Bona fide tax deduction claim defeats contempt where no wilful disobedience of the payment direction is shown.

A bona fide claim of deduction at source under the Income-tax Act did not amount to wilful disobedience of the Court's payment direction, because the respondents were not shown to have acted mala fide in withholding part of the amount. Contempt was therefore not made out, and the Court declined to proceed against the respondents. The question whether the withheld sum was ultimately taxable was expressly left open for determination by the Income-tax Officer in assessment proceedings, so the tax liability remained separate from the contempt issue.

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Issues: Whether the respondents were liable to be proceeded against for contempt for withholding part of the amount directed to be paid, on the plea of deduction of tax at source under the Income-tax Act, 1961.

Analysis: The direction to pay Rs. 4 lakhs was not shown to have been disobeyed mala fide. The deduction of Rs. 1,20,000 was claimed to have been made under Chapter XVII of the Income-tax Act, 1961, and the Court found no basis to infer an intention to violate its earlier order. The question whether the amount was ultimately taxable was expressly left open for the Income-tax Officer to decide, and the Court declined to record any final opinion on that aspect.

Conclusion: No contempt was made out against the respondents, and the deduction made on the stated tax basis did not amount to wilful disobedience of the Court's order.

Final Conclusion: The application was disposed of by declining contempt action, while leaving the taxability of the amount to be determined in assessment proceedings.

Ratio Decidendi: Where payment is withheld under a bona fide claim of statutory tax deduction and there is no wilful disobedience of the court's direction, contempt proceedings are not warranted; the underlying tax liability may be examined separately by the tax authority.

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