|CORAM:||A. D. Jain (JM), Pramod Kumar (AM)|
|CATCH WORDS:||TDS deduction|
|DATE:||June 10, 2015 (Date of pronouncement)|
|DATE:||June 15, 2015 (Date of publication)|
|AY:||2007-08 to 2010-11|
|FILE:||Click here to download the file in pdf format|
|S. 194C: Only payments "in pursuance of a contract" are subject to TDS. Payments made under a legal obligation are not covered|
The appellant has made payments to Punjab Water Supply and Sewerage Board for execution of work relating to sewerage pipe lines and for treatment of polluted water of the city. However, such payments are out of legal obligations rather than contractual arrangements. It is only when payments are made “in pursuance of a contract” that the provisions of section 194C come into play. The contract may be oral or written, express or implied but there must be a contract nevertheless. In the present case, the payment is on account of legal obligation under section 24(1) of the Punjab Water Supply and Sewerage Board Act 1976. Accordingly, the provisions of section 194C did not come into play on the facts of this case. Therefore, the impugned demands under section 201(1) and 201(1A) r.w.s. 194C are wholly devoid of any legally sustainable merits.