Delhi

North East

ea/13/2014

Aman Tyagi - Complainant(s)

Versus

Oriental Insurance Co. Ltd. - Opp.Party(s)

09 Mar 2019

ORDER

 DISTRICT CONSUMER DISPUTES REDRESSAL FORUM: NORTH-EAST

GOVT. OF NCT OF DELHI

D.C. OFFICE COMPLEX, BUNKAR VIHAR, NAND NAGRI, DELHI-93

 

Complaint Case No. 13/14

 

In the matter of:

 

	Aman Tyagi S/o Late. Sh. R.K. Tyagi House no. N-68, Kriti Nagar New Delhi-110015	Complainant
	Versus
	Oriental Insurance Company Ltd. DO-26 19A, Second Floor Sarti Complex, Jwala Heri Market New Delhi-110063	Opposite Party

 

DATE OF INSTITUTION:    JUDGMENT RESERVED ON:                DATE OF DECISION      :

04.04.2014 09.03.2019 09.03.2019

 

 

 

N.K. Sharma, President

Ms. Sonica Mehrotra, Member

 

Order passed by Ms. Sonica Mehrotra, Member

 

 

 

 

ORDER

1. The present execution petition has arisen out of order dated 26.02.2014 passed by this Forum in Complaint Case No. 434/2011 vide which this Forum had passed an order of Rs. 2,74,982/- alongwith interest @ 9% p.a.  from date of claim till realization in favour of the complainant / decree holder (DH) henceforth alongwith compensation of Rs. 60,000/- for harassment and Rs. 10,000/- as litigation cost to be paid by OP / judgment debtor (JD) henceforth within 30 days from receipt of this order, failing which the rate of interest on the decreetal amount of Rs. 2,74,982/- shall be enhanced to 12% from date of claim preferred. The JD did not comply with the order within the stipulated period and therefore the said execution petition was preferred by DH on 04.04.2014 before this Forum. Recovery Certificate was issued on 09.04.2014 for a sum of Rs. 4,37,384/- against the JD. DH filed bank account details of JD and warrant of attachment of account of JD to the extent of decreetal amount was issued vide order dated 12.06.2014 for JD’s bank account held with HSBC Bank, Barakhamba Road, Delhi to the extent of decreetal amount. On hearing held on 15.07.2014 counsel for JD brought a cheque bearing No. 474535 drawn on HSBC Bank dated 08.07.2014 for a sum of Rs. 4,51,660/- in favour of the DH and the same was placed on record of this Forum. The counsel for JD filed copy of stay order dated 14.07.2014 passed by Hon’ble SCDRC in FA No. 686/2014 preferred by JD against the order passed by this Forum dated 26.02.2014 and execution proceedings were stayed. However, the Hon’ble SCDRC vide order dated 06.09.2017 dismissed the appeal preferred by JD as being barred by limitation.
2.  The counsel for DH moved restoration application on 10.10.2017 and the execution petition was restored and notice was issued to JD on 06.11.2017 and fresh warrant of attachment for bank account of JD bearing no. 051-788412-001 with HSBC bank to the tune of                 Rs. 5,41,501/- as decreetal amount computed upto date was ordered. The counsel for JD handed over a Demand Draft (DD) No. 028094 dated 10.01.2018 for a sum of Rs. 5,02,197/- to DH after Tax Deducted at Source (TDS) of 20% on the interest component of the decreetal amount due to absence of PAN card of the DH, the deduction being opposed by the counsel of DH.
3. The counsel for DH filed written submission / synopsis and objections against deduction of TDS by JD on the decreetal amount to the tune of Rs. 40,000/- without authority and placed reliance on the judgment of Oriental Insurance Co. Ltd Vs Income Tax Officer (2005) 96 TTJ Delhi 589 passed by Income Tax Appellate Tribunal (ITAA) passed on 27.09.2004 in which the Tribunal was dealing with a case of TDS deducted by insurance company on the decreetal amount awarded in favour of the legal heirs of accident Victims passed by MACT Court. The ITAA was of the view that the said amount was the decreetal amount awarded through court paid by the insurance company and therefore insurance company had no discretion to deduct any TDS on the amount of decree payable to the claimants and the assessee insurance company has to indemnify third party as per insurance policy and award (decree) passed by MACT Court and held that Section 2 (28A) of Income Tax Act are not applicable in this case. The Tribunal further held that the assessee was not under legal obligation to deduct TDS on the amounts of decree paid to the claimants, which is known as interest on compensation. The counsel for DH also objected to the applicability of the judgment of Hon’ble National Commission in Anil Kumar Jain Vs Emaar MGF Land Ltd and anr (2017) CPJ 204 (NC) as not being applicable to the present case as the same is not a precedent and has no binding force and no ratio decidendi is explicit from the said case law vide which the Hon’ble National Commission had observed that it was the duty of insurance company to deduct the