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2006 DIGILAW 1148 (DEL)

BALWANT JAIN v. DELHI DEVELOPMENT AUTHORITY

2006-07-13

GITA MITTAL

body2006
GITA MITTAL, J. ( 1 ) IT is submitted by learned counsel for the decree holder that after the issuance of notice by this court, the DDA has made payment of the decretal EX. P. 55/2006 Page 1 of 6 payment but has deducted a sum of Rs. 1,47,724/- on account of tax deductable at source on the decretal amount. Learned counsel has drawn my attention to a pronouncement of this court reported at 2006 (1) Arb. L. R. 281 (Delhi) Unique Enterprises v. Delhi Development Authority which was pronounced on 20th January, 2006 wherein an identical submission was made on behalf of the Delhi Development Authority and the court held thus :-1]. The learned counsel for the judgment debtor has raised two issues. The first issue being that any amount that is payable under the award and decree would be liable to deduction of tax at source under Section 194c of the Income- Tax Act, 1961 because it would be a payment to the contractor. It is pointed out by the learned counsel for the judgment debtor that although the amount was payable under the award and decree, it is, in point of fact, a payment for the work done by the contractor and, therefore, would be covered under the provisions of Section 194c of the Income-tax Act, 1961. Therefore, tax would have to be deducted at source and the decree holder can only get such payment after the deduction of the tax as calculated in terms of Section 194c of the Income-tax Act, 1961. The learned counsel for the decree holder, however, EX. P. 55/2006 Page 2 of 6 submitted that this is not a payment under the contract but a payment pursuant to a decree which, in turn, has been made pursuant to an award. According to him, therefore, it would not fall within the parameters of Section 194c of the Income-tax Act, 1961. He placed before me a copy of a circular which forms part of the CPWD Manual, Volume II at , thereof which reads as under: arbitration Awards2]. Section 194c of the Income-tax Act, 1961 contemplates deduction from payments to be made to resident contractors in pursuances of a contract between the contractor and the Central Government. The underlined portion is important inasmuch as the section covers amount payable pursuant to a contract. Section 194c of the Income-tax Act, 1961 contemplates deduction from payments to be made to resident contractors in pursuances of a contract between the contractor and the Central Government. The underlined portion is important inasmuch as the section covers amount payable pursuant to a contract. Where a dispute has arisen between the contractor and the Government and that dispute has gone before the arbitration and the arbitrator makes an award wherein, the payment which the arbitrator directs the Government to pay the contractor by the award is not a payment made pursuant to a contract, but one made pursuant to an award. Secondly, when the award directs that a certain amount shall be payable by the Government to the contractor and that award merges in a decree when the award is made a rule of the court, the Government have no alternative but to pay the whole amount. They will not be within their rights in making any EX. P. 55/2006 Page 3 of 6 deduction unless the statutory provision expressly authorises the Government to do so even in such cases. [m/wandh (Works Divn) No. 21011 (27)72-W4, dated 25. 01. 1973 to CE (EZ)CPWD]. 3]. The learned counsel for the judgment debtor submitted that the judgment debtor (DDA) follows the CPWD Manual and, therefore, the same principles would apply to the judgment debtor also. This being the case, it is clear that no deduction can be made in respect of payments made pursuant to an award/decree under Section 194c of the said Act. ( 2 ) THIS judgment was pronounced on an objection raised by the Delhi Development Authority in circumstances which were identical as to the present case. The only difference was that the amount stood deposited in this court while in the present case, the payment has been effected by the DDA directly to the contractors. In my view, this makes little difference upon result. ( 3 ) I find that the decision was rendered on 20th January, 2006 and it is obvious that the Delhi Development Authority was in knowledge of the position in law. There is no warrant therefore for deduction of the amount EX. P. 55/2006 Page 4 of 6 of Rs. 1,47,724/- from the payment which has been made to the decree holder purporting to be towards the decretal amount. There is no warrant therefore for deduction of the amount EX. P. 55/2006 Page 4 of 6 of Rs. 1,47,724/- from the payment which has been made to the decree holder purporting to be towards the decretal amount. ( 4 ) LEARNED counsel appearing for the DDA submits that the DDA has already deposited the amount with the income tax authorities. It will be for the DDA to take appropriate steps to seek refund/adjustment of this amount from the income tax authorities in accordance with law. However, the petitioner cannot be deprived of the payment to which it was entitled by virtue of the decree in its favour. ( 5 ) HAVING regard to the facts and circumstances of the case, I am of the view that the decree holder deserves to be paid costs of the present proceedings and compensated for the delay in making the payment in terms of the award. The judgment of the court required to be complied with especially by public authorities dealing with public funds. ( 6 ) THERE is no warrant for not abiding with the principles laid down in the judgment rendered in Unique Enterprises case (supra ). Therefore, the DDA shall make payment of a sum of Rs. 10,000/- towards the costs. The EX. P. 55/2006 Page 5 of 6 DDA shall pay a sum of Rs. 2500/- to the decree holder and the balance shall be paid in equal shares to the National Legal Aid Fund (NALSA), Delhi High Court Legal Services Committee and the Delhi High Court Bar Association Library Fund. The payment of the sum of Rs. 1,47,724/- shall be made to the decree holder and the costs awarded today within a period of four weeks from today. In view of the facts noticed and the order passed today, this petition does not require to detain this court any further. The petition is disposed of accordingly.