Citation Codes

Equivalent Citations

citation codes

Case Number

W.P Nos. 7803, 7804, 7807, 8483, 8894, 8895, 9020, 10098, 10099, 10147, 12406, 15303, 15306, 15685, 16336 to 16348, 16377, 17153, 17225 and 17678 of 1994.

Attorney(S)

Mr. R. Krishnamoorthy, Senior Counsel for Arvind B. Datar and K. Srinivasan, Mr. V.R Sridharan, Mr. C.T Selvamani, Mr. R. Thiagarajan, Mr. K. Kuppuswamy, Mr. V.P Venkat, Mr. C. Natarajan and Mr. V. Subramanian, Senior Advocate
Mr. N.V Balasubramanian, Junior Standing Counsel on behalf of the respective respondents in each of the petitions.

Judges

Raju, J.

Acts

SECTION 194 C INCOME TAX ACT 1961
provisions contained in Sections 2(h) and 10 of the Indian Contract Act, 1872
provisions of Section 194-C:(i) The provisions of Section 194-C
Finance (No. 2) Act, 1991 inserted Section 194-H
ARTICLE 265 CONSTITUTION OF INDIA
ARTICLE 14 CONSTITUTION OF INDIA
provisions contained in Section 194-C
Nadu Societies Registration Act,
Sub-Section (4) of Section 194-C
Sub-Section (1) of Section 194-C
provisions of Section 194-C.4.
provisions of Section 194-C(1)
provisions of Section 194-C
SOCIETIES REGISTRATION ACT
sub-section (1) of S. 194-C
INCOME TAX ACT 1961
Section 194-C.(iii)
FINANCE ACT 1992
Section 194-C(1)
FINANCE ACT 1972
Section 194-C(4)
Section 194-C(i)
Section 194-C

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Smart Summary

Concise Summary of the Opinion (Circular No. 681 dated 8.3.1994)

Factual and Procedural Background

These batch of writ petitions challenge Circular No. 681 dated 8.3.1994 issued by the Central Board of Direct Taxes (CBDT). The impugned circular gives instructions and guidelines on the applicability of Section 194-C of the Income Tax Act, 1961 concerning deduction of income tax at source in relation to certain categories of payments by specified classes of persons or institutions. The circular purportedly withdraws earlier Board Circulars No. 86 (29.5.1972), No. 98 (26.9.1972) and para 11 of Circular No. 108 (20.3.1973), while reiterating Circular No. 558 (28.3.1990).

Multiple writ petitions were filed by different classes of persons and associations: an individual advocate (W.P. No. 7807 of 1994); The Madras Bar Association (W.P. No. 7803 of 1994); The Madras High Court Advocates Association (W.P. No. 7804 of 1994); Chartered Accountants Study Circle (W.P. No. 8483 of 1994); The Advertising Club, Madras (W.P. No. 12406 of 1994); Madras Goods Transporters' Association (W.P. No. 9020/94); and other petitions by persons in similar categories. Leading submissions were made in a set of these petitions and other counsel adopted those arguments.

The court heard detailed pleadings, considered prior circulars and legislative history, examined relevant Supreme Court and High Court decisions, considered counter-affidavits filed by the respondents, and then delivered the judgment summarized here.

Legal Issues Presented

Whether Circular No. 681/8.3.1994 (CBDT) lawfully expands the scope of Section 194-C of the Income Tax Act, 1961 to include payments for professional services (e.g., advocates, chartered accountants, doctors, architects) and other categories such as transport, advertising and service contracts.
Whether the CBDT, by issuing Circular No. 681, exceeded its administrative powers under Section 119 of the Act and whether a circular can be used to impose tax-deduction liabilities not laid down by the statute.
Whether the impugned circular violates Articles 14 and 265 of the Constitution of India (i.e., arbitrariness/equality and requirement that tax be levied only by authority of law).
Whether Section 194-C should be interpreted (in light of judicial precedents, including the Supreme Court decision in Associated Cement Co. Ltd.) to cover (a) professional fees, (b) mere carriage/transport contracts, and (c) advertising-service contracts.

Arguments of the Parties

Petitioners' Arguments

The CBDT's circular was issued under Section 119 only for administration and cannot be used to create new tax liabilities or expand statutory obligations beyond the statute's wording.
The impugned circular unlawfully expands Section 194-C to include professionals (lawyers, doctors, architects, chartered accountants) and other categories that, in ordinary commercial/legal understanding, are not "contractors" under Section 194-C.
The Supreme Court decision in Associated Cement Companies Ltd. does not support the expansive reading that would bring professional fees within Section 194-C; the facts and ratio do not justify the CBDT's change of position.
The circular is internally inconsistent (notably between paragraphs 1 and 10 regarding deduction computed on "income comprised" vs. on the "amount of payment").
The circular is discriminatory (applies deduction when payment is made by companies/statutory bodies but not by other entities) and violates Article 14.
The circular attempts to collect tax by administrative instruction contrary to Article 265 (tax collection only by authority of law), and exposes non-deducting persons to interest/penalty under Sections 201(1) and 276B unless statutory liability is clear.

Respondents' (CBDT / Revenue) Arguments

Section 194-C(1) itself (properly construed) covers payments for "any work" including services rendered pursuant to contracts (oral or written) by professionals and others; therefore the circular was merely clarificatory for ease of understanding.
The ordinary meaning of "service" is "work", so services rendered for fees by professionals fall within the term "any work".
The word "contractor" in Section 194-C denotes a resident who does work; therefore persons who do work and are paid are within the scope of "contractor".
The circular does not impose any additional liability beyond what Section 194-C already provides; it clarifies the law in light of the Supreme Court decision in Associated Cement Co.'s case.
Deductions at source are a provisional adjustment and amounts deducted will be credited/adjusted against ultimate tax liability; procedures exist under Sub-Section (4) for certificate-based non-deduction or deduction at lower rate.
The CBDT is entitled to change or clarify its earlier view in the light of new judicial pronouncements; previous practice is not immutable.
Administrative difficulties alleged by petitioners are denied; in practice, many bodies appoint professionals under board resolutions which create implied contractual relations.

