TDS on Interest

Kumar Gaurav (Querist) 24 March 2009 This query is : Resolved
Some consumers filed cases against our company. And the court awarded interest alongwith cost of machine. machine already returned & recd by the company. Now the question is that interest being paid to consumers attracts TDS/not? Please guide by providing the supporting case law.

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adv. rajeev ( rajoo ) (Expert) 25 March 2009
TDS will no applicable because it is interest awarded in the consumer case. But in accident cases now in an awarded compensation dedcuting the TDS amount. So it will be cleared to u shortly

Rajneesh Malhotra (Expert) 25 March 2009
Here is the point wise reply>>
1. No TDS can be deducted as the interest granted is in the form of COMPENSATION and not earning of interest.
2.In MACT claims, there is a provision in the Income Tax Act which states that if the interest is MORE than Rs.50,000/- only then the TDS on the interest beyond Rs.50,000/- will be deducted.
3.Plese check the following citation>>
2004(3) Recent civil reports 784.
In case you are not able to locate this judgment plese let me know.