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The Commissioner of Income Tax (TDS) Versus The Commissioner, Akola Municipal Corporation

2017 (8) TMI 418 - BOMBAY HIGH COURT

Liability to collect tax at source u/s 206C(1C) - octroi collected by the agent appointed by the assessee - Held that:- Section 206C(1C) of the Act obliges every person who grants a contract/lease transferring his right to collect toll to also collect tax at source as specified at serial No.2 of the Table to Section 206C(1C) of the Act. However, Section 206C(1C) of the Act cannot be extended to oblige the Corporation to collect tax at source from its agent in respect of octroi collected. - S .....

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nue to extend the ambit and scope of section to also include contracts, license or lease for collection of items other then toll, parking fees and for mining and quarrying. Therefore, there is no legislative mandate to collect tax at source or the octroi collected under Section 206C(1C) of the Act. - No fault can be found with the impugned order of the Tribunal. - Decided in favour of assessee and against Revenue. - Income Tax Appeal No. 91, 92, 97 of 2008 - Dated:- 1-7-2017 - M. S. Sanklech .....

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March, 2009 on the following identical substantial questions of law : 'i) Whether the Tribunal is correct in law in holding that there is no liability to collect tax at source under Section 206C(1C) of the Income Tax Act, 1961 in respect of octroi collected by the agent appointed by the assessee? ii) Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that "octroi" collectible by the assessee is different than "toll" leviable by .....

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also issued in the name of respondent/assessee. The entire amount collected by the agent is remitted to the respondent/assessee and the agent is entitled to a commission depending upon the quantum of octroi collected during the year. 4. The appellant/Revenue issued notices to the respondent/assessee for the subject assessment years asking it to show cause why it should not be held liable to pay the tax collected at source (TCS) under Section 206C(1C) of the Act. The basis of the notices was that .....

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gent/licensee during three years at the rate prescribed in Section 206C(1C) of the Act on the amount received from its agent/licensee along with interests thereon. Thus, the order dated 20th April, 2007 demanded an amount in the aggregate of ₹ 1.09 Crores being the tax collectible at source by the respondent/assessee along with interest thereon of ₹ 15.96 Lakhs for the subject three assessing years. 6. Being aggrieved, the respondent/assessee carried the issue in appeal in respect of .....

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for the three subject assessment years, the Tribunal by the impugned order allowed respondent/assessee's appeal. The impugned order hold that Section 206C (1C) of the Act obliges a person who grants an agency/license, or in any other manner transfers his right in respect of parking lot, toll plaza or a mine and quarry to another person, then while receiving the amount so collected from such other person i.e. agent/licensee (the transferee of its right), the respondent/assessee should also co .....

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;s appeal. 8. Being aggrieved, the Revenue is in appeal before us. 9. Before we consider the rival submissions, it would be useful to reproduce Section 206C(1C) of the Act which arises for consideration in the present appeals and reads as under : "206C(1);(1A);(1B);....................... (1C) Every person, who grants a lease or a licence or enters into a contract or otherwise transfers any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry, to a .....

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ature specified in column (2) of the Table blow, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income tax: TABLE Sl. No. Nature of contract or licence or lease etc. Percentage (i) Parking lot Two per cent (ii) Toll Plaza Two per cent (iii) Mining and quarrying Two per cent 10. Mr. Parchure, learned counsel appearing for the appellant/Revenue in support of appeal submits that there is no difference between "octroi" .....

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n the impugned order and submits that legally and commercially toll is considered to be distinct and differ from an octroi. Thus, it is submitted that there is no occasion to interfere with the impugned order of the Tribunal. 12. We find that the impugned order of the Tribunal is a detailed order and it has examined in depth the difference between the meaning of the word 'toll' and 'octroi' and pointed out how differently the two words are legally and popularly understood. The Se .....

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toll'. This again is indicative of the fact that legally 'octroi' as a tax is distinct from a 'toll' as a tax. Further, we note the impugned order also placed reliance upon various dictionary meanings which again show that a 'toll' is normally collected on account of use of the roads by animals and humans. As against which, 'octroi' is normally collected on account of goods entering the corporation limits (area) for use, consumption or sale. Keeping in view th .....

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fiscal statues are strictly construed. Long years ago, in the case of Cape Brandy Syndicate vs. IRC 1921 1 Kings Bench 64, Justice Rowlatt explained the principles of strict construction of a taxing statues, as follows : "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." .....

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nnot import provisions in the statues so as to supply any assumed deficiency." 14. Recently the Supreme Court in CIT vs. Calcutta Knitwears [2014] 362 ITL 673 (SC) has held that while interpreting fiscal statues, the Court must not add or substitute the word in the provision. Court observed as under : "31. This Court in Tata Consultancy Services v. State of Andhra Pradesh has ascribed plain meaning to the terms computer and computer programme in a fiscal statute and reiterating the pro .....

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n omission in the words used by the legislature, the Court cannot correct or make up the deficiency. Where the legislative intent is clear from the language, the Court should give effect to it (Delhi Financial Corporation v. Rajiv Anand, 2004 (11) SCC 625; Government of Andhra Pradesh v. Road Rollers Owners Welfare Association, 2004(6) SCC 210). 33. In B. Premanand and Ors. v. Mohan Koikal and Ors., (2011)4 SCC 266 this Court has observed as follows: The literal rule of interpretation really mea .....

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e, donkey or an elephant. In other words, the literal rule of interpretation simply means that we mean what we say and we say what we mean. If we do not follow the literal rule of interpretation, social life will become impossible, and we will not understand each other. If we say that a certain object is a book, then we mean it is a book. If we say it is a book, but we mean it is a horse, table or an elephant, then we will not be able to communicate with each other. Life will become impossible. .....

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look fairly at the language used and nothing more and nothing less. (J. Srinivasa Rao v. Govt. of A.P. and Anr. 2006(13) SCALE 27, Raja Jagadambika Pratap Narain Singh v. C.B.D.T., [1975] 100 ITR 698(SC))." (emphasis supplied). 15. Further, the Supreme Court in CIT vs. Vatika Township (P) Ltd. 367 ITR 466 has quoted with approval Lord Cairns in Partington V. Attorney General, As I understand the principle of all fiscal legislation it is this: If the person sought to be taxed comes within th .....

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