Tax as per provisions laid down in the Income Tax Act since the Hon’ble NCDRC in the said judgment had not interpreted provision of Section 194A of Income Tax Act pertaining to TDS and therefore the said judgment was a mere obiter dicta. The counsel for DH further questioned the said judgment of having lost the sighte of Section 195 (1) of Income Tax Act which lays down that TDS is deductible only from “sums chargeable” under the act. The counsel for DH also cited judgment of SCDRC Chandigarh in execution petition titled Dr. Anil Goel & Anr Vs Parsvnath Developer Ltd & Anr passed on 12.09.2014 in which SCDRC Chandigarh was adjudicating the execution petition agitated by DH for deduction of TDS from the interest amount by JD on the compensation awarded by State Commission on grounds that the same was awarded as damages because JD failed to deliver possession of unit within the stipulated period and withheld the sum deposited by DH with itself without any basis.  JD relied upon provision of Section 194A of Income Tax Act for justifying deduction of TDS as JD being legally bound to deduct income tax from the amount of interest payable / paid to DH. The State Commission Chandigarh observed that the term “interest” has been defined in Section 2 (28A) of Income Tax Act and is distinct and different from the word interest used in the order of State Commission / National Commission in which parlance the interest means compensation or damages granted on account distress and disappointment faced by aggrieved party. Therefore interest as defined in sub section 2 (28A) and 2 (28B) and provision of Section 194A of Income Tax Act were held not applicable and JDs were clearly wrong deducting interest payable / paid to DH for the above said reason. In Revision Petition no 2244 / 1999 GDA vs. Dr. N.K. Gupta decided by four Member Bench of Hon’ble National Commission vide order dated 18.09.2002, the Hon’ble National Commission clearly distinguished the term interest as used in Income Tax Act from the term use for amount paid by way of damages and held that merely describing the damages as by way of interest do not make them as interest under the Income Tax Act. The Hon'ble National Commission held that Section 2 (28A) and 194A of Income Tax Act and were not applicable to justify deduction of TDS from interest amount payable to DH holders and directed JD to pay the TDS amount to DH.
4. The counsel for DH urged / pressed factors undermining the authority of a precedent if it is rendered in ignorance of statute or a rule having force of statute or is inconsistent with earlier decision of same rank / conflicting with one another or is sub silentio.
5. The counsel for DH argued that there is no jurisdiction of this Consumer Forum for determining whether TDS has to be deducted from decree amount or interest on the decree amount, competent authority to adjudicate which is Income Tax Authority under Income Tax Act 1961, and any observation on deduction by this Forum would be absurd and inconsequential attracting writ jurisdiction. Lastly, DH submitted that the deduction of TDS by JD despite contrary direction as per case laws of Income Tax Department is equivalent to disregard and contempt of Court attracting penal consequences since the Income Tax Appellate Tribunal has all the trappings of a Civil Court and proceedings held before it are deemed to be judicial proceedings.
6. The copy of the objection was given to JD for appropriate reply / response. On hearing held on 06.07.2018, the counsel for JD submitted the application for filing TDS certificate in favour of DH alongwith Form 16 A under the stamp and seal duly signed by Deputy Manager of JD. The counsel for JD placed on record judgment of Hon’ble Kerala High Court passed in Writ Petition (Civil) no 15133 / 2010 National Insurance Company Ltd. Vs President Consumer Dispute Redressal Forum and Ors decided on 11.04.2017 in which the question before Hon’ble High Court was whether while paying the claim amount, the Insurance Company was at fault in deducting TDS. The Insurance Company had argued that the TDS on MACT decree amount was deducted as per Section 194A of the Income Tax Act and remitted to the Income Tax Department and Form 16A was issued to DH / policy holder. If it had not been deducted, insurer will be exposed to penal proceedings as mandated in Section 200 and 201A of the Act and the policy holder on receiving Form 16A from the insurer can claim refund from Income Tax Department. The Hon’ble Kerala High Court, after appreciating Section 194A(3)(ix), Section 200 and Section 200A  concluded that interest accrued on rewarded compensation is a revenue receipt, subject to tax deduction under Section 194 A (3) (ix) of the Act.
