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    TDCAN requirement modernisation centralises TAN/PAN linkage and reporting, tightening compliance and correction procedures.
    Clause 397 requires persons deducting or collecting tax to apply for and, once allotted, quote a Tax Deduction and Collection Account Number (TDCAN) in all prescribed documents; it consolidates deduction and collection numbers, sets out statutory carve-outs and government-notified exemptions, integrates PAN linkage and consequences for non-furnishing, and centralises payment, reporting and correction mechanisms including procedures for non-resident payments and government offices.
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    TDS/TCS certificate obligation requires deductors and collectors to issue prescribed certificates enabling tax credit and digital reporting.
    Clause 395(4) requires every person deducting or collecting tax at source to issue a certificate to the deductee/collectee specifying the amount of tax deducted or collected, the rate, and any other prescribed particulars within a prescribed period; employers who pay tax on behalf of employees must similarly furnish a certificate confirming payment to the Central Government. The clause covers both TDS and TCS, delegates format and timing to subordinate rules, and anticipates digital and harmonized implementation while leaving rectification, duplicate issuance and penalty mechanics to rules.
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    Non-exclusivity of source-based tax collection allows authorities to pursue additional recovery methods when payments are provisional.
    Clause 390(4) states that taxes paid by deduction or collection at source, advance payments and specified payments operate in addition to any other mode of tax collection to discharge the liability for income assessed for a tax year, preserving the tax authority's power to pursue alternative recovery measures where such anticipatory payments are provisional, insufficient, or incorrect while allowing credit or refund for any excess.
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    TDS/TCS enforcement: deeming of defaulting deductors as assessees in default triggers interest, charge on assets, and conditioned relief.
    Clause 398 deems persons required to deduct or collect tax, including principal officers and specified collectors, to be an assessee in default where tax is not deducted, not collected, or not paid to the government; relief is available if the recipient files a return, includes the relevant sum, pays the tax due and the deductor/collector furnishes a prescribed accountant's certificate. Interest is prescribed for the periods between deductibility, deduction and payment, unpaid tax plus interest is a statutory charge on assets, time limits for default orders are specified, and penalty requires satisfaction of lack of good and sufficient reasons.
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    Centralised TDS/TCS processing: automated, time bound framework mandates intimation within a year and covers correction statements.
    Clause 399 creates an automated framework for processing TDS and TCS statements, including correction statements, requiring rectification of arithmetical errors and adjustment of apparent incorrect claims, computation of interest and fee, determination of net payable or refundable amounts after adjusting prior payments, issuance of a formal intimation to the deductor/collector, and grant of any refund due; it also mandates that intimations be sent within a year from the end of the tax year and empowers the Board to make a centralised processing scheme.
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    TDS/TCS compliance: expanded reporting and verified statement obligations, including cross-border and below-threshold payment reporting.
    Clause 397(3) requires persons responsible for deduction or collection of tax, and certain employers, to pay amounts to the credit of the Central Government within prescribed time and to submit verified statements in prescribed form and manner; it mandates reporting of payments to non-residents whether or not chargeable, requires special statements for government payments without challans, permits correction statements within six years, obliges reporting of below-threshold interest payments by specified entities, and makes collectors who fail to collect liable to pay the tax.
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    Tax credit for source deductions ensures remitted taxes are treated as payment on behalf of the relevant taxpayer and allocated by rule.
    Clause 390(5) treats sums remitted as tax paid on behalf of the person from or in respect of whose income such tax was deducted or collected, and Clause 390(6) empowers the Board to make rules for allocating that credit to such persons or to others and for specifying the tax year for which credit is allowed, extending the scope beyond conventional TDS/TCS to include specified pre-payments and leaving operational detail to subordinate rules.
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    Tax deducted is income received: gross receipts included for tax computation with credit for foreign withholding.
    Clause 396 deems amounts deducted under the relevant withholding chapter and income tax deducted abroad (where credit is allowed) to be income received for computing an assessee's taxable income, with specified carve out exceptions; this preserves gross income inclusion while permitting credit for taxes withheld and raises interpretative issues about the chapter's scope, the stated exceptions, cross border withholding and transitional treatment.
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    TDS nil-declaration prevents withholding when estimated total income is below taxable threshold, subject to prescribed declaration and reporting.
    Clause 393(6) permits certain recipients to avoid TDS by furnishing a prescribed written declaration that their estimated total income for the year yields nil tax; upon a valid declaration the payer must not deduct tax on specified payments and must forward a copy to tax authorities, subject to the condition that aggregate such incomes do not exceed the basic exemption limit and to general anti evasion consequences for false declarations.
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    Lower Deduction Certificates: streamlined TDS/TCS certification requiring AO satisfaction and binding certificate rates.
    Clause 395(1) creates a mechanism for Lower Deduction Certificates allowing taxpayers to apply for lower or nil deduction of tax at source; the Assessing Officer must issue a certificate when satisfied on objective material, the deductor must apply the specified rate until the certificate's validity, and procedural details, scope, validity periods and ancillary measures are to be provided by rules.
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    TDS on securities income: clarified withholding rules, treaty relief mechanics, and exemptions for capital gains and exempt fund receipts.