Other Counsel / Supporting Submissions

Learned Advocate General and petitioners' counsel relied on decisions of Bombay and Delhi High Courts holding that Section 194-C does not apply to professional fees or mere carriage contracts, and argued that the CBDT cannot, by circular, override the statute.
Some counsel (for transport contractors, advertising agencies, chartered accountants) emphasized authority of the previously issued CBDT circulars (1972/1973/1990) and argued the change effected by Circular No. 681 is not justified by the Supreme Court's decision relied upon by respondents.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Associated Cement Co. Ltd. v. Commissioner of Income-Tax, (1993) 201 I.T.R. 435 (Supreme Court)	Held that the words "any work" in Section 194-C have a wide import and include supply of labour; the Court refused to confine "any work" to the special tax-law concept of "works contract".	The Court examined whether this decision justified the CBDT's expanded interpretation in Circular No. 681. It concluded the Supreme Court's decision did not extend to or address whether professional services fall within Section 194-C, and therefore did not support CBDT's broad construction to include professional fees.
State of Himachal Pradesh v. Associated Hotels of India Ltd., (1972) 29 S.T.C. 474 (Supreme Court)	Used by earlier CBDT circulars to state contracts for professional services cannot be regarded as contracts "for carrying out any work"; accordingly, no deduction under Section 194-C would be made for such payments.	The opinion records that earlier Board circulars relied on this decision in excluding professional services from Section 194-C; the Court considered that circular history in its analysis of the proper scope of the statutory phrase "any work".
Chamber of Income Tax Consultants v. CBDT, (1994) 209 ITR 660 (Bombay High Court)	Division Bench held that Section 194-C is not applicable to payments made by way of professional fees; struck down CBDT circulars insofar as they cover professionals.	The present court agreed with the ratio and reasoning of the Bombay High Court decisions and adopted their reasoning as part of its own reasons in holding that Circular No. 681 could not validly require deduction from professional fees.
Bombay Goods Transport Association v. CBDT, 210 ITR 136 (Bombay High Court)	Held Section 194-C does not apply to contracts for mere carriage of goods (i.e., transport contracts that do not include loading/unloading or other work) and that the CBDT circular wrongly extended Section 194-C to such transport contracts.	The court relied on and adopted this decision in concluding Circular No. 681 was illegal insofar as it required deduction for mere carriage of goods unconnected with any work of the carrier.
Advertising Agency Association of India v. CBDT, 210 ITR 152 (Bombay High Court)	Applied the reasoning in the Chamber and Transport Association cases to hold that payments to advertising agencies for professional services were not within Section 194-C.	The court cited and followed this decision, holding Circular No. 681 illegal and without jurisdiction insofar as it required deduction for payments made to advertising agencies for professional services.
S.R.F. Limited v. Central Board of Excise & Customs (cited) ((1994) 122 C.T.R. 431 = 1995) 211 ITR 861) (Delhi High Court)	Discussed the binding nature and effects of CBDT circulars and the constitutional limits on tax collection by administrative process (Article 265); emphasized that circulars are potent and affect assessees' behavior.	The opinion refers to the Delhi High Court for the proposition that CBDT circulars are powerful and that persons affected by them should not be denied access to challenge them; this supports the court's reasoning that the circular's mandatory language made judicial intervention appropriate.
Commissioner of Income-Tax v. Panipat Woolen Mills, AIR 1976 S.C. 640 (Supreme Court)	Principle that court should look at the substance and not merely the form of transactions/contracts.	The respondents invoked this decision to justify looking at substance (i.e., the fact that services are obtained under agreements) when construing whether a person is a "contractor" under Section 194-C; the court considered this principle among others but ultimately distinguished professional services from contractual work for Section 194-C purposes.
C.I.T. v. Sun Engineering Works (P) Ltd., (1992) 198 I.T.R. 297 (Supreme Court)	Judgments must be read as a whole; one must not lift isolated sentences divorced from the context of the question actually decided.	The court used this rule to criticize the CBDT's selective reading of Associated Cement Co.'s case; the court held that the CBDT had misconstrued the Supreme Court's observations beyond their context.
State of Madras v. Gannon Dunkerley & Co., AIR 1958 SC 560 (Supreme Court)	Historical authority on the concept of "works contract" (in the context of Sales Tax) and legislative responses; used to explain the special connotation of "works contract".	The court relied on the historical background provided in authorities like this to explain the special tax-law meaning of "works contract" and why Section 194-C's language should not be read to encompass professional services.
Builders Association of India v. Union of India, AIR 1989 SC 1371 (Supreme Court)	Discussed earlier (State-Madras) developments and the context of works-contract jurisprudence.	The decision was cited in the opinion's discussion of the historical development of the "works contract" concept to support the analysis that professional services are not naturally included within Section 194-C.
Unreported Gujarat High Court orders (Special Civil Petitions Nos. 4802, 5288, 5289 & 5414 of 1994) and Division Bench judgment (1994) 76 Taxman 307	Gujarat High Court dismissed petitions challenging the circulars and held the Board's interpretation was not binding on courts or assessing officers.	The respondents relied on these decisions; the court considered them but declined to follow them as providing an effective final solution, preferring to quash parts of the CBDT circular itself to avoid further litigation.
1986 (2) SCC 11 and 1994 S.C.W. 3415 (cited)	Principles cited by transport counsel that circular orders cannot override statutory provisions (general rule).	These authorities were invoked by counsel for transport contractors; the court accepted the general proposition that circulars cannot override statute and applied that principle in holding the impugned circular invalid to the extent it attempted to extend Section 194-C beyond its statutory scope.

Court's Reasoning and Analysis

The court undertook a layered analysis which can be summarized in the following steps, using only the reasoning contained in the opinion:

Historical and textual analysis of Section 194-C(1): The court read the words "any work" in Section 194-C(1) in their statutory context, noting that the phrase must be construed in light of the words "contractor" and "contract". The court emphasized that the phrase "any work" takes its colour from the statutory texture and that it is appropriate to distinguish work involving predominantly physical and tangible activities from occupations where intellectual skill predominates (e.g., lawyers, doctors, architects, chartered accountants).
Review of CBDT's past practice and contemporanea expositio: The court recorded the CBDT's earlier circulars (No. 86, 98, 108) which had consistently excluded professional service contracts from Section 194-C since the introduction of the provision in 1972. The court treated those long-standing circular interpretations as significant contemporaneous exposition that carried weight in statutory construction.
Examination of Associated Cement Co. (Supreme Court) and its scope: The court carefully analyzed the Associated Cement Co. decision. It observed that the only question before the Supreme Court was whether "any work" was confined to "works contract" (in the special tax-law sense) and held that "any work" had a wide import to include labour contracts. However, the court stressed that the Supreme Court did not consider whether professional services fall within Section 194-C. Therefore, the court concluded the CBDT's reliance on that decision to expand Section 194-C to professional fees was a manifest misreading and an impermissible extension of the ratio.
Distinction between "work" (including supply of labour) and "professional services": The court adopted and agreed with reasoning in earlier Division Bench decisions of the Bombay and Delhi High Courts that the inclusive clause "including supply of labour" in Section 194-C indicates Parliament's limited extension and does not mean Section 194-C covers every kind of service. The court emphasized that Parliament has elsewhere (attempts in 1987 Finance Bill, and later enactments) distinguished or provided separate provisions for professional fees and commissions, indicating legislative intention that professional fees are not to be swept under Section 194-C by administrative fiat.
Weight of prior administrative interpretation and principle of stability in fiscal statutes: The court noted the well-settled principle that an interpretation of a taxing provision accepted and acted upon for years should not be lightly departed from. The CBDT's long-accepted interpretation confined Section 194-C to works and labour contracts and excluded professional fees; the circular reversing that long-standing view required compelling justification which, the court found, was absent.
Reliance on and adoption of High Court authorities: The court reviewed and adopted the reasoning of the Bombay High Court and the Delhi High Court decisions that had adjudicated substantially similar challenges and concluded that Circular No. 681's expansion of Section 194-C to professional fees, mere carriage contracts, and advertising professional services was not supported by the statute or by the Supreme Court authority invoked.
Constitutional concerns and administrative power limits: The court observed that the mandatory wording of the impugned circular ("shall apply") meant it constrained officers under the Act and could effectively impose obligations beyond what the statute prescribed. The court held that CBDT cannot enlarge the scope of a statutory provision by administrative circular; where a circular attempts to do so it is ultra vires and subject to judicial review, especially because of potential constitutional problems under Articles 14 and 265 (arbitrariness and levy/collection only by authority of law).
Conclusion from combined analysis: On the combined textual, contextual, precedential and constitutional analysis, the court concluded that Section 194-C(1), as properly construed, does not apply to (a) payments by way of professional fees to advocates, solicitors, chartered accountants, tax practitioners, etc.; (b) contracts of mere carriage of goods not involving loading/unloading or other work; and (c) advertising agencies' professional services. Hence Circular No. 681 was unlawful insofar as it attempted to direct deduction in those circumstances.

