# Smt. Rekha Mishra & Ors v. Ram Kumar & Ors

- **Citation:** (2020) 12 ILRA 81
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-12-08
- **Case number:** First Appeal From Order No. 598 of 2020
- **Bench:** Dr. Kaushal Jayendra Thaker
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/smt-rekha-mishra-ors-v-ram-kumar-ors-45525
- **Pages:** 5

## Headnote

Sri Radheyshyam, Sri Pradeep Kumar Sinha

A. Motor Accident Claim - Deduction of
income tax on the compensation - Power
of Tribunal - Held, Tribunal cannot deduct
tax on the compensation - The amount
awarded by the Tribunal cannot be
subjected to tax on the flat rate as
decided by the Tribunal. (Para 11 and 13)
B. Interpretation of Statute - Motor
Vehicle legislation and Tax legislation -
Conflict - Which amongst it prevail -
Motor Vehicle legislation
is a social
welfare legislation and there is no conflict
between the social welfare legislation and
tax legislation - Even if there is conflict,
the social welfare legislation would prevail
as it would subserve larger public interest.
 (Para 13)

Appeal partly allowed (E-1)
Cases relied on :-

## Text

12 All. Smt. Rekha Mishra & Ors. Vs. Ram Kumar & Ors.
81

8. The registry is directed to send a
copy of this order to the Tribunals so that
the Tribunals may pass necessary orders
while disposed of the claim petitions.

9. The review application is disposed
of.
----------
(2020)12ILR A81
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 08.12.2020

BEFORE

THE HON'BLE DR. KAUSHAL JAYENDRA
THAKER, J.

First Appeal From Order No. 598 of 2020

Smt. Rekha Mishra & Ors. ...Appellants
Versus
Ram Kumar & Ors. ...Respondents

Counsel for the Appellants:
Sri Hanuman Prasad Dube, Sri Vipul Dube

Counsel for the Respondents:
Sri Radheyshyam, Sri Pradeep Kumar Sinha

A. Motor Accident Claim - Deduction of
income tax on the compensation - Power
of Tribunal - Held, Tribunal cannot deduct
tax on the compensation - The amount
awarded by the Tribunal cannot be
subjected to tax on the flat rate as
decided by the Tribunal. (Para 11 and 13)
B. Interpretation of Statute - Motor
Vehicle legislation and Tax legislation -
Conflict - Which amongst it prevail -
Motor Vehicle legislation
is a social
welfare legislation and there is no conflict
between the social welfare legislation and
tax legislation - Even if there is conflict,
the social welfare legislation would prevail
as it would subserve larger public interest.
 (Para 13)

Appeal partly allowed (E-1)
Cases relied on :-
1. Hansaguri Parafulchandra Ladhani & ors. Vs
The Oriental Insurance Company Ltd. and
others, 2007 ACJ 1897
2. New India Assurance Company Ltd. Vs Hussain
Babulal Shaikh & ors., 2017 (1) TAC 400 (Bom.)
3. F.A.F.O. No. 2935 of 2005, Smt. Balesh Kumari & ors.
Vs Sahbat Khan & anr., decided on 25.11.2020
4. Sarla Verma & ors. Vs Delhi Transport
Corporation & ors., (2009) 5 SCC 121
5. National Insurance Co. Ltd. Vs Mannat Johal
& ors., 2019 (2) T.A.C. 705 (S.C.)

(Delivered by Hon'ble Dr. Kaushal Jayendra Thaker, J.)

1. Heard Sri Dube, learned counsel for
the appellants and Sri P.K. Sinha, Advocate,
assisted by Sri Ojha, learned counsel for the
respondent-Insurance Company.

2. This appeal is preferred by the
original claimants against the award and
decree dated 23.11.2019 passed by Motor
Accident
Claim
Tribunal/Additional
District Judge, Court No.3, Jhansi in Motor
Accident Claims Petition No. 29 of 2018.

