Law:

Section:

Section 206C of the Income-tax Act, 1961, read with section 2(g) of the Andhra Pradesh Forest Act, 1967 - Collection of tax at source - Assessment years 1988-89 to 1993-94 - Whether in order to attract provisions of section 206C one has to examine whether items sold are forest produce or not - Held, yes - Assessing Officer initiated proceedings under section 206C against assessee, a Forest Development Corporation, on ground that said corporation failed to collect tax from its buyers in respect of bamboo, firewood, etc. - On revision, Commissioner held that corporation was under obligation to collect tax in view of definition of 'forest produce' in section 2(g) of 1967 Act - Whether since there was no finding either by Assessing Officer or by revisional authority as to whether produce sold was actually grown and cultivated by corporation or not, impugned order of Commissioner was to be set aside and matter was to be restored to Assessing Officer to consider claim and to give a finding as to nature of production of items - Held, yes FACTS The petitioner-assessee was a Forest Development Corporation. The Assessing Officer initiated proceedings under section 206C against the assessee-corporation on the ground that the Corporation failed to collect tax from its buyers in respect of bomboo, cashew, eucalyptus, pepper etc. The Corporation claimed that the produce it sold to various buyers was agricultural produce and sale of such items would not attract provisions of section 206C. The Corporation also produced some non-deduction certificates issued by various Assessing Officers, claiming exemption from the tax collection at source. The Assessing Officer rejected the claim of the Corporation. The Commissioner, on revision, held that the Corporation was under an obligation to collect tax on some items, viz., timber bamboo and firewood in view of the definition of 'forest produce' contained in section 2(g) of the 1967 Act. On writ : HELD The Department had applied the provisions of section 206C to the corporation on the assumption that the items that were sold by the corporation would fall under the items specified under section 206C. The provisions of section 206C would…

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