2002 (7) TMI 30 - HC - Income Tax

TDS - Contractor - The above batch of writ appeals have been filed questioning the orders of the learned single judge, in striking down Circular No. 681, dated March 8, 1994, issued by the Central Board of Direct Taxes on the ground of it being ultra vires section 194C of the Income-tax Act, 1961 - The argument that inasmuch as the Finance Act, 1995, was enacted authorising the deduction even for mere transportation of goods, and as such, the circular is deemed to have been ratified by Parliament is also liable to be rejected, for the reason that the said Finance Act, 1995, which came into effect from July 1, 1995, is only prospective in operation and not retrospective. It is also clear from the judgment of the Supreme Court, cited supra. In view of the above, all the writ appeals are dismissed

Summary

The High Court of Madras dismissed writ appeals challenging the legality of Circular No. 681, dated March 8, 1994, issued by the Central Board of Direct Taxes. The circular authorized tax deduction at source under section 194C of the Income-tax Act, 1961. The court ruled that section 194C did not authorize tax deduction for mere carriage of goods by transportation in motor vehicles. The judgment was based on previous decisions by the Bombay High Court and the Supreme Court. The court rejected the argument that a later Finance Act ratified the circular, as it was prospective, not retrospective. All writ appeals were dismissed with no costs.