Holding and Implications

Holding: The writ petitions are allowed in part and the impugned Circular No. 681 dated 8.3.1994 is quashed to the extent it purports to require deduction at source under Section 194-C of the Income Tax Act in respect of:

Payments made by way of professional fees to advocates, solicitors, chartered accountants, tax practitioners, and similar professionals for services rendered (paras 20, 86);
Contracts for mere carriage/transport of goods that do not include loading/unloading or other work performed by the carrier (paras 21, 87); and
Payments to advertising agencies or agents for rendering professional services (paras 21, 87).

The court further declared those parts of the circular to be violative of Articles 14 and 265 of the Constitution and opposed to the provisions of Section 194-C of the Act, insofar as the circular required deduction in the above categories.

Direct consequences and immediate effects:

The writ petitions challenging the circular succeed to the extent articulated above and the challenged portions of Circular No. 681 are set aside.
There shall be no order as to costs in the circumstances of this litigation (as stated by the court).

Broader implications:

The court relied upon and expressly adopted the reasoning of relevant Division Bench decisions of the Bombay and Delhi High Courts and emphasized that administratively issued circulars cannot expand the scope of a taxing statute. The opinion does not purport to create a new statutory enactment; it affirms limits on administrative interpretation and the necessity for legislative action if the tax net is to be extended to professional fees or other categories not presently covered by Section 194-C.
The judgment does not purport to set aside the entire circular, only those parts stated. The opinion notes legislative history (attempted amendments and later insertions in other sections) indicating that any comprehensive change to subject-matter coverage should properly be effected by Parliament rather than by administrative circulars.

End of summary based exclusively on the provided opinion.

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Madras Bar Association, Rep. By Its Treasurer M. Venkatachalapathy v. The Advocates Association, Registered As A Society, Madras, Rep. By Its President, P. Jayaraman, V.S Jayakumar, The Chartered Accountants Study Cricle, Etc. Etc.

These batch of writ petitions involve for consideration a challenge to the Circular No. 681 dated 8.3.1994 issued by the Central Board of Direct Taxes, New Delhi. The impugned Circular Order is in the form of instructions and guidelines in regard to the applicability of the provisions of Section 194-C of the Income Tax Act, 1961, hereinafter referred to as ‘the Act’ concerning deduction of income tax at source in relation to certain categories of payment by specified class of persons or institutions. The impugned Circular further purports to withdraw the Board's Circular No. 86 dated 29.5.1972, Circular No. 98, dated 26.9.1972 and reiterates the Board Circular No. 558 dated 28.3.1990

2. The challenge is made to the impugned Circular by different class of persons. Apart from an advocate in his individual capacity having challenged the same (W.P No. 7807 of 1994), the professional Associations concerning the legal fraternity— The Madras Bar Association (W.P No. 7803 of 1994) and the Madras High Court Advocates Association (W.P No. 7804 of 1994) have also challenged this impugned Circular for the benefit of their member advocates. The Chartered Accountants Study Circle, a Society registered under the Tamil Nadu Societies Registration Act, 1975 has chosen to file a Writ Petition challenging the very Circular in order to protect the interests of their members, namely Chartered Accountants, in W.P No. 8483 of 1994. The Advertising Club, Madras, which also is a society, registered under the Societies Registration Act, has challenged the Circular for and on behalf of their member constituents who are stated to be advertising agencies rendering professional and creative services to their clients in W.P 12406 of 1994. The Madras Goods Transporters' Association, another society registered under the Societies Registration Act has also challenged the Circular in question for and on behalf of its constituent members comprising of various firms and companies who are stated to be engaged in transporting goods from Madras to various places by using their own trucks or vehicles as also engaging the trucks and vehicles belonging to other owners in W.P 9020/94. The other writ petitions belong to one or more of the above categories. As a matter of fact, leading submissions have been made in the above noticed writ petitions and the other learned counsel appearing in the remaining writ petitions have adopted the arguments made in those cases.

3. Before adverting to the grounds of challenge, it would be appropriate as also necessary to refer to the salient features of the impugned circular and the earlier Circulars withdrawn by the impugned Circular. The Finance Act, 1972 has introduced a new Section 194-C in the Income Tax Act, 1961 with a view to providing for deduction of income-tax at source from income comprised in payments made to contractors and sub-contractors in certain cases. Sub-Section (1) of Section 194-C lays down that any person responsible for paying any sum to any resident contractor for carrying out any work or supplying labour for carrying out any work inclusive of sub-contract in pursuance of a contract with the Central Government, State Government, Local Authority, Statutory Corporation or a company is obliged, at the time of credit of the sum to the account of the contractor, or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, to deduct an amount equal to two per cent of such some as Income Tax on the income comprised therein. Likewise, an obligation is cast on the contractor making payment to a resident sub-contractor in pursuance of any contract made with him for carrying out the whole or part of work undertaken by the contractor or for supplying any labour to deduct an amount equal to one per cent of such sum as Income-Tax on the income comprised therein. The above provisions came to be introduced with effect from 1.4.1972

3(a). With reference to the modalities of enforcement, guidelines were issued by means of Board Circular No. 86 dated 29.5.1972, Circular No. 98, dated 26.9.1972 and Circular No. 108 dated 20.3.1973 Under Circular No. 86 dated 29.5.1972, while adverting to the decision of the Supreme Court reported in (1972) 29 S.T.C 474 (S.C) (State of punjab (State of Himachal Pradesh) v. Associated hotels of India. In paragraph (iii) it has been clarified as follows:—

“Contracts for rendering professional services by lawyers, physicians, surgeons, engineers, accountants, architects, consultants, etc. can also not be-regarded as contracts “for carrying out any work” and, accordingly, no deduction of income-tax will be made from payments relating to such contracts.”

In Circular No. 98 dated 26.9.1972, which was issued in the form of question and answer, it has been clarified as follows:—

“Question 7: Does the requirements apply in relation to payments made to commission agents for arranging sales or to advertising agents rendering professional services?