7. Thereafter, the counsel for DH had filed another application on 05.09.2018 to place additional written submission and the same was listed for reply by JD. However, counsel for DH withdrew the said application / representation as not pressed on hearing dated 08.03.2019 on which date both parties addressed oral arguments and at the stage of arguments, counsel for JD objected to written submission not having being signed by DH himself to which the counsel for DH countered as not being required.
8. We have heard the rival contentions of both the parties and have carefully perused the written synopsis filed by counsel for DH and judgments relied upon by both counsel for DH as well as JD. The key dispute is the deduction of TDS by JD on the interest component of the decreetal amount awarded by this Forum duly executed by warrant of attachment of  bank account of JD to the extent of decreetal amount of Rs. 5,41,501/- passed by this Forum vide order dated 06.11.2017 from which sum the JD deducted TDS @ 20% on grounds of non availability of PAN card of DH and got a cheque made of Rs. 5,02,197/-  in favour of DH after deducting approx Rs. 40,000/- from the decreetal amount. The Hon'ble Supreme Court in Civil Appeal no 7224 / 2002 titled GDA Vs. Chander Bhan Singh decided on 18.08.2004 held in a case of delay in delivery of possession by Ghaziabad Development Authority that there cannot be deduction of TDS on the interest awarded on account of mental agony and harassment and loss to the allottees vide decree passed by Consumer Court under Consumer Protection Act and directed GDA to refund the TDS with 18% interest. The Hon'ble Supreme Court in Civil Appeal no 5618 / 2004 titled HUDA Vs. Dev Dutt Gandhi decided on 31.08.2004 observed that  under Section 14(1)(d) of Consumer Protection Act, deduction of TDS amount from compensation awarded is not permissible and directed HUDA to refund wrongfully deducted TDS with 12% interest. The Hon'ble National Commission in Jethani Vs. Airport Authorities of India judgment passed on 05.04.2008 held that damages awarded by Court cannot be equated with income liable to tax deduction at source (TDS) and directed AAI to refund the sum of TDS alongwith 9% interest to the complainant (Jethani) on grounds that authority should not have made deduction in the first place and referred the matter to Income Tax Department.
9. Merely, terming the compensation as interest does not make it interest as envisaged under Income Tax Act within the ambit of Section 2 (28A). Section 14(1)(d) empowers consumer fora to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by him due to negligence of OP and therefore whenever any amount is paid by OP as compensation for mental harassment and agony by way of interest or otherwise, there arises no question of deduction of any TDS thereon, notwithstanding the fact that compensation awarded is termed and / or quantified as interest and any such payment does not fall within the ambit of Section 194A read with Section 2 (28A) of Income Tax Act. Interest awarded by consumer Forum is in the nature of payment of damages and does not constitute “income” under the provision of Income Tax Act.
10. Further JD has failed to place on record any document to show that it had called upon DH to furnish the PAN card but instead straight away resorted to TDS deduction of @ 20%. The least they were required to do was to ask for PAN detail and, only if DH failed to furnish the same, should they have deducted TDS @ 20%. But since the very act of deduction of TDS is wrongful / unlawful / unjustified in the present case as per settled preposition of law in light of judgment of Hon'ble Supreme Court and Hon’ble NCDRC so therefore any issue of PAN or absence of same is inconsequential.
11. In light of the exhaustive discussion on the settled law which does not permit deduction of TDS on the interest amount awarded by way of compensation in court decree, interest being distinctive and not taxable under the Income Tax Act, we hold the deduction of TDS of Rs. 39,304/- unjust, wrongful, unlawful, illegal and against the settled law and therefore direct the JD to refund the TDS amount of Rs. 39,304/- alongwith interest @ 9% from 12.01.2018 (i.e.  the date on which the TDS deducted draft was handed over by JD to DH before this Forum) to DH till realization.
12. Let the order complied with by JD within 30 days of receipt of copy of this order.     
13.  Let a copy of this order be sent to each party free of cost as per regulation 21 of the Consumer Protection Regulations, 2005.
14.   File be consigned to record room.
15.   Announced on  09.03.2019

 

(N.K. Sharma)      President

(Sonica Mehrotra)  Member