Circular No. 8/2011

Section 194A of Income-tax Act, 1961 - Deduction of TAX at Source - Interest Other Than Interest on Securities - TAX Deduction at Source on the Deposits in Banks in the Name of the Registrar/prothonotary and Senior Master Attached to the Supreme Court/ High Court ETC. During the Pendency of Litigation of Claim/compensation

What this is

Circular No. 8/2011 was issued by the Central Board of Direct Taxes on 14 October 2011. Its subject is Section 194A of Income-tax Act, 1961 - Deduction of TAX at Source - Interest Other Than Interest on Securities - TAX Deduction at Source on the Deposits in Banks in the Name of the Registrar/prothonotary and Senior Master Attached to the Supreme Court/ High Court ETC. During the Pendency of Litigation of Claim/compensation.

What it does

Settles who is the deductee when a court directs a litigant to place money in a bank deposit during litigation, usually a time deposit held in the name of the Registrar or the Prothonotary and Senior Master. The bank deducts tax at source on the interest under section 194A in the ordinary way and at the rates in force, but issues the certificate of deduction in the name of the depositor — the party the court ordered to make the deposit — not in the name of the court officer in whose name the deposit stands. Where more than one person was directed to deposit, the deduction and the certificates follow each depositor's share of the interest. At the time of making the deposit the depositor files a prescribed declaration with the court, and the Registrar or authorised officer passes those particulars to the bank so that deduction is made in the right name.

Why it was issued

References were received about difficulty in applying section 194A to such deposits — how to deduct on the interest periodically accruing, and who is the deductee entitled to the certificate in Form No. 16A.

Who it reaches

Litigants directed by a court to deposit money during proceedings
Insurance companies depositing part of a motor accident compensation award
Authorities depositing land acquisition compensation under court direction
Banks holding such time deposits and issuing Form No. 16A
Registrars and Prothonotaries of courts holding deposits in their names

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.194A	s.2, s.393, s.400, s.402

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

SECTION 194A OF INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE - INTEREST OTHER THAN INTEREST ON SECURITIES - TAX DEDUCTION AT SOURCE ON THE DEPOSITS IN BANKS IN THE NAME OF THE REGISTRAR/PROTHONOTARY AND SENIOR MASTER ATTACHED TO THE SUPREME COURT/ HIGH COURT ETC. DURING THE PENDENCY OF LITIGATION OF CLAIM/COMPENSATION
CIRCULAR NO. 8/2011 [F.NO. 275/30/2011- IT (B)], DATED 14-10-2011[SUPERSEDED BY CIRCULAR NO. 23/2015, DATED 28-12-2015]
Section 194A of Income-tax Act, 1961 ("the Act") stipulates deduction of tax at source (TDS) on interest other than interest on securities if the aggregate of amount of such interest credited or paid to the account of the payee during the financial year exceeds the specified amount.
2. The Board has received references expressing difficulties in implementation of provisions of section 194A of the Act in a situation where in the course of the proceedings before Supreme Court/High Court/ any other court or tribunal (hereinafter "the court"), one or more than one litigant (hereinafter 'the depositor') is directed by the court that a specified amount (hereinafter "deposit") be deposited in the bank either directly or through the court in order to protect the interest of litigants. Such deposits (usually time deposits) are kept in the bank in the names of Registrar/Prothonotary and Senior Master or any other name as per the order of the court. Difficulties are faced in making TDS on the interest periodically accruing on such deposits/time deposits and about the person(s) as deductee who is entitled to TDS certificate in Form 16A.
3.1 The matter has been examined in the Board and it has been decided that, subject to para 4 below, this circular shall be applicable to cases where one or more than one litigant is directed by the court that a specified amount be deposited in the bank directly or through the court. The bank shall in accordance with the provisions of the Act, deduct tax at source on the interest accruing on the above mentioned deposit(s) as per existing procedure and at the rates in force. The certificate of deduction of tax shall be issued by the bank in the name of 'the depositor'. If more than one person has been directed to deposit any specified amount, the amount of TDS shall be corresponding to each such depositor for the portion of interest accrued in its respective share in the total amount deposited and TDS certificates shall be accordingly issued by the bank.
3.2 At the time of making deposit of the amount ordered by the court, the depositor(s) shall submit a prescribed declaration with the court for record purpose and to facilitate the administration of TDS. The Registrar/Prothonotary and Senior Master or any person authorized by the court will pass the information furnished therein to the bank concerned for TDS properly in the name of the depositor(s) in accordance with the provisions of the Act.
3.3 Some of the instances covered by this circular are:

a.

In the course of appellate proceedings, the court directs an insurance company (the depositor) to deposit a part of compensation awarded by Motor Accident Claims Tribunal. This amount is deposited as Time Deposit in a bank in such name as per the directions of the court, the credit of TDS on interest accruing on such deposit will be allowed to the Insurance company which has made the said deposit.

b.

