LAWS(GJH)-2014-9-239

CHANDRAVADAN DHRUV Vs. MUNICIPAL COMMISSIONER & ORS

Decided On September 05, 2014
Chandravadan Dhruv Appellant
V/S
Municipal Commissioner And Ors Respondents

JUDGEMENT

(1.) BY this Public Interest Litigation, the petitioner -in -person, a journalist of a Gujarati newspaper, has prayed for direction upon the Income Tax Authority to take appropriate steps, including levy of penalty and interest, upon the respondent No.1/the Municipal Commissioner, Vadodara Municipal Corporation, for non -compliance of the provisions contained in Section 194 -I of the Income Tax Act, 1961 for not deducting TDS in respect of making payment of rent to the respondent No.2.

(2.) ACCORDING to the petitioner, the Vadodara Municipal Corporation from the year 1994 has been taking bulldozer on rent from the respondent No.2/the Managing Director, Gujarat State Land Development Corporation Ltd. and under the aforesaid heading of rent , the respondent No.1 has made payment of Rs.4,87,83,300/ - during the years 1998 to 2013 to the Gujarat State Land Development Corporation Ltd. but did not care to deduct tax at source, as provided in Section 194 -I of the Income Tax Act, 1961. The petitioner contends that for the above violation of mandatory provision of law, the respondent No.1 has become deemed assessee in default within the meaning of Section 201 of the Income Tax Act but the Income Tax Authority did not take any step in spite of continuous violation of the mandatory provision at the instance of the respondent No.1.

(3.) THE respondent No.1 has filed affidavit -in -reply thereby asserting that the Municipal Corporation under a bona fide but erroneous impression had not been deducting tax at source, as required under Section 194 -I of the Act, at the time when it credited the amount of rent in the account of the Gujarat State Land Development Corporation Ltd. for the assessment years up to 2012 - 13. The respondent No.1, however, claimed that to the best of information available with the Corporation, the payee of the amount, namely, the Gujarat State Land Development Corporation Ltd., has been paying income tax at the prescribed rate on the entire amount received by it from the Corporation and thus, there has been no loss of revenue to the Department. It is further asserted that income tax returns of the Corporation for the previous years have already been assessed by the Income Tax Authority and no notice has been served upon the Corporation for default in payment of the tax at source on payment of advance rent to the Gujarat State Land Development Corporation Ltd., presumably because of the revenue neutrality of the transaction. The further case of the respondent No.1 is that on becoming aware of the correct position of law, the Corporation has taken immediate corrective steps and is now deducting tax at source on payment of rent being made by it to the Gujarat State Land Development Corporation Ltd. The respondent No.1 has further assured this Court that the Corporation would henceforth deduct tax at source, as required under Section 194 -I of the Income Tax Act on the rent paid by it for hiring of bulldozers from the Gujarat State Land Development Corporation Ltd. and would deposit the same in accordance with law.