Answer: No. Service contracts not involving the carrying out of any work are outside the scope of the provision.”

3(b). In Circular No. 108 dated 20.3.1973 particularly in paragraph 11(3), it has been stated as follows:—

“Contracts for rendering professional services by lawyers, physicians, surgeons, engineers, accountants, consultants, etc., cannot be regarded as contracts “for carrying out any work” and, accordingly, no deduction of income-tax will be made from payments relating to such contracts.”

Circular No. 558 dated 28.3.1990 came to be issued thereafter clarifying the position in respect of payments made by a State Road Transport Corporation to private bus owners, from whom buses have been hired for plying on specified routes. In the said circular, the term “transport-contracts” was considered as not including contract for plying buses ferries etc. along with staff and that the question will have to be considered also in individual cases on merit in terms of the guidelines disclosed.

3(c). Thereupon, while matters stood thus, the Supreme Court of India rendered a decision in Associated Cement Co. Ltd. v. Commissioner Of Income-Tax. (1993) 201 I.T.R 435 while disposing of an appeal filed against a Division Bench of the Patna High Court reported in (1979) 120 I.T.R 444. Immediately after the decision of the Supreme Court, the Central Board of Direct Taxes considered it necessary to review and reconsider the guidelines and instructions issued in the earlier Circulars referred to supra culminating in the issue of Circular No. 681 dated 8.3.1994 The Board was of the view that the conclusion flowing from the judgment of the Supreme Court is that the provisions of Section 194-C of the Act would apply to all types of contracts including transport contracts, labour contracts, service contracts, etc. and consequently, the Board has decided to withdraw Circular No. 86 and 93 and para 11 of Circular No. 108 and instead issue the following guidelines in regard to the applicability of the provisions of Section 194-C:—

“(i) The provisions of Section 194-C shall apply to all types of contracts for carrying out any work including transport contracts, service contracts, advertisement contracts, broadcasting contracts, telecasting contracts, labour contracts, materials contracts and works contracts.

(ii) No deduction at source under Section 194-C shall be required to be made if the consideration for the contract does not exceed the prescribed amount which at present is Rs. 10,000/- (Ten thousand only)

(iii) The provisions of Section 194-C would not apply in relation to payments made for hiring or renting of equipments etc.

(iv) The provisions of Section 194-C would not apply in relation to payments made to banks for discounting bills, collecting/receiving payments through cheques/drafts, opening and negotiating letters of credit and transactions in negotiable instruments.

(v) Service contracts would be covered by the provisions of this Section since service means doing any work as explained above.

(vi) The provisions of this Section will not cover contracts for sale of goods.

(a) Since contracts for the construction, repair, renovation or alternation of buildings or dams or laying of roads or airfields or railway lines or erection or installation of plant and machinery are in the nature of contracts for work and labour, income-tax will have to be deducted from payments made in respect of such contracts. Similarly, contracts granted for processing of goods supplied by the Government or any other specified person, where the ownership of such goods remains at all times with the Government or such person, will also fall within the purview of this Section. The same position will obtain in respect of contracts for fabrication of any article or thing where materials are supplied by the Government or any other specified person and the fabrication work is done by a contractor.

b) Where, however, the contractor undertakes to supply any article or thing fabricated according to the specifications given by the Government or any other specified person and the property in such article or thing passes to the Government or such person only after such article or thing is delivered, the contract will be a contract for sale and as such outside the purview of this Section.

(c) In State of Himachal Pradesh v. Associated Hotels of India Ltd. (1972) 29 STC 474, the Supreme Court observed that where the principal objective of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, contract is of work and labour. The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale: neither the ownership of the materials nor the value of skill and labour as compared with the value of the materials is conclusive although such matters may be taken into consideration in determining, in the circumstances of a particular case, whether the contract is, in substance, one of work and labour or one for the sale of a chattel. A building contract or a contract under which a movable is fixed to another chattel or on the land, where the intention plainly is not to sell the article but to improve the land or the chattel and the consideration is not for the transfer of the chattel, but for the labour and work done and the material furnished, the contract will be one of work and labour. In case of doubt, whether a particular contract is a contract for work and labour or for sale, the matter should be decided in the light of the principles laid down by the Supreme Court in the above mentioned case.

(vii) The provisions of this Section would apply in relation to payments made to persons who arrange advertisement, broadcasting, telecasting etc.

(viii) The provisions are wide enough to cover not only written contracts but also oral contracts.

(ix) Where the total payment under the contract is likely to exceed Rs. 10,000/- for the entire period during which the contract will remain in force, income-tax will have to be deducted at source.

In case where, at the time when the contract was entered into, it was expected that the total payment thereunder would not exceed Rs. 10,000/- but later on, it is found that the payment exceeds that amount, deduction should be made in respect of earlier payments as well.

(x) The percentage deduction prescribed in law is with reference to the amount of payment and not “income comprised in the payment”. The person responsible for making payment, therefore, is not required to estimate the income comprised in the payment.

(xi) In a case where advance payments are made during the execution of a contract and such payments are to be adjusted at the time of final settlement of accounts, tax will have to be deducted at the time of making advance payments if the total payment is likely to exceed Rs. 10,000/-

(xii) Where any contractor is the recipient of any amount under a contract but the income of the recipient is not subject to income tax, such contractor may obtain a certificate from his Assessing Officer under Section 194-C(4) for receiving payment without deduction of tax at source.

(xiii) Every contractor, other than an individual or a HUF (Hindu Undivided Family), who is responsible for paying any sum to any sub-contractor (who is resident in India) in pursuance of a contract with such sub-contractor for carrying out or for the supply of labour for carrying out, wholly or in part, of the work undertaken by the contractor of for supplying whether wholly or partly any labour which the contractor had undertaken to supply, will be required to deduct income-tax at the rate of 1 per cent of such sum.

8. It may be noted that:—

(i) The term “service contracts” would include services rendered by such persons as lawyers, physicians, surgeons, engineers, accountants, architects, consultants, etc. However, services rendered for which payment is in the nature of salaries which is chargeable under the head of income “A. Salaries” in Chapter IV of the Income Tax Act, 1961 shall not be covered by Section 194-C.

(iii) The term “material contracts” in the context of Section 194-C would mean contracts for supply of materials where the principal Contract is for work and labour and not a contract for sale of materials.

9. Board's circular No. 86, dated 29th May, 992 and No. 93 dated 26th September 1972, and para 11 of Circular No. 108, dated 20th March, 1973 are hereby withdrawn. Board's circular No. 558, dated 28th March, 1990 is reiterated.

10. It is clarified that this circular explaining the provisions of Section 194-C will apply with effect from 1st April, 1994. Tax deductions made in accordance with circulars Nos. 86, 93 and 108 upto 31st March, 1994 will be regarded as compliance of the provisions of Section 194-C”.

