STATE OF UTTARAKHAND Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF UTTARAKHAND
STATE OF UTTARAKHAND
COMMISSIONER OF INCOME TAX
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(1.) The disputes, in all these matters, are identical. We, accordingly, pass the following order, which shall apply to all these matters. In terms of Section 194C of the Income Tax Act, any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract between the contractor and the said person shall, at the time of credit of such sum to the account of the creditor or at the time of payment thereof in cash or by issue of cheque or draft or by any other mode is obliged to deduct a certain percentage of the amount payable as and by way of tax and to deposit the same to the Income Tax Officer to whom such deduction is required to be deposited. The time to make such deposit has not been prescribed in the Act. Rule 30 of the Income Tax Rules obliges such person, if it is the Government, to deposit the deducted amount on the same date of payment.
(2.) In the instant case, while payments were made to contractors, tax was deducted by the appellant State Government at source, but the amount of tax, so deducted, was not deposited with the concerned Income Tax Officer on the date of deduction. The same was deposited after some time of such deduction. In consequence thereof the Income Tax Officer assessed liability of the appellants to pay interest thereon. Appellants took the matter before the Commissioner of Income Tax (Appeals) and thereupon before the Tribunal and lost before both the authorities. In the present appeals, it is the contention of the appellants that in terms of the definition of "person", as given in Income Tax Act, the appellant State Government cannot be treated as person and as such the State Government has no obligation to pay interest for delay in deposit of Income tax deducted at source. We think that since it is a dispute between two Governments, it would be appropriate to sort out the same by the Governments instead of seeking to have the same sorted out through Courts. We, accordingly, direct the appellant State Government through its Secretary of Finance to place the dispute highlighted above before the Secretary Finance of the Central Government, whereupon the Secretary of Finance, Central Government and Secretary of Finance, State Government shall sort out the dispute, referred to above, and report back to this Court nine months hence. Until then, we request the respondent-Income Tax Officer not to take any step to recover the assessed interest.;
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