TaxTMI 
TaxTMI 
2002 (3) TMI 39
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....thority for payment of a sum of Rs. 1,82,070 on account of royalty as well as payment of income-tax to the extent of Rs. 17,205 in order to enable the writ petitioner to execute the lease. The petitioner who is admittedly a member of the Scheduled Tribe of the State of Nagaland applied to the jurisdictional Income-tax Officer for grant of an exemption certificate in view of the provisions of section 10(26) of the Income tax Act, 1961. The authority did grant a certificate to the petitioner certifying that the petitioner is not liable to pay income-tax under section 10(26) of the Act in respect of any income arising or accruing to him from any source in any area specified as a Sixth Schedule area under the aforesaid provisions of the Constit....
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....s of business of trading in forest produce under section 206C of the Act, is plainly contrary to section 10(26) of the Act. Learned counsel has further submitted that when the transactions entered into by the petitioner in respect of the lease and income arising therefrom are exempted from payment of income-tax, the question of collection of income-tax at source under the provisions of section 206C of the Act does not and cannot legitimately arise. Learned counsel has further submitted that the aforesaid restrictions contained in the exemption certificate, as noted hereinabove, have been so included by the jurisdictional Income-tax Officer on account of the provisions contained in the proviso to section 206C of the Act. It is the contention....
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....doubt can only be resolved in the course of the assessment proceeding. It is from this perspective that the Income-tax Officer, it is submitted, had issued the exemption certificate and had taken the stand that the collection at source be made in respect of the transactions entered into by the petitioner and if in the course of assessment proceeding, on the basis of returns submitted by the petitioner, it is found that the petitioner is entitled for exemption such amount as may be found to have been collected and deducted, will be refunded to him. On the aforesaid basis, learned counsel for the Revenue has submitted that there would be no occasion for this court to interfere with the order impugned in the present writ proceeding. The sub....
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....le entitling the petitioner to the exemption as claimed in the instant case. If the income to be generated by the writ petitioner from the lease in question has originated from a Sixth Schedule area and, therefore, the petitioner's income is exempted under section 10(26) of the Act, no question of applicability of section 206C of the Act can legitimately arise. If the income itself is exempted, any deduction/collection, on account of income-tax, at source, would be beyond the powers conferred by the provisions of the Act. The following passage from the judgment of the apex court in Bhawani Cotton Mills Ltd. v. State of Punjab [1967] 20 STC 290 ; [1967] AIR 1967 SC 1616, 1623, though made in a somewhat different context may be usefully ex....