Himachal High Court Quashes Circular of Income Tax Department

Himachal High Court Quashes Circular of Income Tax Department

On Wednesday the Himachal High Court quashed a circular of Income Tax Department regarding deduction of income tax on the award and interest accrued on them by court in Motor Accident Claims cases.

A division bench consisting of chief justice Mansoor Ahmed Mir and Justice Tarlok Singh Chauhan said while passing the orders on a public interest litigation (PIL), the circular of October 14,2011, issued by the Income Tax Authorities, whereby deduction of Income Tax has been ordered on the award amount and interest accrued on the deposits made under the orders of the court in Motor Accident Claims cases is quashed.
“In case any such deduction has been made by respondents, they are directed to refund the same with interest at the rate of 12 per cent from the date of deduction till payment, within six weeks from today” the bench ruled.

Judicial (the registrar) of the high court had put up a note that bank authorities are making tax deductions on interest accrued on the term deposits/fixed deposits made by Registry in terms of the orders passed by the court in Motor Accident Claims cases.

The matter was referred to the Finance/Purchase Committee for examination and the Committee at its meeting on May 20, 2014 and it was of the view that since the dispute involved is intricate and public interest is involved, it was recommended that the matter requires consideration on judicial side.

The recommendation of the committee was treated as Public Interest Litigation and suo moto proceedings were drawn.


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