Law:

Section:

Section 194C of the Income-tax Act, 1961 - Deduction of tax of source - Contractors/Sub-contractors, payments to - Whether where assessee had been awarded a contract by municipal committee for collection of octroi, income-tax was to be deducted only on payments made to it and not on amount which was collected by it on behalf of municipal committee - Held, yes FACTS The assessee had been awarded the contract for collection of octroi by the municipal committee. The assessee filed the instant writ petition complaining that while making a payment to it, tax was being deducted under the provisions of section 194C on the collections made by it and not on the payments being made to it. HELD The grievance of the assessee was genuine. The department had not been able to refer to any provision of law under which such a deduction could be made from the total collections made by the assessee. A bare perusal of section 194C shows that the tax has to be deducted from the payments made to a contractor at the time of credit of such amount to the account of the contractor or at time of payment thereof in cash or by issue of a cheque or draft or by any other mode. Thus, it is clear that the tax has to be deducted only on the payments which are made to the contractor and not on the amount which is collected by it on behalf of the municipal committee. Accordingly, the writ petition was to be disposed of with the direction that the department would be entitled to charge income-tax under section 194C on the amount paid to the assessee and not on the basis of the gross amount collected by way of octroi. Note : The case was decided in favour of the assessee. L.S. Sidhu for the Petitioner. Sachin Midha, A.R. Takkar and Dr. N.L. Sharda for the Respondent. JUDGMENT 1 N.K. Sud, J.-The petitioner, who has been awarded the contract for collection of octroi by respondent No. 3, complains that while making a payment to it, tax is being deducted at the rate of 2.30 per cent, at source under the provisions of section 194C of the Income-tax Act, 1961 (for short "the Act"), on the collection made by it and not on the payments being made to it. This issue had come up for consideration before a…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492