TDS on TDR certificates: High Court finds strong prima facie case against deduction at interim stage.

At the interim stage, the Bombay High Court found a strong prima facie case that tax deduction at source was not attracted on issuance of transferable development rights certificates in lieu of compensation. The Court read the words "or by any other mode" in Sections 194C and 194LA ejusdem generis with payment by cash, cheque or draft, and noted that those provisions did not appear to cover kind-based discharge through TDR certificates. It also drew support from Sections 194B and 194R, which expressly deal with payment wholly or partly in kind, indicating that such language was absent from Sections 194C and 194LA. Operation of the impugned order, demand notice and penalty notice was stayed pending final disposal.

---

---

Issues: Whether, at the interim stage, the petitioner made out a strong prima facie case that tax deduction at source was not attracted when Transferrable Development Rights certificates were issued in lieu of compensation under the relevant provisions.

Analysis: The Court found, at least prima facie, that the words "or by any other mode" in Section 194C of the Income-tax Act, 1961, and the corresponding words in Section 194LA, had to be read ejusdem generis with payment by cash, cheque, or draft. The Court further held, at this stage, that those provisions did not appear to cover issuance of TDR certificates in lieu of compensation. Support was drawn from Sections 194B and 194R, which specifically contemplate situations where payment is wholly or partly in kind, a feature absent from Sections 194C and 194LA.

Conclusion: The petitioner established a strong prima facie case for interim protection, and operation of the impugned order, demand notice, and penalty notice was stayed pending final disposal of the writ petition.

---