Sunday 9 September 2012

On Accidental Claim No TDS Deduction applicable

As an accidental claim is not a income part it is an award to beneficiary and due this ground there is no TDS Deduction applicable. TDS deduction is applicable when the Taxpayee get income likely Salary, Interest, Rent, Horse Rate or Lottery or Wining Prize etc. The following judgement regarding claiming of TDS Deduction is not valied on Accidental Claim.

In this case, the National Consumer Disputes Redressal Commission ("Commission") considered the issue whether tax is deductible on the compensation paid to the parents, whose child dies in an escalator mishap maintained by Airport Authority of India ("AAI")?

The Commission relied on the judgment of Delhi Development Authority vs. ITO [1995] 53 ITD 19 (Delhi) wherein it was held that the compensation paid to the customer, for deficiency in service was not an interest, rather it was a damage, which didn't warrant deduction of tax at source under section 194A. Therefore, it was held that the compensation awarded in such cases cannot be equated with income and, thus, it is not liable for deduction of tax at source. Accordingly, the AAI directed to refund the tax it has deducted while paying the compensation - GEETA JETHANI V. AIRPORT AUTHORITY OF INDIA [2012] 25 taxmann.com 23 (NCDRC - New Delhi)

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