2002 (3) TMI 19 - HC - Income Tax

Issues Involved:
1. Validity of the orders under Section 201 of the Income-tax Act, 1961.
2. Validity of Circular No. 715, dated August 8, 1995, and Circular No. 681, dated March 8, 1994, issued by the Central Board of Direct Taxes (CBDT).
3. Jurisdiction of the CBDT under Section 119 of the Income-tax Act.
4. Applicability of Section 194C of the Income-tax Act to the transactions in question.
5. Availability and necessity of exhausting alternative statutory remedies before invoking Article 226 of the Constitution of India.

Detailed Analysis:

1. Validity of the Orders under Section 201 of the Income-tax Act, 1961:
The petitioner, an educational institute, challenged the orders dated March 22, 1996, and March 25, 1996, issued by the Assistant Commissioner of Income-tax, determining the liability for tax deduction at source (TDS) for the periods from April 1, 1994, to March 31, 1995, and April 1, 1995, to June 30, 1995, respectively. The orders were based on the non-deduction of tax on payments for contracts such as AMC of computers, printing, courier services, and rental payments. The petitioner contended that these transactions did not fall under the purview of Section 194C of the Act, arguing that the transactions were either sales of goods or lacked a contractual basis.

2. Validity of Circular No. 715 and Circular No. 681 Issued by the CBDT:
The petitioner also sought the quashing of Circular No. 715 and Circular No. 681 issued by the CBDT, arguing that these circulars exceeded the jurisdiction conferred under Section 119 of the Act. The petitioner claimed that the circulars intended to widen the scope and meaning of the word "work" under Section 194C, which was beyond the CBDT's authority.

3. Jurisdiction of the CBDT under Section 119 of the Income-tax Act:
The petitioner argued that the CBDT had no power to make "supplemental legislation" under the guise of exercising power under Section 119 of the Act. The interpretation of the provisions of the law or judgments of the courts should be the domain of competent courts, not statutory or administrative authorities like the CBDT.

4. Applicability of Section 194C of the Income-tax Act to the Transactions in Question:
The petitioner contended that the transactions related to printing, courier services, and hotel payments did not constitute "work" under Section 194C. Specifically, the petitioner argued that the printing transactions were sales of goods, and there were no oral or written contracts with courier services. The Department, however, maintained that these payments were job charges or rent, thus falling under the purview of TDS provisions.

5. Availability and Necessity of Exhausting Alternative Statutory Remedies:
The court emphasized that the petitioner had effective legal remedies available under the Income-tax Act, such as appeals to the Income-tax Appellate Tribunal and further judicial review. The court reiterated that Article 226 should not be used to circumvent statutory remedies unless extraordinary circumstances justified such action. The court observed that resolving the factual controversies required comprehensive adjudication by the authorities under the Act, and the High Court should not ordinarily enter into disputed questions of fact.

Conclusion:
The court dismissed the writ petitions, emphasizing the need for the petitioner to exhaust alternative statutory remedies before approaching the High Court. The court reserved the petitioner's liberty to file an appeal before the jurisdictional appellate authority within one month and left open all factual and legal contentions for adjudication by the appellate authority. The court also reserved the petitioner's right to challenge the validity of the impugned circulars at an appropriate stage if necessary.

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