TaxTMI 
TaxTMI 
2005 (11) TMI 223
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....he Act in spite of certificate issued by the AO to the beneficiary GTV Spinners Ltd. under s. 194C(4) of the Act. The briefly stated facts are that the assessee-company paid charges for conversion of yarn to M/s GTV Spinners Ltd. from 1st July, 2000 to 31st March, 2001 amounting to Rs. 1,38,90,700. These conversion charges were paid without deduction of tax between 1st July, 2000 to 31st March, 2001 only on the ground that the contract party, M/s GTV Spinners Ltd. had obtained a certificate for non-deduction of tax from the concerned AO. However, after going through the certificate, it is gathered that the certificate was issued on 25th April, 2001 and the relevant certificate reads as under: "I hereby authorize you to pay the contract a....
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.... for paying and deducting tax at source under s. 194C(5) is bound to accept the certificate until and unless it is cancelled by the AO under s. 194C(5) of the Act. On the other hand, the learned Departmental Representative relied on the orders of the lower authorities. 4. We have heard both the sides and considered the arguments. We have examined the case record. The above certificate issued by the Jt. CIT, Special Range-II, Chennai, is dt. 25th April, 2001 and this is in favour of the assessee-company. Authorizing not to deduct the tax on the contract amount paid to M/s GTV Spinners Ltd. This certificate was issued vide its application dt. 12th March. 2001 in which the schedule of payment is attached which reads as under: -----------....
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.... the current previous &nb....
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....------------------------------- 1 2 3 4 5 6 -------------------------------------------------- 1. Sri Santha 1-7-2000 Yarn 31-3-2001 Year lakshmi Mills conver ended (P) Ltd., 109, sion 31-3-2001 Meenakarai  ....
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....s may be appropriate. (5) : Where any such certificate is given, the person responsible for paying the sum referred to in sub-s. (1) or sub-s. (2) shall, until such certificate is cancelled by the AO, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be." A bare reading of these sections clarifies the position that (once) such certificate is given then the responsible person for paying the sum referred to sub-ss. (1) and (2) shall, until such certificate is cancelled by the AO, (not) deduct tax at the rates specified or had been taxed as the case may be. Sec. 194C casts a legal duty on the person responsible for paying any sum to another for carrying out any work in pursuance to a contract ....