Damages awarded cannot be equated with income liable to tax deduction at source (TDS), the apex consumer commission has held. The National Consumer Disputes Redressal Commission (NCDRC) gave the order while directing the Airport Authority of India (AAI) to refund the "tax deducted at source (TDS)" it had subtracted from the compensation it had to pay to a couple for death of their daughter.

The AAI had been asked by the apex consumer commission on August 5, 2004 to pay Rs. 2.5 lakh as damages to a Dubai-based couple after their young daughter had died while getting off an escalator maintained by the Authority.

The NCDRC while directing the AAI to refund the sum of TDS to complainants, Geeta and Parmanand Jethani, observed that the authority should not have made the deduction in the first place and instead should have referred the matter to the Income Tax department.

"First of all the respondent (Airport Authority of India) should not have deducted the TDS. An information to the Income Tax Authority would have sufficed.

"In the instant case, the compensation is by way of damages. The damages paid for the death of a person cannot be equated with income as such. Consequently, the opposite party (AAI) is directed to pay the TDS amount along with interest of 9% per annum," the bench presided by Justice J M Malik said.

The NCDRC order came on a plea by the Jethanis seeking directions to the AAI to release the Rs. 2.5 lakh it had been directed to pay by the apex consumer commission.

During the pendency of the Jethanis' petition, the AAI paid the compensation but only after deducting the TDS out of it and contended that since the TDS had already been deducted, the Jethanis should seek its refund from the Income Tax authorities to whom the amount was handed over.

The Jethanis contended that the AAI was not entitled to deduct the TDS from the damages.

While directing the AAI to refund the amount it had deducted as TDS from the damages, the NCDRC asked it to recover the same from the Income Tax Department. (PTI)