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2019 (10) TMI 928 - HC - Income TaxTDS u/Sec. 194J /194C - sale of Shrink- Wrapped-packaged software on CD/DVD - Petitioner seeks a direction that the Central Board of Direct Tax (CBDT)should issue a direction to Shrink-Wrapped-packaged software on CD/DVD, cannot be subjected to tax deduction at source under Sections 194J/194C - HELD THAT - In this case, the obligation to deduct tax at source under the Act is on the Petitioner s customers under Section 194C/194J of the Act. In all cases where it is of the view that the payment made is of the nature specified under Sections 194C/194J of the Act, it is liable to deduct tax at source and pay it to the Revenue. This non-deduction of tax by the Petitioner s customers visits it with consequences u/s 201. Therefore, in such a case, the legal right if any is of the customer who is required to deduct tax at source. In any case, there is no legal right in the Petitioner and/or its customers to compel the CBDT to give a ruling on the issue of tax deduction at source. It is clear in terms of Section 119(1) of the Act, there is no duty cast upon the CBDT to issue clarification and decide the matters which would be essentially in the realm of adjudication before the authorities under the Act. The CBDT would also be barred for issuing of instruction in respect of the Petitioner s application b virtue of the proviso (a) to Section 119(1) - writ of mandamus can not be issued, directing the CBDT to consider and decide Petitioner s representation/ application. We decline to entertain this Petition.
Issues:
1. Whether the sale of Shrink-Wrapped-packaged software on CD/DVD is considered a Sale of Goods not subjected to TDS under Sections 194J/194C of the Income Tax Act? 2. Whether the Central Board of Direct Tax (CBDT) should issue a clarification that Shrink-Wrapped-packaged software on CD/DVD is not subjected to tax deduction at source under Sections 194J/194C of the Act? Analysis: 1. The petitioner sought a ruling that no tax deduction at source under Section 194J/194C of the Income Tax Act should be made for Shrink-Wrapped-packaged software. However, during the hearing, the petitioner's counsel clarified that they are not pressing for this prayer as it seeks an Advance Ruling by the Court. The obligation to deduct tax at source under the Act lies with the petitioner's customers under Section 194C/194J, and the non-deduction of tax by customers can lead to consequences under Section 201 of the Act. The court stated that there is no legal right in the petitioner or its customers to compel the CBDT to provide a ruling on tax deduction at source. 2. The petitioner requested a direction for the CBDT to issue a clarification that Shrink-Wrapped-packaged software on CD/DVD is not subject to tax deduction at source under Sections 194J/194C of the Act. The petitioner relied on Section 119(1) of the Act, which empowers the CBDT to issue orders, instructions, and directions for the proper administration of the Act. However, the court noted that Section 119(1) does not impose a duty on the CBDT to issue clarifications that fall within the realm of adjudication before authorities under the Act. The court further highlighted that the CBDT is barred from issuing instructions on the petitioner's application under the proviso (a) to Section 119(1) of the Act. Consequently, the court held that a writ of mandamus cannot be issued to direct the CBDT to consider and decide the petitioner's representation/application. In conclusion, the court declined to entertain the petition, leading to the dismissal of the Writ Petition.
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