2008 (5) TMI 332 - AT - Income Tax

Octroi Collection Not Taxable under Section 206C(1C) - Tribunal Decision

The Tribunal held that the assessee was not liable to collect tax under section 206C(1C) of the Income-tax Act for octroi collected, as it was ... Collection Of Tax At Source Issues involved: The liability of the assessee to collect tax under section 206C(1C) of the Income-tax Act in relation to octroi collected by the agent appointed by the assessee, Municipal Corporation in the City of Akola.Summary:Issue 1: Stay Petition DismissalThe stay petition was dismissed as all appeals were disposed of on merit separately.Issue 2: Liability to Collect Tax under Section 206C(1C)The Income-tax Department concluded that the assessee was required to collect tax at source on octroi, akin to a 'Toll Plaza' under section 206C(1C). However, the assessee argued that octroi collection is distinct from the concept of a toll plaza, citing relevant legal provisions and court decisions. The Tribunal analyzed the definitions of 'toll' and 'octroi' from various sources, including the Constitution, statutes, and judicial precedents. It was determined that octroi is a tax on goods entering local areas, while toll is a compensation for temporary land use or passage of vehicles. As the octroi collected was not for a parking lot, toll plaza, mining, or quarrying, the Tribunal held that the assessee was not liable to collect tax under section 206C(1C). Consequently, the orders of the CIT(A) and Assessing Officer were set aside, and the assessee's appeals were allowed.