3. Brief facts giving rise to this appeal are
that on 6.11.2017 Jai Prakash Mishra on
motorcycle bearing Registration No. U.P. 93
AE 9142 was going to Mijhauna via Daboha.
Said motorcyle was being driven by his elder
brother Virendra Kumar Mishra carefully and
slowly at left side. When the motorcycle
reached in front of village Gora at Daboha
Bhander Road at about 1.35 pm, a Scorpio
bearing Registration No. MP 09 V 6431 was
coming rashly and negligently from front
looking to which Virendra Kumar Mishra
stopped motorcycle on kachcha pavement of
his left hand despite that said Scorpio dashed
hardly motorcycle on account of which
Virendra Kumar Mishra and Jai Prakash Mishra
succumbed to injuries on the spot.
82 INDIAN LAW REPORTS ALLAHABAD SERIES

4. There is no dispute as far as
assessment of quantum, compensation and
liability, the accident having taken place,
the deceased having succumbed to the
injuries received in the accident. That the
deceased was a salaried person is also not
in dispute. The only issue that arises for
consideration is whether the Tribunal itself
could have assumed and deducted income
tax from the compensation awardable to the
heirs of the deceased.

5. On 17.3.2020, I had passed the
detailed order as follows:-

"Admit.

A copy of memo of appeal be
given to Sri Radhey Shyam, Advocate who
normally appears for National Insurance
Company Limited to seek instructions from
it and assist the Court as the matter can be
disposed of at the first hearing.

The matter is covered by the
judgment of the Gujarat High Court as well
as Section 194A(3)(IX) of Income Tax Act.
The amount of income tax slab can be
deducted from the income of the deceased
who was a salaried person, but adhoc
Rs.10,00,000/- and more amount by way of
calculation of income tax could not have
been deducted from the compensation to be
awarded. The said is without any sanctity
of law.

Normally
in
the
claimant's
appeal, I do not pass any interim order but
in this case the deduction of Rs.1064543/-
as proposed income tax could not have
been ordered to be deducted. The order of
deduction of Rs.1108165/- as proposed
income tax is against the mandate of law.
The reason being income tax liability of
concerned claimant to pay tax on interest
or the compensation awarded to them shall
arise if such interest or income is accrued
in concerned financial year together with
other income of the respective claimants in
that financial year. The judgment of the
Apex
Court
in
Ramabai
Versus
Commissioner of Income Tax, (1990) 181
ITR page 400 will come to the aid of the
appellants. Similar is the decision of
Gujarat High Court in Civil Application (
For Order) No.10031 of 2006: First Appeal
No.1392
of
2006
(
Hansaguri
Prafulchandra Ladhani and others Versus
Oriental Insurance Company Limited)
decided on 4.10.2006 reported in 2007 (2)
GLR 1484 which will also be applicable to
the facts of this case.

The Insurance Company if has
not yet deposited the amount shall deposit
the decretal amount with interest along
with the deducted amount of Rs.1108165/-.
The second aspect which will have to be
looked into would be whether the Tribunal
should add prospective income after
deduction of the personal expenses or it
should be before in the light of the
judgment of Supreme Court in Civil Appeal
No. 1999 of 2020 ( Nirmala Kothari Versus
United India Insurance Company Limited)
decided on 4.3.2020.

List
on
31.3.2020
for
final
disposal.

Meanwhile, the learned Judge be apprised
by the Registrar General of this order through the
District Judge, Jhansi so that such mistake is not
committed in other matters as this would be his opinion
in matter which involve high stake.

Notice to the owner is not
necessary as the liability is fastened on the
insurance company."

6. The matter has been listed today
thereafter on urgency note filed by Sri
Dube. The matter can be disposed off on
short point.

7. The presence of the owner is not
necessary.
12 All. Smt. Rekha Mishra & Ors. Vs. Ram Kumar & Ors.
83

8. The appellants' only prayer is that
the Insurance Company could not also have
deducted the amount of income tax which
has been deducted by the Tribunal on its
own.

9. Sri Dube, learned counsel for the
appellants submitted that in the case of
Hansaguri Parafulchandra Ladhani and
others Vs. The Oriental Insurance
Company Ltd. and others, 2007 ACJ
1897, which has been again reiterated and
followed by the Bombay High Court in
New India Assurance Company Ltd Vs.
Hussain Babulal Shaikh and others, 2017
(1) TAC 400 (Bom.) and by this Court in
First Appeal From Order No.2935 of
2005, Smt. Balesh Kumari and others Vs.
Sahbat
Khan
and
another,
dated
25.11.2020, practice of the deduction of
TDS
by
Insurance
Company
was
deprecated. In this case, the Tribunal itself
has deducted the amount of income tax,
i.e., reason for this appeal which could not
have been done.

