Compensation can’t be taxed: Consumer court

Rajshri Mehta TNN 

Mumbai: The National Consumer Disputes Redressal Commission has held that damages awarded in a case cannot be equated with income and thus, not liable to attract tax deducted at source. The NCDRC passed the order while directing the Airports Authority of India (AAI) to refund the TDS it had subtracted from the compensation of Rs 2.5 lakh it paid to a couple for the death of their daughter. 
    The NCDRC had on August 5, 2004 directed AAI to pay the Dubai-based complainants Geeta and Parmanand Jethani damages of Rs 2.5 lakh after their daughter Jyotsana died while getting off an escalator maintained by the airport authority. The AAI paid the compensation but only after deducting tax and contended that since the TDS had already been deducted, the Jethanis should seek its refund from the income tax authorities. 
    The commission said that AAI should not have deducted the TDS in the first place. “The AAI should have merely passed on the information to the I-T department. The damages paid for the death of a person cannot be equated with income as such,’’ the bench president Justice J M Malik said. 
    The bench referred to a similar order passed in 2002 wherein it held a consumer not liable to pay TDS on the interest on the amount refunded by the Ghaziabad Development Authority. It held that the interest was paid because of deficiency of services.

Source::::: The Times of India, 03-09-2012, p.01 . http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW