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Madras HC directs Insurance Company to Deposit entire Award Sum without applying TDS till further orders of Larger Bench

Madras High Court - TDS - entire award sum - Taxscan

The High Court of Madras directed the Registry to place this matter before the Hon’ble Chief Justice for considering the issues for resolution by a larger bench. Meanwhile, the insurance company was directed to deposit the entire award sum of Rs. 10,46,200/- with interest at 9% per annum with a cost of Rs. 27,332/- and without applying any Tax Deduction at Source (TDS).

The Claimant, Mr. M. Ashok Kumar suffered grievous injury and was assessed disablement by Medical Board vide orders of this Court made in Tata AIG General Insurance Co. Ltd. Vs. Prabhu dated 12-04-2016, including medical expenses of Rs.3,54,000/-. A simple nudge was sufficient to the Counsel for Insurance Company to surrender the appeal to the larger cause of the community of victims in these pandemic times.

The claimant thoughtfully brought to the notice of the court that Act 32 of 2019 which has introduced the replacement of Chapter XI of Motor Vehicles Act, 1988. Under the new dispensation, Parliament has introduced changes for the benefit of accident victims to protect them during the “Golden Hour”, immediately after the accident and also to protect the interest of the victims in respect of “Hit and Run Accidents” or those involving uninsured vehicles. If a meaningful corpus is available with the Income Tax Department, as an unrefunded TDS, it could come for proper use under this new dispensation.

Further, it was also contended that TDS is in the application in millions of motor accident cases. Huge sums may have accumulated in the coffers of the Income Tax Department. Not all victims may have sought and/ or obtain refunds. Many victims may belong to such strata of society that they may not be in a position to pursue a refund.

The single-judge bench of Justice N. Anand Venkatesh deemed it fit to leave it to the larger bench to allude to this issue also and examine the possibility of proper utilization of the unrefunded amounts for the benefit of motor accident victims.

“The Income Tax Department could be asked to provide statistics relating to the TDS amounts, refunds sought and pending, refunds ordered and no refunds sought for at all, and the period for the same, for this purpose,” the court observed.

Meanwhile, the court directed the insurance company to deposit the entire award sum of Rs. 10,46,200/- with interest at 9% per annum with a cost of Rs. 27,332/- and without applying any Tax Deduction at Source (TDS), till further orders of the larger bench come.

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