The Court while deciding the cases of land compensation directs the authority concerned (liable for making payment of compensation) to deposit any sum in time deposit in any bank, the TDS on time deposit shall be in the name of the authority making deposit, if such authority is an entity liable for charge to Income-tax on its income. In case the deposit in the bank is by Central or State Government no tax will be deducted.

c.

The court adjudicating upon financial dispute during pendency of proceedings direct any party(ies) to deposit any amount as security in time deposit, the TDS on interest accruing on such deposit will be in name of the depositor irrespective of the fact that at the directions of the court such time deposit has been drawn in the name of the officer of the court or joint name or any other name.

4. The above procedure shall not apply to:

(a)

any deposit in the bank held or dealt by the court or any other person appointed by the court in the capacity of being an administrator or receiver or any authority of similar nature; or

(b)

any deposit which has not been made by any specific depositor but has arisen due to attachment made by the Court; or

(c)

the cases of "representative assessee" within the meaning of section 160 of the Act.

DECLARATION TO BE FILED BY THE DEPOSITOR AND TO BE FORWARDED BY THE REGISTRAR/PROTHONOTARY & SENIOR MASTER ETC.
A case of the following description is pending in the Court of ______________ and during the pendency of the case, the court vide order dated ___________ (copy enclosed) has directed the below mentioned person(s) to make a deposit of the amount mentioned in (d) with the bank mentioned in (e) below:—

(a)
The title of case with complete details such as case No. and the year to which it pertains, complete details of the parties to the case.

(b)
Name and address of the person directed by the court to make deposit (separate declaration should be filled if more than one person has been directed by the court to make the deposit, indicating their respective share).

(c)
Date of order of the court by which directions were issued to make the aforesaid deposit.

(d)
Amount ordered to be deposited.

(e)
Name/branch of the depository bank, if known.

(f)
Whether assessed to income-tax, if yes, Permanent Account Number (PAN)

(g)
Any other information

It is certified that the information above is true to best of my knowledge and belief.
Date:
Place
(SIGNATURE OF THE DEPOSITOR)
Forwarded to the Bank concerned for proper compliance of the TDS provisions of the Income-tax Act, 1961.Tax is to be deducted in the name of the depositor mentioned above in accordance with rule 37(BA) of the Income-tax Rules,1962. The information provided above is correct as per the records in the case mentioned above.
Date:
Place
REGISTRAR/PROTHONOTARY and SENIOR MASTER
NOTE: If more than one person has been directed to deposit any specified amount, separate declaration by each depositor may be submitted.
■■

What to watch

Three situations are outside this procedure altogether: a deposit held or dealt with by the court or a court-appointed administrator or receiver, a deposit that arose from an attachment by the court rather than from a specific depositor, and a case of representative assessee under section 160.
No deduction is made where the deposit in the bank is by the Central or a State Government.
In a land compensation case the certificate goes to the authority making the deposit only if that authority is itself chargeable to tax on its income.
The declaration to the court at the time of deposit is what makes the mechanism work; if it is not filed, the bank has nothing to go on and the certificate may issue in the wrong name.

Where you meet it

When a Form No. 16A on court deposit interest does not match the party claiming the credit, and in the credit for tax deducted at source claimed in the return of a litigant, insurer or compensating authority.

An example

Ours, not the Board’s: a worked case built from the rule the instrument sets, to show how it falls out.

In an appeal against a Motor Accident Claims Tribunal award, the court directs the insurer to deposit part of the compensation as a time deposit standing in the Registrar's name. The bank deducts on the interest and issues the certificate to the insurer, which takes the credit, even though the deposit does not stand in its name.

What it names

Rules it names. Rule 37 of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

It mentions. Circular No. 23/2015, Circular No. 8/2011

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 27/2023 [F. No. 370142/11/2023-TPL] / SO 2189(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 16 May 2023
Notification No. 110/2021 [F. No. 275/27/2021-IT(B)] / SO 3815(E) — Ministry of Finance 17 September 2021
Notification No. 26/2019 [F. No. 275/15/2018-IT(B)]/SO 1399(E) — -, -. ~ "Bo ito ~o 33004 99 REGD. NO. D. L.-33004/99 ([he <5o':t.ette of 3ndio . 1251] No. 1251] 3ffiTmruT EXTRAORDINARY 20 March 2019
Notification No. 6/2018 — TDS deduction under section 194A of the income tax act 1961 in case of senior citizens 6 December 2018
Notification No. 65/2016 [F. No. 275/28/2015-IT (B)] / SO 2616(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 5 August 2016
Notification: 4 Date of Issue: 24/1/2013 — [To BE Published in Gazette of INDIA, Extraordinary, Part II 24 January 2013

← Circular No. 402/92/2006-MC (28 of 2011) · ORDER [F.NO.225/72/2010/ITA-II] →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.