15 July 2024


High Court of Madras

Tamil Nadu State Transport Corporation v. Chinnadurai


Motor Vehicles

MACT award not classifiable as “income”

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.

Tags : mact compensation interest tds welfare

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