10. Sri Dube further submits that
education cess could not have been
deducted, which is vehemently objected by
Sri P.K. Sinha, assisted by Sri Ojha making
submission that amount has accrued in the
year 2019 immediately after the claim
petition was filed and, therefore, the
deduction by the Tribunal cannot be found
fault with and has requested the Court to
dismiss the appeal.

11. The Tribunal, after assessing the
compensation, did not assign any reason as
to under what provision, it had assumed
itself to be an Authority which could deduct
what can be said to be tax on the entire
compensation. Calculation of income tax
could not have been done for the reason
that income tax is on the income which
accrues ever year. If the Tribunal was of the
view that income of the deceased was
without deduction of any tax then it could
have done it from the gross salary of
Rs.27187/- rather the Tribunal deducted
Rs.2200/- which was amount of Provident
Fund which he would have received on his
retirement. Amount of Rs.2000/- was
further deducted on the loan which he had
taken and had the Tribunal gone by the
basics also as the salary of the deceased
was Rs.27,187/- per year, annual salary
after deductions under the Income Tax Act
would not beyond the slab of Rs.2,50,000/-
per year had he been survived. Income tax
is to be chargeable in the year in which it is
received. Thus, there is a mistake which is
apparent on the face of the record. The
assessee claimant cannot be now forced to
claim refund.

12. Provision of Section 194A read
with sub section 3 (ix) of the Income Tax
Act lays down several guidelines for
deduction of tax and source in payment of
amount, which is awarded. Amount could
not be subjected to deduction of income
tax. The reason being that Section 194A (3)
(ix) will not permit even the Insurance
Company to deduct the same at par. The
procedure has already been laid down
wayback in the year 2007 by the High
Court of Gujrat in the case of Hansaguri
(supra), which has been followed by High
Court of Bombay in a recent Judgment
rendered in the case of New India
Assurance Company Ltd Vs. Hussain
Babulal Shaikh and others (supra), which
has been followed by the undersigned in
the case of Smt. Balesh Kumari (supra).

13. When the Income Tax Act and the
decisions referred hereinabove do not
permit the Insurance Company to deduct
TDS, could the Tribunal deduct what is
84 INDIAN LAW REPORTS ALLAHABAD SERIES
known as tax on the compensation. With
utmost respect, the answer is same cannot
be. Tax has to be levied each yer.
Compensation is awarded in lump sum
which has to be spread over as it was an
aggregate amount. Income even if we
consider apart from the interest, it has to be
spread over relevant financial year from the
period when the amount would accrue. The
claimants normally are not given the entire
amount and are subjected to deposit the
amount. The amount awarded by the
Tribunal cannot be subjected to tax on the
flat rate as decided by the Tribunal. The
legislation being a social welfare legislation
and in fact there is no conflict between the
social welfare legislation and tax legislation
even if there is conflict the social welfare
legislation would prevail as it would
subserve larger public interest. A reference
to
a
Division Bench
Judgement
of
Himachal Pradesh which quashed the
circular
issued
by
the
Income
Tax
Department has been considered by the
Bombay High Court in the Judgment
referred hereinabove (supra) on which also
this Court places reliance.

14. Further the learned Judge has lost
sight of the fact that the deceased left
behind him five legal representatives when
he passed away. The amount has to be
distributed amongst all the five of them and
it cannot be that the income tax would be
payable on the total sum amount awarded.
Even if we look at the order, amounts are
bifurcated which goes to show that the
amounts are again kept in fixed deposits. In
that view of the matter, the amount of
compensation will have to be divided
between the persons who got money and
this amount has to be spread over to the
coming years. It is not one time income to
them. It is compensation spread over as per
the system prevailing. The amount cannot,
therefore, be held to be income in one
particular year, namely, 2019 when the
award came to be passed even if we
consider that the period during which the
matter
remained
pending
before
the
Tribunal, the amount has to be bifurcated
amongst the legal heirs. Thereafter, the
Income Tax Department will have to
consider the slabs as they are applicable. As
per decision of the Apex Court in Sarla
Verma Vs. Delhi Transport Corporation,
(2009) 6 SCC 121, the contribution to the
family known as multiplicand multiplied by
the multiplier which is for the several
imponderables in life and economic factors
and is based on the application of multiplier
with reference to the age of the deceased
which has been identified by the Apex
Court. It is not the year that the income has
to be considered. Hence, the exercise
undertaken by the learned Tribunal is prima
facie not tenable and is deprecated. Award
passed by the Tribunal in its operative
portion would read as follows:-

