The New India Assurance Co. Ltd. Vs Savitri Devi (Punjab and Haryana High Court)
It is observed when there is conflict between the Social Welfare Legislation and Taxation Legislation, then the Social Welfare Legislation should prevail, since, it sub-serves larger public interest.
Admittedly, Motor Vehicles Act, 1988, is a Social Welfare Legislation. In case of victims, they have already been subjected to the rigors of law by taking rounds of the Courts for year or some time decades to get the compensation for the loss they have already suffered. Therefore, in my view, interest paid on account of delayed payment of compensation cannot be subjected to TDS as discussed above.
Considering the object of the Motor Vehicles Act, 1988, regarding grant of compensation to the victim, it will not only be unjust but cruel to ask the hapless victim to first pay the interest received along with compensation on account of delayed payment, for which he is not responsible, and then to file the income tax return and claim the refund.
As a result of the foregoing discussion, it is held that the interest paid along with the compensation as a result of the order of the Tribunal or of the superior Court is not liable for TDS.
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