4. The salient grounds of challenge to the impugned circular as raised in the pleadings may be referred to hereinafter. In W.P Nos. 7803, 7804 and 7807 of 1994 pertaining to the members of the legal profession, it is contended that the circular has been issued by the Board in exercise of the power under Section 119 of the Act only for the purpose of proper administration of the Act and no such circulars could be used to issue directions or even guidelines running contrary to the provisions of the Statute so as to create liability to tax in a person who is not otherwise liable. It is stated that the impugned circular is contrary to Sections 119 and 194-C of the Act in so far as it purports to expand the scope of Section 194-C and include various professions and provisions which are outside the purview of Section 194-C itself. Professionals like lawyers, doctors, architects etc. cannot, according to the petitioners, be brought within the scope of Section 194-C by means of a circular. It is also contended that the word ‘Contractor’ must be understood in the ordinary commercial sense and by no stretch of imagination, can fees paid to advocates, doctors and other professionals, be brought within the scope of Section 194-C. The further contention on behalf of the petitioners is that the decision of the Supreme Court in Associated Cement Companies Ltd. case (supra) does not lend support or authority to issue the impugned circular and neither there is any comparison on the facts of the case concerned in the decision dealt with by the Supreme Court and the professions under consideration in these cases, nor could the principles laid down or the ratio underlying the said decision be of any help or assistance to issue the impugned circular. In substance, it is also contended that the circular has the effect of expanding the words ‘service contracs’ and unauthorisedly attempting to bring in various professionals within the ambit and scope of Section 194-C. The circular is also stated to be violative of Article 14 of the Constitution of India. The circular is said to be also discriminatory in so far as it directs tax deduction at source where the payment is made by the company or other categories specified in Sub-Section (1) and not making such provision applicable in the case of payment made by the firm or other entity. In so far as the impugned circular attempts to collect tax in contravention of the provisions of the Act is concerned, it is contended to be violative of Article 265 of the Constitution of India. It is also contended that since the failure to deduct the tax at source attracts payment of interest under Section 201(1) of the Act on the amount not so deducted and also exposes the person concerned committing the default to penal action under Section 276-B of the Act involving serious consequences, unless statutory provisions themselves are clear with reference to the liability to deduct the tax at source, no person can be made liable to deduct the tax at source by means of a mere executive instruction. Finally, it is contended that paragraphs 1 and 10 of the circular are mutually contradictory in that when paragraph 1 says that a sum equal to 2% of such sum as income tax of the income comprised therein may be deducted, Paragraph 10 states that the prescribed percentage may be deducted with reference to the amount of payment and not income comprised in the payment. Apart from the said contradiction in terms, it is also stated to be in contravention of the statutory provisions contained in the Act.

5. The respondents have filed a counter affidavit in W.P Nos. 7803, 7804 and 7807 of 1994, which was meant to be for and in respect of all the other writ petitions also since almost identical and similar issues have been raised therein, contending among other things that though the question of deduction from payments made to the various persons contemplated by the impugned circular can really be made even on a proper construction of Section 194-C(1) of the Act itself without having recourse to the Circular, for easy understanding only, the clarification and the circular came to be issued. It is also contended that Section 194-C(1) contemplates that where any payment is made by one of the authorities referred to in the said Section to any person for doing “any work” pursuant to a contract between them, deduction will have to be made at the stipulated rate of 2% of the payment towards income-tax on the income component included in the said payment and that in the cases on hand for consideration before this Court for work done or to be done by the various members of the Association, they receive money as and by way of Professional fees from one or other of the various categories of the authorities referred to in the provision in pursuance of an agreement or contract between them, oral or written and, therefore, such cases would fall within the term “work” contemplated in Section 194-C, and the same cannot be said to be confined merely to the categories of “works contract” which is said to have a special connotation in law, as stated to have been declared by the Apex Court in the decision in the Associated Cement Company's case, supra. It is also contended that the ordinary dictionary meaning of the word ‘service’ is work and, therefore, the provisions of Section 194-C will squarely apply to cases of the petitioners and the members of the petitioners Association. It is also contended that the word “contractor” has been used in Section 194-C(i) only to denote a resident who does work and accordingly, so long as a person does work and he is paid for such services, he would come within the scope of the term “contractor” as envisaged by Section 194-C. It is, therefore, contended that the scope of the provisions being obvious, there is no need for the authorities to base their action on the basis of the Circular and consequently, the question of Circular being either valid or not will be of no relevance or consequence in the context and the construction and interpretation placed upon Section 194-C of the Act by the Supreme Court. The decisions of the Bombay High Court reported in 209 ITR 660 (Chamber of Income Tax Consultants v. CBDT), 210 ITR 136 (Bombay Goods Transport Association and Another v. CBDT) and 210 ITR 152 (Advertising Agency Association of India and Another v. CBDT) are also adverted to in the counter affidavit and explained. The counter affidavit further proceeds to justify the circular and contend that merely because as an earlier point of time a particular view of the statutory provision was taken by the Central Board of Direct Taxes, it does not mean that the Board cannot take a different view in the teeth of the latest pronouncements of the Supreme Court. It is contended that the fact that the legislature sought to introduce a provision for deducting tax at source from payments made in respect of the various types of contracts that are included in the impugned circular and did not pursue the legislative measure is no ground to contend that the existing section will not cover the categories of contracts and that the provisions contained in Section 194-C as it stands are sufficient to rope in such clauses of contracts. It is also stated that the deduction is only towards possible liability of tax and the fact that the amount was deducted from the payment can be taken note of and adjusted by the petitioners or their members at the time of making advance payment of tax and such deduction of an amount towards tax is really to the advantage of the members of the Petitioners Association as well as other persons and cannot be said to be in any way detrimental to their interest. It is also contended that the liabilities imposed upon persons who are obliged to deduct, but failed to do so can, if at all, be made grievance of and challenge by the persons who are obliged to deduct the amount and not by the recipients of the amounts. The alleged administrative difficulties involved with the maintenance of accounts in complying with the provisions contained in Section 194-C are also denied and disputed by the respondents. It is also stated that the tax deducted at source is liable to be adjusted at the time of making advance payment of tax and given credit to against the tax liability ultimately determined with further right for the persons to whose account the same was deducted to get refund in accordance with law on the claimants substantiating the position that they had no such liability under the Act. The percentage of deduction is justified to be reasonable and not arbitrary or discriminatory. It is also contended that Sub-Section (4) of Section 194-C provides the procedure for non-deduction or deduction at a lower rate in cases where the recipients produced a Certificate to the effect obtained from the Assessing Officer and merely because many of the members of the Petitioners Association or the petitioners themselves cannot get such certificates they have resorted to the method of challenging the circular even at the threshold as long as Section 194-C of the Act is valid and justified, there can be no impediment in the deduction as claimed for the respondents and it is contended that no exception can be taken to the procedure envisaged for deduction.

