AIR 1999 SUPREME COURT 3036 ::1999 AIR SCW 2967 ::1999 TAX. L. R. 843 ::1999 (4) Arbi LR 459 ::1999 (7) ADSC 502 ::(1999) 4 ArbiLR 459 ::(1999) 155 CurTaxRep 489 ::1999 (7) SCC 266 ::(1999) 5 Scale 40 ::(1999) 105 Taxman 742 ::1999 (152) Taxation 344 ::1999 (7) Supreme 150 ::1999 (239) ITR 587 ::1999 (8) SRJ 421 ::(1999) 5 JT 654 (SC)

Supreme Court Of India

(From : Andhra Pradesh)*

Hon'ble Judge(s): D. P. Wadhwa, M. B. Shah , JJ

Deduction of tax at source - Assessee making payments under Contracts to non-residents - Was under obligation to deduct tax at source in respect of those sums - Obligation is limited only to appropriate proportion of income chargeable under Act. Income-Tax Act (43 of 1961) , S.195— The assessee who made the payments to the three non-residents was under obligation to deduct tax at source under Section 195 of the Act in respect of the sums paid to them under the contracts entered into. The obligation of the respondent-assessee to deduct tax under Section 195 is limited only to appropriate proportion of income chargeable under Act. It cannot be said that the expression "any other sum chargeable under the provisions of this Act" would not include cases where any sum payable to the non-resident is a trading receipt which may or may not include 'pure income'. The language of Section 195(1) for deduction of income-tax by the payee is clear and unambiguous and casts an obligation to deduct appropriate tax at the rates in force. The purpose of S. 195(1) is to see that the sum which is chargeable under Section 4 of the Act for levy and collection of income-tax, the payee should deduct income-tax thereon at the rates in force, if the amount is to be paid to a non-resident. The said provision is for tentative deduction of income-tax thereon subject to reg....