2007 (12) TMI 212 - SCH - Income Tax

Supreme Court grants leave in TDS liability case under Income Tax Act

The Supreme Court granted leave in a case involving two parties regarding liability to deduct TDS under Section 194C of the Income Tax Act. The Court ... Deduction of tax at source under Section 194C - Substantial question of law - Summary dismissal of appeal - Remand for fresh consideration by the High CourtSubstantial question of law - Summary dismissal of appeal - High Court erred in summarily dismissing Income Tax Appeals under Section 260A without deciding whether the assessee was liable to deduct tax at source. - HELD THAT: - The Supreme Court held that the question whether the respondent society was liable to deduct tax at source under Section 194C constituted a substantial question of law which the High Court ought to have adjudicated. The High Court should not have disposed of the appeals by summary dismissal; where a substantial question of law is raised in appeals under Section 260A, the appellate court must address and decide that question rather than summarily rejecting the appeal.Impugned order set aside insofar as it summarily dismissed the appeals; High Court faulted for not deciding the substantial question of law.Deduction of tax at source under Section 194C - Remand for fresh consideration by the High Court - Question whether the respondent society (truck operators' union) was liable to deduct TDS under Section 194C was not decided on merits and was remitted to the High Court for decision in accordance with law. - HELD THAT: - Rather than deciding the substantive question on the merits, the Supreme Court remitted the matter to the High Court to consider and determine whether the contract between the payer and the society attracted the obligation to deduct tax at source under Section 194C. The remand requires the High Court to examine the legal and factual aspects germane to applicability of Section 194C and to pronounce a reasoned judgment.Matter remitted to the High Court for fresh consideration and decision on whether TDS under Section 194C was payable by the assessee.Final Conclusion: Impugned order set aside; appeals remitted to the High Court for adjudication of the substantial question of law-whether the respondent society was liable to deduct tax under Section 194C-with no order as to costs. The Supreme Court granted leave in a case involving M/s. Gujarat Ambuja Cement Ltd. and M/s. Sirmour Truck Operators Union regarding the liability to deduct TDS under Section 194C of the Income Tax Act. The Court found the question to be substantial and remitted the matter back to the High Court for consideration. The Appeals were disposed of with no order as to costs.