T K ABOOBACKER Vs. UNION OF INDIA

JUDGEMENT

(1.) THESE writ appeals are filed against the judgment in Original Petitions Nos. 8292 of 1988, 8237 of 1988, 8291 of 1988 and 8257 of 1988 by some of the writ petitioners therein. The writ petitioners are all citizens of India doing business in timber by participating in the auctions/ sales conducted in the various forest timber depots under the control of the concerned DFO who are respondents in the writ appeals. The common grievances in the writ appeals are against s.44AC and s. 206C of the IT Act, 1961, introduced by the Finance Act, 1988. Sec. 44AC is to come into force w.e.f. April 1, 1989, and s. 206C came into force w.e.f. June 1, 1988.

(2.) SEC . 44AC, in short, 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 a 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 per cent of the purchase price shall be deemed to be the profits and gains of business or profession. Sec. 206C is the provision for deduction at source and that section provides that a person being a seller referred to in s. 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 cent of the amount as income-tax on income comprised therein. The provisions of ss. 44AC and 206C are extracted hereunder:

(3.) 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."