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Interest on compensation

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Querist : Anonymous

Querist : Anonymous (Querist)

22 August 2013
Dear Sir

I have received compensation after death of my husband received amount of Rs. 2550000/- but this amount was delay. So i have received interest of Rs. 624222/- but insurance co. deduct tax 10% & deposited in sec. 194J, but interest sec. is 194A. I have no decide this income is wheres 2nd i think this interest is exempt on which sec.

thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

22 August 2013 I also support your view as far as TDS section for Interest is concerned.
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In my view the following case will be helpful to you-

https://indiankanoon.org/doc/1465669/
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In brief, in this case the tribunal has discussed that interest is just part of the compensation and it is not like interest as defined U/s 2(28A). You can treat the same as a capital receipt also.
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