1) the Madras High Court has held that the compensation awarded by the Motor Accident Claims Tribunal (MACT) to accident victims cannot be subjected to TDS and Income Tax since the compensation and the interest awarded therein does not fall under the term income under the income tax act

2) that purpose of granting compensation under the Motor Vehicles Act is to ameliorate the sufferings of the victims so that they may be saved from social evils and starvation, and that the victims get some sort of help as early as possible.

3) compensation cannot be treated as income

The award amount is not taxable and no TDS can be deducted for that.

You may show it as income from other sources and file income tax returns accordingly.

compensation awarded by court does not fall under the term income . hence not taxable

2) it does not fall under head income from other sources

You have to make an account of this money hence you may have to show it in the income form other sources giving the details of the source. Even if it is becoming taxable, you have no option than to make an account of this legal money.