Civil Writ Jurisdiction Case No. 4112 of 1997. Case: 1. Advocates Association, Patna High Court, through its President Shyama Prasad Mukherjee S/o Late Ashutosh Mukherjee, 2. B. P. Verma S/o Late J. P. Verma Vs 1. Union of India, through Secretary, Ministry of Finance, Department of Economic Affairs, New Delhi, 2. Central Board of Direct Taxes, Ministry of Finance, Department of Economic Affairs, New Delhi, though its Director (TPL). High Court of Patna (India)

Case NumberCivil Writ Jurisdiction Case No. 4112 of 1997
CounselCase No
JudgesSudhir Kumar Katriar & Birendra Prasad Verma, JJ.
IssueHimachal Pradesh General Sales Tax Act, 1968; Constitution of India, 1950 - Article 265; Income-tax Act, 1961 - Sections 194J(a), 194J, 244
Judgement DateSeptember 20, 2010
CourtHigh Court of Patna (India)

Judgment:

Sudhir Kumar Katriar, J.

  1. This writ petition has been preferred by an Association of Lawyers as well as a lawyer, with the prayer to quash the offending portion of circular No.715, dated 8.8.1995 (Annexure-1), whereby the person(s) contemplated by section 194-J (a) of the Income Tax 1961 (hereinafter referred to as the Act), are required to deduct tax at source on the gross amount of the bill including reimbursement for actual expenses to a lawyer. The respondents have placed on record their counter affidavit and have opposed the writ petition.

  2. We have perused the materials on record and considered of the submissions of the learned counsel for the parties. Section 194-J of the Act obliges any person, not being an individual or Hindu Undivided family making payment for professional services, to a person carrying legal, medical, or architectural consultancy etc., to deduct at source by way of advance income tax on the entire bill amount, including the amount of actual expenses incurred by the lawyer and reimbursement of which is made by the person making payment to the lawyer. The relevant portions of section 194-J, are reproduced herein below:

    [Fees for professional or technical services.

    194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of -

    (a) fees for professional services, or

    (b) fees for technical services [or]

    (c) Royalty, or

    (d) any sum referred to in clause (va) of section 28]

    shall, at the time of credit of such sum to the account of the payee or at the time of payment therefore in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to [ten] per cent of such sum as income-tax on income comprised therein:

    Section 207 is headed "Liability for payment of advance tax", and Section 208 is headed "Conditions of liability to pay advance tax." Section 244 of the Act is headed "Interest on refund where no claim is needed and provides for payment of interest on the amount to be refunded by the Central Government to the assessee on the excess amount of taxes including tax deducted at source paid by him."

  3. The Board of Direct Taxes noticed that persons making payment of professional fee to lawyers were not deducting taxes at source as per the provisions of section 194-J of the Act, and there was no consistency in the method being adopted by different persons. Some were collecting the T.D.S only on the net income being paid to professionals, and others were collecting T.D.S on the gross value of the bill amount being...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT