The Calcutta High Court has recently restrained the Income Tax Department from collecting Tax Deduction at Source (TDS) under Section 194N of the Income Tax Act, 1961, till September 30.
The Court was hearing a petition which challenged the constitutional validity of the provision on the legality of Section 194N of the Income Tax Act, 1961, which mandates the deduction of tax at source at the rate of 2% on cash withdrawals from, a banking company exceeding Rs 1 crore in a financial year.
The Single-Judge Bench of Justice Md Nizamuddin observed, “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. It has also been submitted that series of orders have been passed by the Hon’ble Kerala High Court on the same issue admitting the writ petition and staying deduction of tax on source under Section 194N of the Income Tax Act, 1961.”
“Considering these facts, I am inclined to grant an interim order restraining the respondents authorities concerned from deducting tax on source on the basis of the aforesaid provisions of Section 194N till 30th September, 2021. Respondents are directed to file affidavit-in opposition within four weeks from date. Petitioner to file reply thereto, if any, within two weeks thereafter.” ordered the Court.
The final hearing has been scheduled after eight weeks.