Life Insurance Corporation of India vs GURDEV SINGH

IN this revision petition, the short point involved is, whether the Life INsurance Corporation was authorised in law to make certain deduction out of the amount of compensation awarded by the learned District Forum by way of income tax or not.

IN the present case, Gurdev Singh, father of late Miss Sukhwinder Kaur, was awarded Rs. 50,000/- by way of compensation with interest at the rate of 18% p.a. with effect from 11.2.1993, the date when the claim was repudiated by the LIC. After the complaint was allowed, the LIC has made the payment on 19.10.1995 but has made a deduction of Rs. 2,398/- purporting to be performing their duty under Section 194-A of the INcome Tax Act. Feeling aggrieved by that, the complainant approached the District Forum for the realisation of the deducted amount and the learned Forum, after considering the matter, has disallowed the deduction made by the LIC by taking the view that the amount of compensation so awarded could not be treated as income under the INcome Tax Act. Hence, no deduction as such was admissible. The LIC has challenged the order of the learned District Forum on the ground that the interpretation made by the learned Forum was not correct.

After hearing the learned Counsel, we are of the considered view that under Section 194-A of the Income Tax Act the deduction can be made only out of an amount which is covered by the expression "income" and not out of an amount of compensation awarded by the Courts or other judicial Tribunals. This question has since been settled by a number of judicial decisions and there is no dispute regarding the same. Consequently, the view taken by the learned District Forum is upheld and the revision petition filed by the LIC is dismissed with no order as to costs. Revision Petition dismissed.