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August 2023

Collection of tax at source — Scope of section 206C — Income from forest produce — Meaning of “forest produce” — Assessee working on sawn timber purchased from third person — Assessee not liable to collect tax at source.

By K B Bhujle | Ritu Punjabi
Advocates
Reading Time 3 mins
30. Principal CIT(TDS) vs. Nirmal Kumar Kejriwal
[2023] 454 ITR 777 (Cal)
A. Ys. 2005-06 to 2009-10
Date of order: 2nd August, 2022
Section 206C of ITA 1961

Collection of tax at source — Scope of section 206C — Income from forest produce — Meaning of “forest produce” — Assessee working on sawn timber purchased from third person — Assessee not liable to collect tax at source.  

An order was passed against the assessee under section 206C(6)/206C(7) of the Income-tax Act, 1961 on the grounds that the assessee did not collect any tax on the sale of timber obtained by any other mode other than forest lease in terms of section 206C(1) of the Act. The assessee raised objections to the order. The AO rejected the objections.

The CIT(A) held that section 206C was not applicable to the assessee. This was upheld by the Tribunal.

On appeal by the Revenue, the Calcutta High Court upheld the decision of the Tribunal and held as under:

“i) Section 206C introduced by the Finance Act, 1988 was intended to levy and collect presumptive tax in the case of trading in certain goods to remove hardship. The trades mentioned therein are alcoholic liquor for human consumption, timber obtained under a forest lease, timber obtained by any mode other than under forest lease and any other forest produce not being timber, at different rates. The object of introduction of the new provisions for working out the p
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