    Clause 393 establishes a tabular TDS regime on income from securities, distinguishing taxable securities income from capital gains and exempt receipts. Clause 393(2) prescribes withholding entries for Foreign Institutional Investors with rates referenced to an interpretative note and a 10% rate for specified funds, subject to documentation for treaty benefits. Clause 393(4) consolidates exemptions by excluding capital gains payable to foreign investors and exempt income of specified funds from TDS, aiming to avoid unnecessary withholding and refund procedures.
    Act RulesBills
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    Tax Deduction at Source clarifies withholding obligations on cross border bond and GDR payments to non residents, including DTAA interaction.
    Clause 393(2) Table S. No. 13 and 14 requires withholding on payments to non residents of interest or dividends and long term capital gains from bonds and GDRs referred to in section 209, mandates deduction at the earlier of credit or payment by any person responsible for the payment, prescribes fixed concessional withholding rates, integrates general TDS machinery including declarations and higher deduction for missing PAN, and preserves DTAA relief and exceptions where income is not chargeable.
    Act RulesBills
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    TDS on offshore fund income and capital gains: withholding at credit or payment, with higher exit withholding and treaty considerations.
    Clause 393(2) requires any person paying income in respect of specified units or long term capital gains on transfer of such units to deduct tax at source at the prescribed rates at the time of credit or payment, without any monetary threshold; the provision cross refers to definitions in section 208, deems credits to suspense accounts as payment for TDS, and is subject to subsections dealing with exceptions, declarations and specified exclusions, while raising interpretative issues on definitions, treaty interaction, gross up obligations and transitional treatment compared with the prior Section 196B regime.
    Act RulesBills
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    Withholding tax on non-resident unit income: consolidation preserves treaty relief and UTI exemption under prescribed conditions.
    Clause 393 consolidates TDS on income in respect of units paid to non-residents: Clause 393(2) requires deduction by any payer on units of specified mutual funds and specified companies paid to non-resident individuals and foreign companies at rates per Note 2 with DTAA benefits subject to prescribed documentation; Clause 393(4) exempts income on Unit Trust of India units payable to NRIs and non-resident HUFs subject to prescribed conditions and FEMA compliance, thereby retaining the legacy UTI carve-out while delegating exemption details to subordinate rules.
    Act RulesBills
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    TDS exemption for specified public entities prevents withholding on interest, dividends and other income, simplifying payer compliance.
    Clause 393(5) provides an overriding TDS exemption for payments to the Government, the Reserve Bank of India, statutorily tax exempt corporations established by or under a Central Act, and mutual funds specified in Schedule VII, covering interest, dividends (in respect of securities or shares owned by or in which they have full beneficial interest) and any other income accruing or arising to them, with the non obstante language ensuring the exemption prevails over other withholding obligations.
    Act RulesBills
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    Grossing-up requirement preserves tax base where payer bears recipient's tax liability, altering TDS computation and compliance.
    Clause 393(10) mandates a grossing-up requirement where the payer bears the recipient's tax: taxable income must be increased so that, after deduction of tax at the rates provided in the Chapter (including applicable surcharge and cess), the net amount equals the contractual payment. The clause applies to TDS payments under the Chapter except specified salary cases, covers residents and non residents, and requires use of the applicable DTAA rate when beneficial. Key practical issues include computation of add ons, allocation across composite payments, currency fluctuation effects, and contract drafting to evidence net of tax obligations.
    Act RulesBills
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    TDS on payments to non-residents: a table-based framework modernizes withholding obligations and aligns rates with treaty benefits.
    Clause 393(2) Table S.No.17 imposes a residuary TDS obligation on interest (excluding specified categories) and any other sum chargeable under the Act, excluding salaries, payable to non-residents or foreign companies; deduction is by "any person" at the earlier of credit or payment at the "rates in force," with treaty rates available subject to procedural compliance, and operates alongside exemptions, lower/nil deduction certificates, suspense-account deeming rules and grossing-up anti-avoidance provisions.
    Act RulesBills
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    TDS on partner payments: mandatory withholding on specified firm-to-partner payments with prescribed threshold and compliance duties.
    Mandatory withholding applies to sums in the nature of salary, remuneration, commission, bonus or interest paid or credited (including to the capital account) by a firm to a partner, deductible at ten per cent at the earlier of credit or payment, with a per-partner annual threshold exemption and declaration-based non-deduction mechanisms; the firm bears the deduction obligation and normal TDS procedures apply.
    Act RulesBills
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    TDS on virtual digital assets imposes withholding obligations with targeted exemptions for small-value and small-taxpayer transfers.
    The Bill requires withholding on any benefit or perquisite arising from business or profession whether cash or non-cash, obliges the provider to deduct tax and, if consideration is wholly or partly in kind with insufficient cash, to ensure tax payment before release. A parallel VDA withholding regime mandates deduction on transfers of virtual digital assets with specified exemptions for small-value transactions and small taxpayers, similar safeguards for non-cash consideration, and procedural rules addressing timing, aggregation and crediting for compliance.
    Act RulesBills
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    TDS on non-monetary benefits: providers must withhold tax on in-kind and indirect business advantages, affecting compliance and valuation.
    Clause 393(1)[Table: S.No. 8(iv)] and section 194R require the provider of any benefit or perquisite arising from business or profession to deduct tax at source on the value or aggregate value of such benefits, covering cash and non-cash advantages, with specified thresholds and exemptions for smaller providers; the Bill consolidates this obligation, clarifies anti-overlap treatment with other TDS provisions, links timing of deduction to credit or payment, and preserves reliance on administrative guidance for valuation and operational issues.

