Greeva Garg–
Calcutta High Court passed an Interim Order and put a stay on collection of Tax Deduction at Source (TDS) under Section 194N of the Income Tax Act, 1961.
The Court has restrained the Income Tax Department from collecting the TDS till September 30, 2021. The Interim Order was passed by the vacation bench headed by Justice Md. Nizamuddin.
The Order was passed in a petition challenging the constitutional validity of Section 194N of the Income Tax Act, claiming that provision is beyond the legislative competence of the Parliament.
The plea challenged that the Parliament cannot enforce a provision for tax deduction form amount not sourced as Income.
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The provision mandates the TDS will be leviable at the rate of 2 per cent on the amount of cash withdrawal from a banking company that exceeds Rs. 1 crore in the financial year.
The Court cited the case of Kanan Devan Hills Plantations Company Pvt. Ltd v. Union of India, where the interim stay was ordered on the same issue and observed that “On earlier occasion opportunity was given to the respondents to seek instruction as to whether the aforesaid order of the Kerala High Court has been further challenged or not to which learned Additional Solicitor General has submitted on instruction that no further appeal has been filed against the said order and the said interim order is still existing.”
Imposing the Interim Stay on the aforesaid provisions till September 30, 2021, the Court has directed the State to file a Counter Affidavit within four weeks, subsequently, the petitioners are asked to file a reply to the affidavit within two weeks.
Click here to Read/Download the Order
