2025 (2) TMI 1087 - SC - Income Tax

Tax deductions obligations and the auctioning process of properties - obligation of the High-Powered Sale Committee (HPSC) to deduct tax at source on interest accruing on deposits in Fixed Deposit and Savings Bank Accounts u/s 194 HELD THAT - As informed by learned counsel for the parties that the HPSC has been able to meet on 13 occasions in almost 7 months. We find that this has led to creation of an anomalous situation. We say so for the reason that we have fixed the honorarium of the Member Secretary-cum-Nodal Officer of the Committee who is a whole-time officer at Rs.7, 00, 000/- per month (instead of Rs.75, 000/- per sitting day). However the Chairperson and other member of the Committee continue to draw honorarium of Rs.2, 00, 000/- and Rs.1, 50, 000/- per sitting date. Since there have not been many sittings it is well understood that their honorarium is far less than that of the Member Secretary. Taking into consideration all the attending circumstances we deem it appropriate to modify paragraph 12(i) and 12 (ii) of our judgment 2024 (7) TMI 935 - SUPREME COURT and consequently to direct that the Chairperson of the HPSC shall be entitled to a lump-sum honorarium of Rs.13, 00, 000/- per month w.e.f. February 2025 besides the travelling boarding and other miscellaneous expenses as may be incurred in discharging the assigned responsibilities. Similarly learned Member who is a former Judge of the High Court shall be entitled to a lump-sum honorarium of Rs.10, 00, 000/- per month in addition to travelling boarding and other miscellaneous expenses as may be incurred in discharging the assigned responsibilities. We request the HPSC to evolve some more measures to expedite the process so that the actual auctioning can commence giving a ray of hope to the investors for the refund of their amount.

Summary

The Court addressed multiple issues in the judgment, primarily focusing on the obligations related to tax deductions and the auctioning process of properties. The key issues considered and analyzed in the judgment are as follows:1. Tax Deduction Obligations: - The Court considered the obligation of the High-Powered Sale Committee (HPSC) to deduct tax at source on interest accruing on deposits in Fixed Deposit and Savings Bank Accounts under Section 194 of the Income Tax Act. - The Court directed that the HPSC is discharged from the obligation to deduct tax at source, shifting this responsibility to the investors-cum-depositors upon receipt of funds. - The modalities of tax payment by investors were to be resolved by the HPSC, allowing for partial payments followed by full payment upon proof of tax deposit.2. Liability for Other Payments: - The Court addressed the liability of the HPSC to deduct tax at source on payments for remuneration, rent, or similar payments. - It was ruled that the HPSC is discharged from this liability, with the onus of paying applicable tax shifting to the recipients upon receipt of payments.3. Auctioning Process Clarifications: - The Court clarified the responsibilities of the HPSC in ensuring fair and transparent auctioning of properties. - Private entity involvement was to be minimized, with the HPSC primarily responsible for the auction process. - The HPSC was directed to continue e-tendering through an e-portal, with details published in local newspapers for wider publicity. - In cases of poor response to e-tendering, the HPSC could resort to conventional auction methods through national and local newspaper notices.Significant Holdings:- The Court held that the HPSC is relieved of tax deduction obligations on interest payments, shifting this responsibility to investors.- It was established that the HPSC's liability for tax deductions on various payments is discharged, with recipients responsible for tax payments.- The Court clarified the auctioning process responsibilities of the HPSC, emphasizing transparency and wider publicity for e-auctions.The judgment also included modifications to the honorarium of HPSC members to expedite the auctioning process and ensure effective functioning. The Court urged the HPSC to implement measures to accelerate the auction process for the benefit of investors awaiting refunds. Additionally, various Interlocutory Applications were disposed of or dismissed based on specific orders and requests made by the parties involved.