TMI Blog1997 (5) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... mber of people at a fixed rate per person exceeding the limit will attract the provisions of section 194C of the Income-tax Act, 1961 (in short "the Act"). The first petitioner is a public limited company owning and operating a chain of five star hotels. One of its hotels is situated at Bangalore. The second petitioner is one of its shareholders. According to the petitioners in their hotels they offer a number of facilities and amenities to patrons such as a select restaurant, a restaurant with facility of orchestra and a banquet hall for special private gatherings and entertainments and other similar facilities. According to the petitioners, the petitioner company provides banquet facilities within its hotel premises to the patrons. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken to such deduction at source, the same was refused to be acceded to by the customer, Tata Informations Systems Limited, resting its stand on the clarifications given by the first respondent-Deputy Commissioner of Income-tax, in its communication at annexure "B". Their reply dated February 29, 1996, has been placed at annexure "D". Therefore, the first and foremost question to be considered is as to whether the replies/clarifications/instructions given by the first respondent-Deputy Commissioner of Income-tax, or for that sake, given by any of the income-tax authorities referred to in section 116 of the Act has any statutory sanction so as to bind the persons governed by the provisions of the Act and thereby giving rise to a cause of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbiguity or misunderstanding, the clarifications given are usually communicated by an official of the Department shortly after the meeting. The first respondent at the relevant time holding the post of Deputy Commissioner of Income-tax (TDS) and also being concerned with effective implementation of the amended provisions of section 194C of the Act was also present at the interface meeting along with other senior officials of the Department. The Chief Commissioner and Commissioner have given clarifications as stated above and they have been communicated in writing by the first respondent. Thus it may be noticed that on the provision in question being amended by the Finance Act, 1995, and queries being raised by the trade association as regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to function within the four corners of the powers and duties assigned to them under the Act. They cannot claim to themselves any inherent power howsoever benevolent or plausible the purpose it is intended to serve. The power to issue clarifications of purportedly ambiguous statutory provisions lies only with the Legislature or its delegate under specified conditions. In the absence of any such delegation, such a power cannot be exercised by any person and if it so exercised then it will be nothing but a nullity binding none on the earth. In the case of Jalan Trading Co. P. Ltd. v. Mill Mazdoor Sabha [1966] 36 Comp Cas 901 ; AIR 1967 SC 691, Para 21, it has been held by the Supreme Court that "a provision authorising the Central Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in favour of the Central Board of Direct Taxes (in short "the Board ") to issue instructions to subordinate income-tax authorities for proper administration of the Act and who are required to observe and follow such instructions. None the less, it may be made clear that such instructions which may even pertain to the interpretation of a statutory provision under the Act cannot bind the taxpayers requiring to seek any remedy against the said instructions/clarifications either statutory or constitutional. But to my utter surprise the respondent-Deputy Commissioner has come on oath before this court to take a stand that the instructions issued by the Commissioners will bind the taxpayers, unless they get rid of it by availing of remedies as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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