2026 (3) TMI 71 - SCH - Income Tax

TCS under Section 206C(1C) on compounding fees from illegal mining held unsustainable; ITAT demands and penalties reversed.

TCS under Section 206C(1C) was contested in relation to compounding fees levied from illegal miners/transporters under Rule 71(5) of state minor mineral ... TCS u/s 206C - compounding fees received from illegal miners/transporters of minerals - Scope of Mines and Minerals (Development and Regulation) Act, 1957/ ‘the MMDR Act’ - offenders who do illegal mining or transportation/storage without having lease or license or have not entered into the contract for transfer of right in Mines or Quarry and from whom Compounding Fine is collected as per provisions under Rule 71(5) of the Chhattisgarh Minor Mineral Rules, 2015 - HC [2025 (6) TMI 2041 - CHHATTISGARH HIGH COURT] held ITAT is completely unjustified in holding that compounding fee/fine (TCS) would be chargeable u/s 206C(1C) by relying upon the definition contained in Section 2(47) of the IT Act. Accordingly, we are unable to uphold the judgment & order passed by the ITAT relying on Section 2(47) of the IT Act. ITAT making demand and levying interest & penalty for non-compliance of Section 206C(1C) of the IT Act cannot be sustained and accordingly, it is set aside HELD THAT:- We are not inclined to interfere with the impugned judgment(s) and order(s) of the High Court; hence, the special leave petitions are dismissed. Outcome: Special Leave Petition dismissed on the ground of delay.