CBDT reply on tax on solatium to victims sought

The Delhi High Court on Tuesday asked the Central Board of Direct Taxes (CBDT) to consider if the provision that mandates deduction of tax on the interest accrued upon award or compensation, granted by the Motor Accident Claim Tribunal (MACT) to accident victims, can be quashed.

A Division Bench of Justice S. Muralidhar and Justice I.S. Mehta asked the CBDT to consider advocate Amit Sahni's plea and decide by June 30.

The court was hearing Sahni's petition, which has sought quashing of Section 194A(3)(ix) of the Income Tax Act, 1961 (as amended up-to-date) that mandates deduction of tax from interest accrued upon the award and compensation granted by the MACT.

He has sought that the provision be declared unconstitutional as it is in direct conflict with the object and spirit of the Motor Vehicles Act, 1988.

"Hold that no authority can deduct TDS upon the interest accrued upon the award/ compensation awarded by the Motor Accident Claim Tribunal (MACT) under Section 194A(3)(ix) of Income Tax Act, 1961 and pass necessary directions to the respondents in this regard," the petition said.

He has sought directions to insurance companies as well as banks not to effect tax deduction at source (TDS) upon such interest on compensation amount.

--IANS

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