High Court Bar Association vs Central Board of Direct Taxes

K. Shivashankar Bhat, J.—This writ petition is by the Bar Association as well as one of the Advocates questioning the circular issued by the CBDT governing section 194C of the income tax Act, 1961 (''the Act'') whereby the CBDT purports to rope in several professionals like Advocates, Architects, Chartered Accountants, etc., into the net of section 194C of the Act. It is unnecessary to refer to the contentions in detail. The various aspects involved in this petition have been considered by a Bench of this Court, of which one of us (K. Shivashankar Bhat, J) was a member in S.R.F. Finance Ltd. Vs. Central Board of Direct Taxes and others, . It has been clearly held therein that the professionals of this nature are not covered by section 194C and these professionals do not ''carry out any work'', as stated in the said provision.

Mr. Pandey, the learned counsel for the revenue, however, contends that this Court should have referred to the dictionary meaning of the word ''contract'', but that has not been done and referred to the decision of the Supreme Court in State of Orissa and Others Vs. Titaghur Paper Mills Company Limited and Another, in this regard. We do not think so. The relevant principles are stated in S.R.F. Finance Ltd.''s case (supra) and are already considered. Dictionary meaning cannot always dictate the scope of a word. In fact, the words ''carry out any work'' in section 194C are the crucial words. The term ''contract'' in section 194C(i) has been referred to a particular set of persons for the sake of convenience.

Mr. Pandey also referred to a decision of the Gujarat High Court in All Gujarat Federation of Tax Consultant v. CBDT [1994] 76 Taxman 307. It is unnecessary to refer to it in greater detail in view of the decision in S.R.F. Finance Ltd.''s case (supra).

Accordingly, the writ petition is allowed. The impugned circular to the extent it purports to govern the profession of Advocates, Architects and Chartered Accountants are declared as ultra vires the provisions of section 194C. The respondents are restrained from giving effect to the said circular to govern the aforesaid professions. Writ petition is allowed. Rule made absolute. No costs.