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Tamil Nadu State Transport Corporation v. Chinnadurai - (High Court of Madras) (02 Jun 2016)

MACT award not classifiable as “income”

Motor Vehicles

Compensation awarded by the Motor Accident Claims Tribunal, and interest accruing therefrom, are not subject to TDS (tax-deducted-at-source) and the same cannot be insisted on being paid to tax authorities, the Madras High Court held..

Justice Muralidaran differed from several High Court judgments that had stated TDS was payable on interest earned from the compensation amount, noting that previous judgments had not considered welfare nuances.

Rubbishing the existence of some great divide between the Motor Vehicle Act and the Income Tax Act qua TDS, the suggested instead that in a conflict between a social welfare legislation and taxation legislation, the social welfare legislation would prevail for serving a larger public interest. Moreover, it added, compensation and interest awarded do not fall under the definition of ‘income’ under the Income Tax Act 1961.


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