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      Amendments to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 upheld by the Supreme Court.

      9 June, 2022

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      2002 (10) TMI 796 - Supreme Court

      Amendments  to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 upheld by the Supreme Court.

      Certain writ petitions have been filed seeking to challenge Amendments made to the Code of Civil Procedure, by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002.

      Writ Petition (civil) 496 of 2002 was filed by Salem Advocate Bar Association and after notice was issued the petitioner sought leave of this Court to withdraw the writ petition. The court declined the request to withdraw the writ petition. The petition had been filed in public interest.


      The amendments sought to be made by the above amendment acts (Amendment Act 46 of 1999 and Amendment Act 22 of 2002) have been challenged but the hon'ble apex court refused to strike down the aforesaid amendments on the ground that there was no infirmity in the same.

      Summons to the Defendant within 30 days.

      A clarification was sought on an amendment made to Section 27 dealing with summons to the defendant. It has to be done within 30 days from the date of the institution of the suit. The hon'ble court clarified that object of this section is to avoid long delay in issue of summons for want of steps by the plaintiff. If all that is required to be done by a party is duly performed then compliance has been done by the party and no fault can be attributed to the party. The objective being, if a party concerned has taken steps to file the process fee along with completing the other formalities which are required to enable the court to issue the summons then such a party is not at fault.

      Arbitration, Conciliation, Judicial Settlement and Mediation.

      Section 89 introduced in the Code of civil procedure, 1908:

      It speaks of settlement of disputes outside the court through arbitration,conciliation, judicial settlement including settlement through Lok Adalat and mediation. Held that it being imperative that resort should be had to Alternative Dispute Resolution Mechanism with a view to bring to an end litigation between the parties at an early date. The parties shall follow the procedures as provided by the mechanism and accordingly appropriate rules be framed with regard to mediation.

      The ADR mechanism is successful in most of the countries but if a matter is not settled through conciliation or mediation or judicial settlement despite efforts being made, the case will ultimately go to trial.

      Section 89 is a new provision and even though arbitration or conciliation has been in place as a mode for setting the disputes, this has not really reduced the burden on the courts. Thus the court suggested that certain modalities have to be framed to make this amendment work. It being suggested to form a Committee to ensure that the amendments made become effective and result in quicker dispensation of justice.
      Any creases which require to be ironed out can be identified and apprehensions which may exist in the minds of the litigating public or the lawyer's clarified.

      A model case management formula as well as rules and regulations which should be followed while taking recourse to the ADR (Alternative Dispute Resolution) is referred to in Section 89. The model rules, with or without modification, which are formulated may be adopted by the High Courts concerned for giving effect to Section 89(2)(d).

      Intra Court Appeal.

      Section 100A which deals with intra-court appeals was absolutely fine as opined by the hon'ble court. No prejudice would be caused to the litigants by not providing for intra-court appeal, even where the value involved is large. The High Court by Rules, can provide that the Division Bench will hear the regular first appeal. A further right of appeal where the amount involved is nominal to a Division Bench will be increasing the workload of courts unnecessarily.

