JUDGMENT : Introduction: Policyholders successfully maintain claims against the Insurance Company. The consumer fora award interest, too. While paying the amounts, the Insurance Company deducts tax--TDS. The Consumer Commission finds fault with the Insurance Company's deducting the tax. Has the Insurance Commission committed any wrong? The anwer: No. 2. As all the four writ petitions involve the same question of law, besides having substantial factual similarities, I dispose them of through a common judgment. Only in W.P. (C) No. 15341 of 2011 was the impugned order issued by the Motor Accidents Claims Tribunal; in the other petitions, the orders impugned were issued by different consumer fora. But the question of law in all remains the same. Facts: 3. In all the four writ petitions, the Insurance Company ("the insurer") is the writ petitioner. While paying the awarded compensation along with interest to the insured, the policyholders, the insurer deducted TDS (Tax Deducted at Source) at 10.30%. Aggrieved, the policyholders filed execution petitions before the adjudicatory authorities for realising the amounts the insurer had deducted. The adjudicatory authorities, in turn, allowed the execution applications holding that the award, in the first place, does not authorise the insurer to deduct the tax. Now the insurer is aggrieved. 4. Though the question of law is the same in all the writ petitions, to contextualize the issue, I will narrate the facts from one writ petition: W.P.(C) No. 3275 of 2011. 5. The second respondent, the policyholder, filed a complaint before the Kerala State Consumer Disputes Redressal Commission, Thiruvananthapuram ("the Commission"), in O.P. No. 13 of 1995, claiming a compensation of Rs. 7,65,000/- for losing his vessel insured. On merits, the learned State Commission allowed the O.P., through Ext.P1 judgment, dated 21.11.1996. The insurer was directed to pay Rs. 5,00,000/- together with 15% interest from 21.07.1993, the date of the accident, till the awarded amount is paid. 6. As seen from the record, the insurer deposited the amount on 27.07.2010: the principal of Rs. 5,00,000/- and accrued interest of Rs. 6,38,116/-. To comply with Section 194A of the Income Tax Act ("the Act"), the insurer deducted TDS of Rs. 65,726/- and remitted it to the Income Tax Department. It has also issued Ext.P4 form No.16A to the policyholder. 7. 5,00,000/- and accrued interest of Rs. 6,38,116/-. To comply with Section 194A of the Income Tax Act ("the Act"), the insurer deducted TDS of Rs. 65,726/- and remitted it to the Income Tax Department. It has also issued Ext.P4 form No.16A to the policyholder. 7. The tax deduction did not go well with the policyholder; he filed E.P. No. 4 of 2004 before the Commission complaining that the insurer deducted the tax going beyond the judicial directive in the award. The Commission allowed the execution petition through the Ext.P5 order. It directed the insurer to pay the amount it had deducted as TDS. To arrive at that decision, the Commission has relied on Haryana Urban Development Authority v. Munshi Ram 2005 CPJ 353 (SC). As a matter of precedent, Munshi Ram, in fact, followed Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65 . 8. In W.P.(C) No. 15133 of 2010, the amount deducted was Rs. 7321/-; in W.P.(C) No. 3060 of 2013, Rs. 12390/-. All the first three writ petitions arise out of the orders passed by the State Commission; whereas W.P.(C) No. 15341 of 2011 arises from an order passed by the Motor Accidents Claims Tribunal, Perumbavoor, and the tax deducted was Rs. 20,579/-. Submissions: Insurance Company's & Income Tax Department's: 9. The contentions of both the learned counsel for the insurer and the learned Standing Counsel for the Income Tax Department are common. They have submitted that the insurer has not altered, much less violated, the award. It has deducted the tax only from the accumulated interest when it crossed Rs. 50,000/-. In this regard, they have drawn my attention to Section 194A of the Act. They also contended that if the insurer does not deduct, it would be exposed to penal proceedings at the Income Tax Department's behest, as mandated in Section 200 and 201A of the Act. To support their contention that the insurer is entitled to deduct income tax from the interest it pays to any policyholder, they relied on State of Kerala v. Mariyamma 2005 (2) KLT 587, and Hansaguri Prafulchandra Ladhani v. Oriental Insurance Co. Ltd. 2007(4) KLT 49. Amicus Curiae: 10. None represented the contesting respondents; that is, the policyholders. Given the importance of the issue, I requested Sri T. Madhu, the learned advocate, to assist the Court. On his willingness, I appointed him as amicus curiae. 11. Ltd. 2007(4) KLT 49. Amicus Curiae: 10. None represented the contesting respondents; that is, the policyholders. Given the importance of the issue, I requested Sri T. Madhu, the learned advocate, to assist the Court. On his willingness, I appointed him as amicus curiae. 