E.A.No.17/2009 to E.A.No.19/2009 in C.D.Nos.106/1993, C.D.No.108/1993 and C.D.No.109/1993

Between:

1. Sree Veera Venkata Satyanarayana

    Rice Mill, Srungavraksham, West Godavari

    District, rep. its Managing Partner

    K.Nagaraju @ Venkata Satyanarayana Murthy,

    Rep. by his S.P.A. Sri K.Narayana Rao.                                                                   Petitioner in PP 17/09/

      Complainant

2. Sree Veera Venkata Satyanarayana

    Raw and Boiled Rice Mill, Srungavraksham,

    West Godavari District, rep. its Managing Partner

    K.V.R.Mohan Rao,

    Rep. by his S.P.A. Sri K.Narayana Rao.                                                                   Petitioner in PP 18/09/

                                                    Complainant

3.  Sree Veera Venkata Satyanarayana Modern

    Rice Mill, Srungavraksham, West Godavari

    District, rep. its Managing Partner

    K.Narayana Rao.                                                                                                       Petitioner in PP 19/09/

      Complainant

          And

1. United India Insurance Co. Ltd.,

    24, Whilter Road, Chennai-14,

    Tamil Nadu.

2. United India Insurance Co. Ltd.,

    Rep. by its Divisional Manager,

    Powerpet, Eluru-2.

    West Godavari District,

     Andhra Pradesh.

3. United India Insurance Co. Ltd.,

    Rep. by its Branch Manager,

    Bhimavaram, West Godavari District.

    Andhra Pradesh.                        

Respondents in PPs.17/09 to 19/09/

                                                                                                                                      Opp.parties.

Counsel for the Petitioner: Mr.Shashank Goel

(Common in all petitions)

Counsel for the Respondents: Mr.Somanchi Venkateswarlu

(Common in all petitions)

          QUORUM:THE HON’BLE SRI JUSTICE D.APPA RAO,RESIDENT.

AND

SMT.M.SHREESHA, MEMBER.

 WEDNESDAY, THE EIGHTEENTH DAY OF AUGUST,

TWO THOUSAND TEN

  (Typed to the dictation of Smt.M.Shreesha, Hon’ble Member.)
***

          These petitions are filed to punish the opposite parties for non compliance of the order in C.D.Nos. 106/1993, 108/1993 and 109/1993 dated 29-9-2008. 

        The order in C.D.Nos.106/1993, 108/1993 and 109/1993 dated 29-9-2008 reads as follows:

          ‘In the result these C.Ds. are allowed in part and opposite parties are directed to pay the amounts as assessed by their surveyor i.e. Rs.4,72,000/- in C.D.No.106/1993, Rs.38,200/- in C.D.No.108/1993 and Rs.3,08,000/- in C.D.No.109/1993 respectively together with interest @ 9% per annum from the date of filing of the complaints till the date of realization together with costs of Rs.5,000/-.  Time for compliance four weeks’.

          The learned counsel for the petitioners represented that the appeals preferred by the respondents/opposite parties was dismissed confirming the order passed in C.Ds.

        The brief point that falls for consideration is whether the insurance company is entitled to deduct the T.D.S. from the amounts payable to the complainants?

        The learned counsel for the insurance company filed a calculation memo stating that they have deposited the demand drafts on 29/6/2010 giving the calculations as follows:

        From the aforementioned calculations, it is clear that the insurance company deducted 20% on the amount awarded towards TDS.  They also filed a memo which states as follows:

        In respect of all cases where pan is not furnished tax is deductable at 20% irrespective of the rates specified. 

        The learned counsel for the complainant also filed a calculation memo which is as follows:

1.    PRINCIPLE AMOUNT AWARDED IN THREE C.Ds.

        C.D.No.106/1993         Rs.4,72,000/-

        C.D.No.108/1993         Rs.5,10,000/-

        C.D.No.109/1993         Rs.3,08,000/-

II Cost Awarded in all the three C.Ds.

                Rs.5000/- each i.e.              Rs.    15,000/-

A. Total Principle Amount                     Rs.13,05,000/-

        INTEREST @ 9% p.a. from 29-4-1993

                        to 29-6-2010

                        i.e. 17 years and 2 months

        in C.D.No.106/1993                             Rs.7,29,240/-

            C.D.No.108/1993                             Rs.7,87,950/-

            C.D.No.109/1993                             Rs.4,75,860/-

        B. Total interest amount                              Rs.19,93,050/-

        C. Total amount entitled by the petitioner

                        A + B =                                     Rs.32,98,050

b) Amount deposited

                C.D.No.106/1993                 Rs. 7,59,437/-

                C.D.No.108/1993                 Rs.11,24,222/-

                C.D.No.109/1993                 Rs. 9,58,550/-

D. Total amount deposited by respondents             Rs.28,42,209/-

E. Balance amount entitled to the petitioner

        C-Di.e. Rs.32,98,050 less Rs.28,42,209 =         Rs.4,55,841

Therefore total amount due and entitled by the petitioners is Rs.4,55,841/-.  The main contention of the complainant is that he was never asked by the insurance company to furnish his pan numbers.  We also observe from the record that no such demand has been made by the insurance company on the complainant to furnish the pan number. Without even asking for the pan numbers, the act of the opposite party, insurance company, in unilaterally deducting 20% when there is a rule position which clearly states that only 10% is to be deducted when the pan number is furnished is unjustified. 

        It is also pertinent to note that the National Commission in F.A.Nos.285/2009 to 288/2009 which were preferred against the C.D Nos.106/1993 to 109/1993 dismissed the appeals vide its order dated 17-11-2009 confirming the order of the State Commission.  Whereas the insurance company has deposited the amounts of Rs.5,25,437/-, 8,69,222/-, 66,263/-, 8,04,550/- respectively on 25-6-2010 and the last three amounts on 23-6-2010.  It is seen in the rule position which the learned counsel drew our attention to is,  that 20% of TDS deductable if the recipient does not furnish the pan number is with effect from April, 2010, which date is much after and subsequent to the order of the National Commission.  

The rule position is as follows:

        A similar amendment has been made in Section 194C(1) with effect from June, 1, 2007.

          Circular No.9 of 2002 making a distinction between nominal member and duly registered member with regard to their rights and privileges, is outside scope of Board’s power under Section 119-Jalgaon District Central Co-operative Bank Ltd., v. Union of India) (2004) 134 Taxman I (Bom)

For the financial year 2009-10, TDS rate is 10 percent (no surcharge, education cess, etc.,)  If the recipient does not furnish his PAN to the deductor, tax will be deducted (with effect from April, 2010) at the rate of 20 per cent.  PAN of the deductee should be mentioned in any correspondence and document which is exchanged between the deductor and deductee.

                  Keeping in view the aforementioned rule, we are of the view that only 10% is to be deducted towards TDS and the complainants shall furnish his pan numbers to the insurance company and the balance amount is to be paid to the complainants by the insurance company within a period of two weeks from the date of this order.

        With the aforementioned directions these P.Ps are closed.  There shall be no order as to costs.

Sd/-PRESIDENT.

Sd/-MEMBER.

JM                                                                                                                     Dt 18-8-2010