2003 (9) TMI 66

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....ourt. The petitioners have filed this petition as a public interest litigation on behalf of the professional people who render services, e.g., lawyers, chartered accountants, legal advisers, doctors, engineers, architects, consultants, etc., who receive payment from persons who need their services and pay remuneration to them. Section 194C was introduced in the Income-tax Act, 1961, with effect from April 1, 1972, making provision for deduction of tax at source on payment to contractors or sub-contractors in certain cases. The aforesaid provision was amended from time to time and various circulars were issued by the Central Board of Direct Taxes. The relevant part of section 194C states: "194C Payments to contractors and sub-contractors....

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....f learned counsel for the petitioner is that section 194C only covers the cases of contractors and sub-contractors who carry out any work including supply of labour for carrying out the work. However, by the impugned circular dated March 8, 1994, deduction of tax under section 194C has also to be made in respect of fees for professional service. It is submitted that section 194C does not cover cases of payment of fees for professional service. It is alleged that the intention of the Legislature is very clear that any type of service such as professional service is not covered by section 194C of the Act. It is alleged that section 194C only applies to works contract or labour contract and will not cover contracts for engagement for professio....