11. The learned amicus curiae has submitted that in Hansaguri Prafulchandra Ladhani, a Division Bench of Gujarat High Court has dealt with the issue elaborately. According to him, the policyholder, on receiving Form 16A from the insurer, can claim a refund from the Department by establishing that he is not an assessee or his income does not exceed the income ceiling imposed by the Act. 12. Heard the learned counsel for the petitioner, the learned Standing Counsel for the Income Tax Department, and Sri T. Madhu, the learned amicus curiae, besides perusing the record. Issue: 13. Section 194A of the Income Tax Act, subject to certain exceptions, requires an assessee to pay tax at a predetermined rate on interest earned, interest on securities excluded from its purview. The person paying interest should deduct the tax at source. Though the Consumer Commission's Award is silent on interest, the insurer deducted TDS. Does the insurer's action violate the judicial mandate in the Award? Discussion: 14. To begin with, we will examine Section 194A of the Act. The provision, to the extent relevant, reads: 194-A. Interest other than "Interest on Securities".-- (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of "Interest on Securities", shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income tax thereon at the rates in force: . . . . . (3) The provisions of sub-section (1) shall not apply-- (i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, [does not exceed-- * * * (iii) to such income credited or paid to— * * * (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or cooperative society carrying on the business of insurance, or (f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette; * * * (vii-a) to such income credited or paid in respect of,-- (a) deposits with a primary agricultural credit society of a primary credit society or a cooperative land mortgage bank or a cooperative land development bank; (b) deposits (other than time deposits made on or after the 1st day of July, 1995) with a cooperative society, other than a cooperative society or bank referred to in sub-clause (a), engaged in carrying on the business of banking;] (viii) to such income credited or paid by the Central Government under any provision of this Act, or the Indian Income Tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth Tax Act, 1957 (27 of 1957), or the Gift Tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest Tax Act, 1974 (45 of 1974); [(ix) to such income credited or paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees.] * * * 15. Section 200 of the Act specifies the duty of the person deducting tax. Section 200 of the Act specifies the duty of the person deducting tax. Section 200-A of the Act deals with the processing of statements of tax deducted at source. The Precedential Position: 16. The Commission made Munshi Ram the basis to direct the insurer to refund to the policyholder the amount it had deducted towards tax. Let us examine that precedent. An allottee of a house plot paid substantial amounts to the civic body, but it did not deliver possession to him. Aggrieved, the allottee filed a complaint before the District Forum, which awarded interest @ 15% p.a. on the entire deposited amount from the date of deposit till offer of possession. The matter eventually reached the National Commission, which confirmed the award of interest, as it did in many similar cases. 17. The Supreme Court, on appeal, deprecated the National Commission's practice of confirming the interest awarded, without reference to the facts of each case. On the deduction of TDS, the Court has observed that as the amounts on which the TDS was deducted paid "towards compensation/damages for mental agony and harassment, TDS could not have been deducted." The judgment, as I understand, has not dealt with the issue whether TDS could be deducted on the accumulated interest on the compensation granted in the Award. So, Munshi Ram cannot be a precedent on this issue. 18. On the other hand, Balbir Singh is the forerunner to Munshi Ram. On the issue of awarding interest at a flat rate of 18% without reference to the facts of the case, Munshi Ram follows Balbir Singh. So, Balbir Singh deals with how interest is to be awarded under variable circumstances. It has not even remotely decided the issue whether the insurer can deduct income tax from the interest payable to the policyholder. 19. In National Insurance Company Ltd. v. Subhash N. Chandrabose 2014(1) KLT 6 the Commissioner ordered interest under Section 4A of the Employees' Compensation Act on the awarded damages. The issue was, as is here, whether the insurer could deduct TDS. The beneficiary contended that interest is an integral part of compensation and, hence, the insurer could not deduct tax. The Division Bench, to resolve the tangle, relied on the Supreme Court's Bikram Singh v. Land Acquisition Collector & Ors 1997(224) ITR 551 . 20. The issue was, as is here, whether the insurer could deduct TDS. The beneficiary contended that interest is an integral part of compensation and, hence, the insurer could not deduct tax. The Division Bench, to resolve the tangle, relied on the Supreme Court's Bikram Singh v. Land Acquisition Collector & Ors 1997(224) ITR 551 . 