The alleged violation of Article 265 of the Constitution of India is denied contending that the deduction at soures is only towards possible liability to tax to be given credit to in respect of the ultimate tax liability with the concomitant right to obtain refund if liability was shown not to exist in respect of the particular person concerned. It is contended that the impugned circular is only clarificatory in nature for the guidance of the officers and does not endeavour to impose any additional liability as alleged by the petitioners and, therefore, the question of striking down the same as unconstitutional or illegal does not arise. The submissions on behalf of the petitioners are said to proceed on an incorrect understanding of the word ‘contractor”, and thereby contend that the members of the Petitioners Association are not contractors and, therefore, the provisions of Section 194-C will not apply to them. While emphasising that the said assumptions on behalf of the petitioners are unwarranted, it is contended that the provisions of Section 194-C would apply to all cases where any person does work or any one or the other of the various authorities referred to in the Section pursuant to agreement or contract either oral or written get paid therefor. Reliance is also placed on the provisions contained in Sections 2(h) and 10 of the Indian Contract Act, 1872 and the decision reported in AIR 1976 S.C 640 (Commissioner of Income-Tax v. Panipet Woolen Mills) wherein it was stated to have been held that the Court should look at the substance of the matter and not its form. Relying upon the decision of the Supreme Court in Associated Cement Company's case Supra, it is reiterated that the deduction has to be made from the payment made for ‘any work’ which it is contended would include service also as the words “work” and “service” are really claimed to be complimentary and interchangeable and, therefore, of wide import and not that it should be construed in a restricted manner. While stating that the various types of work done by the petitioners or the members of the Petitioners Associations are really pursuant to an agreement which may be oral or written for the work to be done by them and for which they receive consideration, it is stated that the provisions of Section 194-C squarely get attracted and that, therefore, the proposed deduction is quite valid and justified and cannot be objected to. Reliance is also placed on an unreported decision of the Gujarat High Court in Special Civil Petition Nos. 4802, 5288, 5289 and 5414 of 1994 wherein the Gujarat High Court was said to have dismissed a batch of writ petitions challenging the impugned Circular by its Order dated 14.7.1994 observing that the interpretation of law was not the domain of the Board and the said interpretation by the Board is not binding either on the Assessing Authority or Courts in so far as the question of interpretation of law is concerned.

6. The respondents also contend that the fact that the petitioners or the members of the petitioners' Association are paid consolidated amounts inclusive of other charges by way of reimbursement than for services is said to be not a ground for contending that the circular is invalid, that no deduction under Section 194-C can be made and that it is always open to the persons concerned to raise separate bills for services rendered and for other expenses and that there can be no challenge to the inclusion of category of services undertaken pursuant to any agreement either in writing or oral within the scope of Section 194-C of the Act. It is finally contended that the petitioners and others should be really happy in the matter of such deduction since it only goes to lessen their ultimate tax burden and viewed thus, the petitioners cannot be said to be really persons aggrieved who could challenge the deduction of such small percentage of amounts towards possible tax liability.

7. The learned Advocate General, appearing for the petitioners in W.P Nos. 7803, 7804 and 7807 of 1994, while reiterating the stand taken on behalf of the petitioners as noticed supra, strongly relied upon the decisions of the Bombay High Court as also the Delhi High Court reported in 1994(75) Taxman 669=209 I.T.R 660 (Chamber of Income Tax Consultants v. Central Board of Direct Taxes) and (1994) 122 C.T.R 431 = (1995) 211 I.T.R 861 (S.R.F Limited v. Central Board Of Excise & Customs of Direct Taxes) in addition, explaining and elaborating his submissions with reference to the ratio of the decision reported in (1993) 201 I.T.R 435 (Associated Cement Co. Ltd. v. Commissioner Of Income-Tax.) of the Supreme Court to contend that the impugned circular is not warranted at all even on the ratio of the decision in Associated Cement Companies Ltd. case supra.

8. Mr. Datar, learned counsel appearing in W.P Nos. 8483, 9020 and 12406 of 1994, while adopting the submissions made by the learned counsel, made certain further submissions with particular reference to the cases of chartered Accountants, Transport contractors and Advertising Agencies. While doing so, the learned counsel placed strong reliance upon the decision reported in 210 ITR 136 (Bombay Goods Transport Association and another v. Central Board of Direct Taxes) and 210 ITR 152 (Advertising Agency Association of India and another v. Central Board of Direct Taxes and others). The other learned counsel, as noticed earlier, has merely adopted the submissions of the above learned counsel. Mr. R. Thyagarajan, learned counsel appearing for a transport contractor also supported the above stand by referring to the decisions reported in 1986 (2) SCC 11 and 1994 S.C.W 3415 that Circular orders cannot override the provisions of a statute.

9. Mr. S.V Subramaniam, learned Senior Counsel instructed by Mr. N.V Balasubramanian, Junior Standing Counsel for the Income-Tax Department, while justifying the circular orders and instructions contained in the impugned circular, reiterated the stand taken in the counter affidavit as referred to supra and contended that the scope of the circular is only to serve as a guideline to ensure uniformity among the various authorities and in order to help them to understand the provisions of the Act in their proper perspective and was necessitated as a follow up action pursuant to the judgment of the Supreme Court in Associated Cement Companies Ltd. case supra. The learned counsel also contended that when the provisions of Section 194(1) of the Act on its own force and application get attracted to the cases on hand in respect of the nature of transactions also, there is no need to go into the other aspects of sub-Section (2) or the circular orders and, therefore, it is unnecessary for this Court to adjudicate on the validity of the circulars. While dealing with the decisions relied upon for the petitioners, the learned senior counsel for the Department contended that the various judgments did not advert to the issue from the angle that even under the provisions of the enactment particularly Section 194(1), the liability squarely fastens and the Circular, if at all, made only clear what was otherwise obvious and an inevitable consequence of the provisions contained in the Act and that the authorities can go into objectively and independently and adjudicate the claims, if any, raised by the petitioners or any other assessees and the apprehensions and grievance made on the basis of the impugned circular have no substance or merit in law. Argued the learned senior counsel further, that the authorities concerned, in practice, resolve by resolutions or pass orders appointing a Standing Counsel or a Chartered Accountant, particularly in the teeth of the provisions contained in the Companies Act to engage the services of the various institutions or professionals under consideration and that this constitutes an implied contract and consequently the submissions made on their liability to be proceeded against have no substance whatsoever. Reliance was also placed on a Division Bench Judgment of the Gujarat High Court reported in (1994) 76 Taxman, 307 to contend that at any rate the position may be clarified as has been done by the Gujarat High court declaring the position about the status, nature and efficiency of the impugned circular and relegate the petitioners to the authorities under the Act for actual redress, instead of undertaking an adjudication of the various issues. Mr. Datar learned counsel, while replying, highlighted the position that the circular has been couched in mandatory terms leaving no discretion with the authorities by the conscious use of the words “shall apply” and that, therefore, this Court must decide the issue as has been done by the Bombay and Delhi High Courts and may not be pleased to leave the matters open which will only result in multiplicity of litigation.

