No TDS on accidental claim as it is not an income

No TDS will be deducted on the award of accidental claim as it is not an income and tax deduction at source will only be deducted if the income is generated by any source like salary, interest, rent, horse race, lottery etc. 


In this case, the National Consumer Disputes Redressal Commission ("Commission") considered the issue whether tax is deductible on the compensation paid to the parents, whose child dies in an escalator mishap maintained by Airport Authority of India ("AAI")?

The Commission relied on the judgment of Delhi Development Authority vs. ITO [1995] 53 ITD 19 (Delhi) wherein it was held that the compensation paid to the customer, for deficiency in service was not an interest, rather it was a damage, which didn't warrant deduction of tax at source under section 194A. Therefore, it was held that the compensation awarded in such cases cannot be equated with income and, thus, it is not liable for deduction of tax at source. Accordingly, the AAI directed to refund the tax it has deducted while paying the compensation - GEETA JETHANI V. AIRPORT AUTHORITY OF INDIA [2012] 25 taxmann.com 23 (NCDRC - New Delhi)
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