20. In Bikram Singh, the question is whether the interest received on delayed payment of compensation under the Land Acquisition Act is exigible to income tax. The Supreme Court has reiterated its consistent view that interest thus earned is a revenue receipt. So, once it is construed to be a revenue receipt, necessarily, unless there is an exemption under the appropriate provisions of the Act, the revenue receipt is exigible to tax. As a result, Subhash N. Chandrabose to has held that interest under Section 4A of the Workmen's Compensation Act is a revenue receipt and is exigible to income tax. 21. In Hansaguri, rendered by a Division Bench of the Gujarat High Court, the claimants did not dispute the Department's right to levy income tax on interest awarded on the compensation in a motor accident claim. They only contended that TDS certificate should be prepared by apportioning the compensation amount and by spreading the interest amount on "year to year basis". 22. In answering the claimants' contention, Hansaguri, followed the Supreme Court's Rama Bai v. Commissioner of Income Tax, AP (1990) 181 ITR 400 (SC): Interest on enhanced compensation for land compulsorily acquired has to be taken to have accrued not on the date of the order of the Court granting enhanced compensation but as having accrued year after year from the date the possession of the land had been delivered till the date the court granted enhanced compensation. The interest could not be assessed to Income Tax in a lump sum only in the year in which the order was made. 23. As a corollary to the above proposition, Hansaguri has held that the claimants will have to pay tax on the interest accrued if that income together with the claimant's other income in the financial year concerned exceeds the chargeable limit, as specified in the provisions of the Income Tax Act, 1961. Directions: 24. 23. As a corollary to the above proposition, Hansaguri has held that the claimants will have to pay tax on the interest accrued if that income together with the claimant's other income in the financial year concerned exceeds the chargeable limit, as specified in the provisions of the Income Tax Act, 1961. Directions: 24. Hansaguri, therefore, issued these directions on how to apportion the accrued interest on an annual basis and on how the insurer could deduct income tax: (a) first spread the interest amount over to the relevant financial years for the period from the date of filing the claim petition till the date of deposit. (b) thereafter, if the interest for any particular financial year exceeds Rs. 50,000/-, separately deposit before the Tribunal the amount liable to be deducted at source under the provisions of Section 194A(3)(ix) of the Income Tax Act, 1961. Such amount shall not, however, straightaway, be paid over to the Income Tax department. (c) produce before the Tribunal a statement of the computed interest by spreading the amount over the relevant years from the date of claim petition till the date of deposit if the interest for any particular financial year exceeds Rs. 50,000/- and also request the Tribunal to treat the amount as a separate deposit. 25. Factually, as is the case here, in Hansaguri, too, the insurer had deducted tax on compensation under Section 194A(3)(ix) of the Act by treating the entire interest amount as one lump sum. So, a similar direction as given in Hansaguri would meet the ends of justice: First, the insurer should give the claimants the details of the amounts of interest spread over the relevant financial years and the break-up amongst several claimants; second, within one month from the date of receipt of a certified copy of this judgment, the insurer shall furnish to the claimants the certificate indicating the interest amounts computed for each year. The statement should also contain the break-up of the interest amounts payable to each claimant in each of those years as per their apportionment. Thereafter, the claimants may apply to the appropriate Income Tax authority which shall decide the claimant's plea for exemption and refund within six months from the date of its receiving the representation. 26. The statement should also contain the break-up of the interest amounts payable to each claimant in each of those years as per their apportionment. Thereafter, the claimants may apply to the appropriate Income Tax authority which shall decide the claimant's plea for exemption and refund within six months from the date of its receiving the representation. 26. To conclude, the Court holds that interest accrued on an awarded compensation is a revenue receipt, subject to tax deduction under Section 194A(3)(ix) of the Act. But the computation of the interest should not be lump sum in the year the tax paid; rather, it should be spread even across from the year the claim arises till the year the compensation is paid. 27. I place on record a word of appreciation for the services rendered by the amicus curiae, Sri T. Madhu. All the writ petitions are disposed of in the manner indicated above. No order on costs.