10. A reference may be made hereinafter to the various decisions relied upon the learned counsel appearing on either side and to the relevant ratio laid down therein. In the decision reported in 201 I.T.R 435 (supra), the Apex Court held as hereunder:—

“Thus, when the percentage amount required to be deducted under sub-section as income-tax is on the sum credited to the account of or paid to a contractor in pursuance of a contract for carrying out a work or supplying labour for carrying out a work, of any of the organisations specified therein, there is nothing in the sub-section which could make us hold that the contract to carry out a work or the contract to supply labour to carry out a work should be confined to “works contract” as was argued on behalf of the appellant. We see no reason to curtail or to cut down the meaning of the plain words used in the Section. “Any work” means any work and not a “works contract”, which has a Special connotation in the tax law. Indeed, in the sub-Section, the “work” referred to therein expressly includes supply of labour to carry out a work. It is a clear indication of the Legislature that the “work” in the sub-section is not intended to be confined to or restricted to “works contract”. “Work” envisaged in the Sub-Section, therefore, has a wide import and covers “any work” which one or the other of the organisations specified in the Sub-Section can get carried out through a contractor under a contract and further it includes obtaining by any of such organisations supply of labour under a contract with a contractor for carrying out its work which would have fallen outside the “work”, but for its specific inclusion in the Sub-Section.

The above decision cannot be of any help to the appellant for it does not lay down that the percentage amount deductible under Section 194-C(1) should be out of the income of the contractor from the sum or sums credited to the account of or paid to him. The words in the Sub-Section “on income comprised therein” appearing immediately after the words “deduct an amount equal to two percent of such sum as income-tax” from their purport, cannot be understood as the percentage amount deductible from the income of the contractor out of the sum credited to his account or paid to him in pursuance of the contract. Moreover, the concluding part of the Sub-Section requiring deduction of an amount equal to two percent of such sum as income-tax, by use of the words “on income comprised therein” makes it obvious that the amount equal to two percent of the sum required to be deducted is a deduction at source. Indeed, it is neither possible nor permissible for the payer to determine what part of the amount paid by him to the contractor constitutes the income of the latter. It is not also possible to to think that Parliament could have intended to cost such impossible burden upon the payer, nor could it be attributed with the intention of enacting such an impractical and unworkable provision. Hence, on the express language employed in the Sub-Section, it is impossible to hold that the amount of two percent required to be deducted by the payer out of the sum credited to the account of or paid to the contractor has to be confined to his income component out of that sum. There is also nothing in the language of the Sub-Section which permits exclusion of an amount paid on behalf of the organisation to the contractor according to clause 13 of the terms and conditions of the contract in reimbursement of the amount paid by him to workers, from the sum envisaged therein, as was suggested on behalf of the appellant.”

11. In the decision reported in 207 I.T.R 660 = (1994) 75 Taxman, 669 (supra), the Division Bench of the Bombay High Court held as hereunder:—

“8. We have carefully considered the rival submissions. We have perused the decision of the Supreme Court in Associated Cement Co. Lid's Case (supra). The controversy before the Supreme Court in that case was whether the expression “any work” used in Sub-Section (1) of Section 194-C means only “works contract” or covers other works also. In the case before the Supreme Court, under the terms and conditions of an agreement between the appellant and a contractor, the contractor was to be paid at a flat rate for loading packed cement bags into wagons or trucks. This rate was fixed on the basis of daily basic wages, dearness allowances, etc, and clause 13 of the agreement stipulated reimbursement by the appellant to the contractor in case of certain increase in the dearness allowance, etc. payable by the contractor to the workmen employed by him. The appellant paid the contractor the amount stipulated at a flat rate as well as amounts by way of reimbursement under clause 13. But the deduction of tax at source made by the appellant under Section 194-C(1) fell short of the deductions required to be made thereunder. On a show cause notice being issued by the Income Tax Officer, the appellant-company contended that it was not liable to deduct any amount on payments made for loading and unloading as Section 194-C was applicable only to payments made in execution of “works contracts” which produces a tangible property and not to other works. It was in this context that the Supreme Court observed;

“Thus, when the percentage amount required to be deducted under Sub-Section as income tax is on the sum credited to the account of or paid to a contractor in pursuance of a contract for carrying out a work or supplying labour for carrying out a work, of any of the organisations specified therein, there is nothing in the sub-section which could make us hold that the contract to carry out a work or the contract to supply labour to carry out a work should be confined to “works contract” as was argued on behalf of the appellant. We see no reason to curtail or to cut down the meaning of the plain words used in the section. “Any work” means any work and not a “works contract”, which has a special connotation in the tax law. Indeed, in the sub-section, the “work” referred to therein expressly includes supply of labour to carry out a work. It is a clear indication of the Legislature that the “work” in the sub-section is not intended to be confined to or restricted to “works contract”, “work” envisaged in the sub-section, therefore, has a wide import and covers “any work” which one or the other of the organisations specified in the sub section can get carried out through a contractor under a contract and further it includes obtaining by any of such organisations supply of labour under a contract with a contractor for carrying out its work which would have fallen outside the ‘work’, but for its specific inclusion in the sub-section”(p. 439).

9. A reading of the above observations of the Supreme Court in the context of the controversy before it, makes it absolutely clear that the Supreme Court did not intend to give an extended meaning to the expression “any work” so as to include professional services within its ambit. The Supreme Court interpreted the expression “any work” to decide whether it was confined to works contract as argued by the appellant before it or it was applicable to labour contracts also. It is in this context that the Supreme Court observed that “any work” means any work and not only a, “works contract”. The above observation of the Supreme Court cannot be interpreted out of context to include payments made to the professionals like advocates, solicitors, chartered accountants, tax practitioners, doctors, surgeons, engineers, etc, for the services rendered by them. Neither such persons rendering professional services are known as “contractors” or “sub contractors” nor payments made to them for the services rendered by them are termed as “payment for carrying out any work” or for “supply of labour for carrying out any work” either in common parlance or in legal terminology. It will be a total misnomer to describe such professionals as “contractors” or “sub-contractors”. If the contention of the revenue in this regard is accepted, a solicitor or an advocate on record will have to be described as a “contractor” and the counsel briefed by him in the matter a “sub-contractor”. An interpretation which leads to such a ridiculous result cannot be a proper interpretation of the section.

10. It is well settled rule of construction that judgments must be read as a whole and observations from the judgments should be considered in the light of the questions which were before the Court. As observed by the Supreme Court in C.I.T v. Sun Engg. Works (P) Ltd. (1992) 198 I.T.R 297, it is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Supreme Court, divorced from the context of the question under consideration and treat it to be the complete “law” declared by the Supreme Court. A decision of the Supreme Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision. It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment.

11. If we read the decision of the Supreme Court in Associated Cement Co. Limited's case (supra) in the light of the principles set out above, it will be abundantly clear that the only question that fell for determination was whether applicability of Section 194-C was confined to “works contracts” only as contended by the assessee. The Supreme Court decided only this limited question and held that there was no reason to curtail or cut down the meaning of the plain words used in Section 194-C to confine or restrict it to “works contracts”. It was in this context that the Supreme Court held that the “work” envisaged in sub section (1) of Section 194C has a wide import and covers any work which one or other of the organisations specified in the sub-section can be carried out through a contractor under a contract. This was also the consistent stand of the revenue ever since in the incorporation of section 194C. The assessee sought to challenge the same and contended that section 194C was applicable only to “works contracts” which produces a tangible property and not to labour contracts. It is this contention of the assessee which was repelled by the Supreme Court and the interpretation put up by the Revenue on section 194C was upheld. No other question fell for determination in that judgement. It is, therefore, evident that the CBDT committed a manifest error in reading the above decision in the way it has done in its impugned circular and reversing the interpretation consistently put by it on section 194C for the last two decades purportedly in the light of the said decision of the Supreme Court.