15. Rs.41,45,000/-+70,000/-+30,000/-
each to the minor children Prachi and
Sparsh, who were 14 and 17 years of age at
the time of accident, hence, the award
would be Rs.42,75,000/- with 7.5% rate of
interest in view of the latest decision of the
Apex Court in National Insurance Co.
Ltd. Vs. Mannat Johal and Others, 2019
(2) T.A.C. 705 (S.C.), wherein the Apex
Court has held as under:-

"13.
The
aforesaid
features
equally apply to the contentions urged on
behalf of the claimants as regards the rate
of interest. The Tribunal had awarded
interest at the rate of 12% p.a. but the same
had been too high a rate in comparison to
what is ordinarily envisaged in these
matters. The High Court, after making a
substantial enhancement in the award
12 All. Uma Shankar Mishra Vs. The Oriental Insurance Co. Ltd., Alld. & Anr.
85
amount, modified the interest component at a
reasonable rate of 7.5% p.a. and we find no
reason to allow the interest in this matter at any
rate higher than that allowed by High Court."

16. As far as the other part is concerned,
the Judgment is maintained. Fresh decree will
be drawn by the Tribunal on receipt of the order
of this Court. The Insurance Company, if has
not deposited the amount as of yet despite the
order dated 23.11.2019, shall immediately
deposit the entire amount. It goes without
saying that no TDS shall be deducted in view of
New India Assurance Co. Ltd. Vs. Hussain
Babulal Shaikh and others, 2017 (1) TAC
400 (Bom.).

17. As far as other aspects are
concerned, lis is settled between the parties.

18. A copy of this order be placed
before the Registrar General so that it may
be circulated to the concerned Tribunal and
other Tribunals in the State so that such
mistake which is apparent on the face of
the record be not committed in future.

19. Appeal is partly allowed.
----------
(2020)12ILR A85
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 01.12.2020

BEFORE

THE HON'BLE DR. KAUSHAL JAYENDRA THAKER, J.

First Appeal From Order No. 667 of 2017

Uma Shankar Mishra ...Appellant
Versus
The Oriental Insurance Co. Ltd., Alld. &
Anr. ...Respondents

Counsel for the Appellant:
Sri Arvind Srivastava
Counsel for the Respondents:
Sri Amit Kumar Sinha, Sri Deepal Srivastava
Sinha, Sri Mohan Srivastava

A. Motor Accident Claim - Production of
insurance
policy-Liability
of
Insurance
Company Exoneration of the CompanyLegality-It is bounden duty of the Insurance
Company to have produced the insurance
policy-Held, the owner and Insurance
Company shall be jointly and severely liable
for the amount. (Para 4, 5 and 6)

Appeal and Cross Objection partly allowed
 (E-1)

Cases relied on :-

1. National Insurance Company Ltd. Vs Jugal
Kishore & ors., AIR 1988 SC 719
(Delivered by Hon'ble Dr. Kaushal Jayendra Thaker, J.)

1. Heard learned counsel for the parties.

2. This appeal at the behest of the
appellant challenges the judgment and
award dated 6.12.2016 passed by the Motor
Accident Claims Tribunal, Allahabad in
M.A.C. Case No. 62 of 2013.

3. A very interesting issue has arisen
before this Court namely what should be the
fate of an owner who has not been permitted to
file the copy of the insurance policy belatedly
but before pronouncement of judgment.
Though the owner did not file the driving
license and/or policy along with written
statement, the policy number was mentioned in
the written statement. The Insurance company
also did not lead any evidence to show that the
vehicle was not insured with it. The owner gave
application to produce the driving license and
the policy. Very strangely the Tribunal rejected
the same on one ground that the matter was
listed for final argument. Could this has been
done? The empathic answer is, no.