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TMI Blog1989 (4) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... , provides that in the case of a buyer obtaining in any sale by way of auction, tender or any other mode, conducted by the seller the right to receive timber obtained by any mode other than under forest lease, a sum equal to 15 per cent. of the amount paid or payable by the buyer in respect of the sale of such right or as the purchase price shall be deemed to be the profits and gains of the buyer from the business of trading in such goods as chargeable to tax under the head "Profits and gains of business or profession". In other words, when the appellants are purchasing timber in auction, 15% of the purchase price shall be deemed to be the profits and gains of business or profession. Section 206C is the provision for deduction at source and that section provides that a person being a seller referred to in section 44AC, shall, at the time of debiting of the amount payable by the buyer referred to in that section to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, collect from the buyer in respect of the sale of timber obtained by any mode other than under a forest lease, 10 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not apply to a buyer (other than a buyer who obtains any goods from any seller which is a public sector company) in the further sale of any goods obtained under or in pursuance of the sale under sub-section (1). (3) In a case where the business carried on by the assessee does not consist exclusively of trading in goods to which this section applies and where separate accounts are not maintained or are not available the amount of expenses attributable to such other business shall be an amount which bears to the total expenses of the business carried on by the assessee the same proportion as the turnover of such other business bears to the total turnover of the business carried on by the assessee. Explanation.-For the purposes of this section, 'seller' means the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act or any company, or firm." "206C. Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc.-(1) Every person, being a seller referred to in section 44AC, shall, at the time of debiting of the amount payable by the buyer referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar for which such income is assessable. (5) Every person collecting tax in accordance with the provisions of this section shall, within ten days from the date of debit or receipt of the amount, furnish to the buyer to whose account such amount is debited or from whom such payment is received, a certificate to the effect that tax has been collected, and specifying the sum so collected, the rate at which the tax has been collected and such other particulars as may be prescribed. (6) Any person responsible for collecting the tax who fails to collect the tax in accordance with the provisions of this section, shall, notwithstanding such failure, be liable to pay the tax to the credit of the Central Government in accordance with the provisions of sub-section (3). (7) Without prejudice to the provisions of sub-section (6), if the seller does not collect the tax or after collecting the tax fails to pay it as required under this section, he shall be liable to pay simple interest at the rate of two per cent. per month or part thereof on the amount of such tax from the date on which such tax was collectible to the date on which the tax was actually paid. (8) Where the tax has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer are utilised for the purpose of manufacturing, processing or producing any article or thing. Similarly, if the goods purchased are destroyed or lost subsequently, there would not be any occasion for trading in such goods and, therefore, the tax collected under section 206C would have to be refunded. Section 206C also ensures that no tax will be collected at source from the buyer who purchases goods for the purpose of manufacturing, processing or producing any article. If a buyer, on an application made by him, obtains a certificate from the Assessing Officer and furnishes the same to the seller that the goods to be purchased are to be utilised for carrying on any of the activities referred to in the section, no tax need be paid under section 206C of the Act. The presumptive rates of profits specified in respect of different commodities in section 44AC of the Income-tax Act for determining the income chargeable to tax will be applied to the amount paid or payable by the buyer as the purchase price in respect of such goods. The purchase price for the purpose will be the cost of the commodity inclusive of any excise duty, sales tax or any other levy, whatever its nomenclature, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income". It is well-settled that the entries in the Lists are not powers of legislation but only fields or legislative heads and designed to define and to delimit the respective areas of legislative competence of the State and Union legislatures. The language of the entries will have to be given the widest scope and in interpreting the entry, it would not be reasonable to import any limitation by comparing or contrasting it with any other entry in the same list. Normally, the constitutionality will have to be presumed in interpreting the enactment, as stated by P. H. Lane, learned author of Australian Federal System, 2 nd Edn., at pp. 106 and 107 : "In testing the validity of a law it is required to (i) scrutinize the very terms of the challenged law, its specific provisions and the law as a whole ; and (ii) ascertain from these terms the precise and immediate impact of the law, what kind of control or restriction is exerted by the law in the realm of rights and duties. Parliament has, prima facie, power to tax whom it chooses, power to exempt whom it chooses, power to impose such conditions as to liability or as to exemption as it chooses. The power to tax is the one gre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llow-Falkiner Pty. Ltd. v. Federal Commissioner of Taxation [1928] 34 Aus LR 276), nor does it to substitute in the case of a foreign controlled business, for taxable income ordinarily calculated a percentage of gross receipts fixed by the discretionary judgment of the Commissioner (British) Imperial Oil Cases [1925] 35 CLR 422 [1926] 38 CLR 153. " The above observation clearly lays down that income can be calculated at a percentage of gross receipts of any assessee. It is held in that case that even in its ordinary economic sense, the expression "income" includes not merely what is received or what comes in by exploiting the use of a property but also what one saves by using it oneself. That which can be converted into income can be reasonably regarded as giving rise to income. Section 295 of the Income-tax Act is the rule-making power. In exercise of such power, a rule has been made in the case of income received from tea. 40% of the total income will be considered as profits and gains chargeable under the Income-tax Act and the rest, under the Agricultural Income-tax Act. Such a fixation was considered not objectionable under the Income-tax Act. If that be so, considering 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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