      Rejection of the Plaint.

      Order 7 Rule 11 to which Clauses (e) and (f) have been added which enable the court to reject the plaint where it is not filed in duplicate or where the plaintiff fails to comply with the provisions of Rule 9 of Order 7. There may not be an automatic rejection of the plaint at the first instance. The court should give an opportunity to rectify the defect and if the same not being done the court will have the liberty or the right to reject the plaint.

      Examination of Chief of the Witnesses.

      Order 18, Rule 4 has been substituted and Sub-rule (1) provides that in every case examination-in-chief of the witnesses shall be on affidavits and copies thereof shall be supplied to the opposite parties by the party who calls them for evidence.

      It being contended that it may not be possible for the party calling the witness to compel the witness to file an affidavit. It often happens that the witness may not be under the control of the party who wants to rely upon his evidence and that witness may have to be summoned through court.

      Order 16 Rule 1 provides for list of witnesses being filed and summons being issued to them for being present in court for recording their evidence. Rule 1A, on the other hand, refers to production of witnesses without summons where any party to the suit may bring any witness to give any evidence or to produce documents.

      Held by the apex court, reading the provisions of Order 16 and Order 18 together it appears to us that Order 18 Rule 4(1) will necessarily apply to a case contemplated by Order 16 Rule 1A, i.e. where any party to a suit, without applying for summoning under Rule 1 brings any witness to give evidence or produce any document. In such a case, examination-in-chief is not to be recorded in court but shall be in the form of an affidavit.

      Held that whether a witness shall be directed to file affidavit or be required to be present in court for recording of his evidence is a matter to be decided by the court in its discretion having regard to the facts of each case.

      Evidence of a witness to be taken by the Court or by the Commissioner.

      Order 18 Rule 4(2) gives the court the power to decide as to whether evidence of a witness shall be taken either by the court or by the Commissioner.

      An apprehension was raised to the effect that the court has no discretion and once it decides that the evidence will recorded by the Commissioner then evidence of other witnesses cannot be recorded in court.

      The hon'ble bench did not agree to the above contention. The Court has a discretion to either record the evidence in Court or through Commissioner or either of them.

      Order 18 Rule 4(3) provides that the evidence may be recorded either in writing or mechanically in the presence of the Judge or the Commissioner. The use of the word 'mechanically' indicates that the evidence can be recorded even with the help of the electronic media, audio or audio-visual, and whenever the evidence is recorded by the Commissioner it will be advisable that it should be done simultaneously,at least an audio recording of the statement of the witnesses so as to obviate any controversy at a later stage.

      Held by the court that Rule 17A has been deleted by the Amendment Act, 2002 with a view that unnecessarily applications are not filed primarily with a view to prolong the trial. The contention of the counsel as to deletion may cause hardship to the litigants was not accepted by the hon'ble court.

      Memorandum of Appeal.

      Rule 9 which was inserted in Order 41 states of "Registry of memorandum of appeal". The court from whose decree an appeal lies shall entertain the memorandum of appeal and shall endorse thereon the date of presentation and shall register the appeal in a book of appeal kept for that purpose. This book be called the register of appeal.
      It being a clear proposition of law that an appeal is to be filed under Order 41 Rule 1 in the court in which it is maintainable.

      Order 41 Rule 9 contemplates that a copy of memorandum of appeal which has been filed in the Appellate Court should also be presented before the court against whose decree the appeal has been filed and endorsement thereof shall be made by the decreeing court in a book called the Register of Appeals.

      The intention of the Legislature being that the court against whose decree an appeal has been filed should be made aware of the factum of the filing of the appeal which may or may not be relevant at a future date.

      Now just because a memorandum of appeal is not filed under Order 41 Rule 9 will not, to our mind, make the appeal filed in the appellate court as a defective one.

      The hon'ble court  hoped that the amendments made in the Code of Civil Procedure would help in expeditious disposal of cases in the trial courts and the appellate courts.

      The hon'ble apex court further held, that a copy of the judgment of the present matter/writ petition be sent to the Registrars of all the High Court’s so that necessary action can be taken by the respective High Courts and any writ petition pending in those High Courts can be formally disposed of.

      Thus the amendments made to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 were upheld/guarded by the hon'ble apex court in the present Writ Petition (civil) 496 of 2002.

      Procedure is an enabling tool to achieve the objectives of equity and justice. It may not be easy to challenge the same by way of invoking the writ jurisdiction/s.

       

       


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      2002 (10) TMI 796 - Supreme Court

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