 2010) whereby and whereunder appellant has been directed to refund Rs. 63,461/- by cheque to the complainant within 30 days from receipt/production of a copy of order failing which interest @ 15% shall become payable.
- Briefly stated the facts of the case is that District Consumer Forum, Vaishali, Hajipur by order dated 10.04.2012 passed in complaint case no. 42 of 2010 awarded compensation of Rs. 4,29,350/- with interest @9% p.a from the date of repudiation of claim i.e 17.06.2008 till the date of payment to the complainant. The judgment and order dated 10.04.2012 passed by District Consumer Forum was affirmed by State Commission by order dated 21.06.2016 passed in appeal no. 241 of 2012 and judgment and order attained finality.
- In compliance of order passed by District Consumer Forum, Vaishali (Hajipur) appellant /Insurance company paid Rs. 6,89,196/- by cheque to the complainant which was received by complainant under protest. According to complainant the amount to be paid was Rs. 7,52,657/-.
- It was submitted by the appellant that they have deducted Rs. 63,461/- as per rate applicable U/s 194A of the income Tax Act for which they are authorized under the scheme applicable. On the other hand it was submitted by the complainant that said deduction in the name of TDS is absolutely uncalled for and appellant be directed to refund the deducted amount to the complainant.
- The District Consumer Commission relying upon several pronouncement of Apex Court as well as National Commission held that compensation and interest ordered to be paid under Consumer Protection Act, is not income within the meaning of Income Tax Act and no TDS can be deducted by the payer. Compensation awarded is not income and not taxable. Interest on damages being a component of damages itself is not taxable as income. In case of conflict between social and taxation legislations the former shall prevail. Compensation and interest thereon is in the nature of compensation and not taxable as income.
- The District Consumer Forum held that the TDS deducted by the insurance company is wholly unjustified and contrary to order passed by the Forum.
- The District Consumer Forum held that TDS deducted by the insurance company is unsustainable in law and further held that it will be unfair to burden complainant to go to income Tax department for refund of amount illegally deposited by insurance company and directed insurance company to refund the sum of Rs. 63,461/- by cheque to the complainant within 30 days from receipt/production of copy of order passed by the District Forum failing which insurance company shall pay interest @15% p.a.
- Aggrieved by order dated 04.10.2017 (arising out of Misc. case no. 08 of 2016) appellant/insurance company has filed this appeal.
- Heard the parties.
- Issue raised in this appeal is no more res-integra and has been reiterated in recent decision of National Commission passed in case of Rita Bakshi Vs. M3M India Ltd & Ors since reported in 2023(1) CPJ 190 (NC) paragraph no. 10, 11 & 14 of which reads as follows:
10. Where compensation is quantified or computed” by way of interest” on the deposited amount i.e. when the term “interest’’ is involved in the formula or yardstick or arriving at a (just and equitable) compensation under Section 14(1)(d) of the Consumer Protection Act, the context and meaning of the terms “ interest” is distinctly different from the context and meaning of the said term as used in Section 194A of the Income Tax Act. An it can in no way be treated as “interest on compensation or on enhanced compensation” as contained in Section 56(2)(viii) of the Income Tax Act.
11. The award of compensation under Section 14(1)(d) of the Consumer Protection Act is in relation to both ‘goods’ and ‘services’ as well as in relation to all the different types of ‘services’ under the purview of the Act including the ‘service’ of ‘housing construction’. It may or may not be computed by using “interest” as the formula or yardstick for computation. Just because in a particular case or in relation to a particular ‘service’ “interest” is used in a formula or yardstick to compute the compensation it does not imply that the very use of allusion to the terms “interest” will cause the provisions of Section 194A of the Income Tax Act to be attracted. Also, in so far as the provisions of Section 56(2)(viii) of the Income Tax Act are concerned, this is not at all a case of “income by way of interest received on compensation or on enhance compensation” but is too obviously a case of “ compensation” per se.
14. As such there is no justification for deducting tax at source in the instant case.
- For the reasons as stated above there is no merit in this appeal and is accordingly dismissed.
(Ram Prawesh Das) (Sanjay Kumar,J)
Member President
Md. Fariduzzama
