Income Tax - No TDS on Compensation
THIS is a sad story.
A young child, named, Jyotsna Jethani, met with a horrifying accidental death in 1999, while getting out of the escalator maintained by Airport Authority of India (AAI) at Delhi Airport. A grief stricken mother and the grandfather filed a complaint with the National Consumer Disputes Redressal Commission, alleging deficiency in service on the part of the Airport Authority of India, which has resulted in chewing or crushing of their beloved child and hence claimed compensation for the irreparable loss.
This was just another file with the AAI and they opposed the compensation tooth and nail.
The Commission in its order dated 5th August 2004, observed, "The case also illustrates to what extent we have developed the tendency to deny the obvious, in litigation. Except admitting the trapping of young child in the escalator, the AAI has tried to dispute its liability and deficiency in service. We do not know when we would change our Jurisprudence which encourages such attitude of denials and protracts litigation and increases burden on adjudicating forums/courts".
The Commission noted that fortunately the AAI has not disputed the death of the young child.
Anyway, the Commission ordered payment of a compensation of 2,50,000 French Francs.
The story did not end there. While giving the compensation, the Airports Authority deducted TDS of Income Tax. The unfortunate victims are again before the Commission with a plea that TDS is not deductible.
The key issue before the Commission was, “Whether the T.D.S. is deductible on the compensation paid to the unfortunate parents, whose child dies in an escalator maintained by an Airport Authority”.
The Commission by its order dated 14.08.2012, held,
First of all the respondent should not have deducted the T.D.S. An information to the Income Tax Authority would suffice. In the instant case, the compensation is by way of damages. The damages paid for the death of a person cannot be equated with income as such.
So, the Commission directed the AAI to pay the TDS amount along with interest @9% p.a. to the Decree Holder, within a period of 30 days.
The AAI was however, directed to recover the same from the Income Tax Department.
But will the Income Tax Department give it back? That is another long litigation.
Please Click Here for the NCDRC Order.