12. The impugned action of the CBDT is also against the well settled principle of construction of fiscal statutes that interpretation of a provision in a taxing statute rendered years back and accepted and acted upon should not be easily departed from except for compelling reasons. The circulars issued by the CBDT during the last two decades explaining the scope and ambit of section 194C are clearly in the nature of contemporanea expositio which can legitimately be used as aids in the construction of the said provision. In construing the statute, the courts are entitled to give due weight to the interpretation put upon it by those who are entrusted with the task of construing, executing and applying it. Under the Act, the CBDT is the highest executing authority and it has been vested with statutory powers to issue orders, instructions and direction to all officers employed in the execution of the Act. The un-controverted position is that ever since the incorporation of section 194C in the year 1972, it was understood by all concerned including the CBDT that its scope was confined to payments made in respect of “works contracts” and “labour contracts” and not to payments made on account of professional services. The interpretation was reiterated and acted upon by the CBDT from time to time. It is this interpretation which is sought to be departed from by the CBDT itself purportedly in the light of the decision of the Supreme Court. We have already examined the decision of the Supreme Court and noted that it contains nothing of the sort which may justify any departure from the interpretation consistently put on section 194C by the CBDT althroughout in the past. Besides, the language of section 194C is plain and unambiguous and leaves no scope for any controversy in regard to its interpretation. In such a situation, the earlier circulars of the CBDT explaining the scope and ambit of Section 194C must be regarded as a strong circumstance in support of the construction that section 194C is not applicable to payments by way of professional fees.

13. The conclusion arrived at by us that section 194C does not apply to payments made by way of professional fees also gets support from the fact that in the year 1987, in the Finance Bill, 1987, provision was sought to be made to provide for deduction of tax at source from payments by way of professional fees by insertion of a new section, viz., Section 194E. The said proposal was, however, dropped at the time of passing of the said Bill. The legislative intent of Section 194C becomes further clear from the feet while incorporating section 194C in the Act in the year 1991 to provide for deduction of tax at source in respect of payments made by way of commission, brokerage, etc. “Payments made for professional services”, were specifically excluded from the scope and ambit of the said section.

14. It is dear from the above discussion that section 194C is not applicable to “payments by way of professional fees”.

12. The Division Bench of the Delhi High Court in the decision reported in (1994) 122 CTR. 431 = (1995) 211 ITR 81 (S.R.F Limited v. Central Board Of Excise & Customs of Direct Taxes) has held as hereunder:—

“3.4 In the instant case, the petitioner is faced by the circulars issued by the CBDT, the highest authority in the hierarchical set-up of the IT Department In view of Ss. 118 and 119, no ITO would have the courage (or audacity) to ignore these circulars. It will be futile exercise for any assessee to challenge the binding nature of these circulars, before the ITOs. The threat posed by the impugned circulars, is real and any person affected by them should not be denied access to this Court to seek appropriate, relief at the very moment threat is posed against him.

3.5 As per Art. 265 of the Constitution of India, no tax shall be levied or collected except by authority of law. The words, “levy” and “collection” are words of wide amplitude in the context of this Article, so as to cover any process employed to collect any amount purporting to be a tax. If the procedure employed is unauthorised, the process of collection will render it an illegal levy or illegal collection and, hence, unconstitutional”.

4.23 No doubt, the Supreme Court has said, the word “work” referred in sec. 194C has a wide import’. But this observation is found in the context of an argument (Of the petitioner therein), that the said word ‘work’ has to be confined to the concept of “works contract”, the word ‘work’ has a wider meaning because, it is not to be restricted to the term ‘works contract’. The concept conveyed by the word “work” found in S. 194-C is not confined, limited or restricted to the concept of ‘works contract’. The word ‘therefore’, in the particular sentence clearly brings out the reason for the statement that the word’ ‘work’ a ‘wide import’. From this it cannot be inferred that the Supreme Court intended to give the word a meaning which the sentence in which it is found, does not convey. The wider meaning is indicated, according to the Supreme Court, because the Section expressly includes supply of labour to carry out a work.

4.24 The entire paragraph in which the above observation of the Supreme Court is found, shall have to be read together; lifting one or the other sentence and reading the lifted portion separately would destroy the integrity of the paragraph. In the opening sentence of the paragraph, the scope of the discussion is indicated, when the Supreme Court said in the last part of the first sentence. “…. there is nothing in the sub-section which could make us hold that the contract to carry out a work or the contract to supply labour to carry out a work should be confined to ‘works contract’ as was argued.”

4.25 The position becomes clear when the special connotation of the term ‘works contract’ in the tax law is properly understood.

“Works Contract” involves two elements—

(i) the transfer of materials; and

(ii) tendering of services in bringing out a tangible property out of the materials; for example, in the case of a building contract, where the contractor has to use his own materials for the construction, payment made to the contractor is for the transfer of materials used in the construction and towards the services rendered by him in construing; the building. Similarly, when a carpenter is asked to supply a table, the consideration payable to him comprises of the cost of the timber and other materials used and the remuneration for the job of converting these materials into a table. However, if the timber and other materials are supplied and the carpenter is asked to make a table, he is paid towards his services in making the table. In the case of a building, if the contractor is engaged to perform the construction work, but the entire materials are supplied by the person engaging the contractor, the contractor is paid for supplying the labour and supervising the construction work. While the former type of cases fall within the category of works contract, the latter type are considered as contract for ‘service’.

4.26 The concept of ‘works contract’ loomed large, earlier, in Sales Tax law. In State Of Madras v. Gannon Dunkerley & Co., (Madras) Ltd and Co. AIR 1958 SC 560, the Supreme Court held that the legislature has no competence to levy sales-tax on the sale of materials involved in a works contract. This necessitated an amendment to the Constitution to enable the levy of Sales-tax on the cost of goods supplied by the contractor, while executing the works contract. The history is narrated in detail in Builders Association of India v. Union of India AIR 1989 SC 1371.

4.27 The narrow meaning attributed to the word ‘work’ in S. 194C as confined to works contract was rejected by the Supreme Court and in that context, the Court held that the term ‘any work’ is a term of wide import, to include not only the work involved in the works contract but also the work resulting in other type of contracts where the contract requires, ‘carrying out of any work’.

4.28 One more factor makes the meaning of the Section beyond the pale of any doubt. If the term ‘any work’ in S. 194-C by itself covers any kind of service, the words found in the bracket, in sub-section (1) of S. 194-C will have to be treated as otiose or superfluous. Supply of labour to carry out any work, is a concept that falls within the concept of ‘services’; if so, why should the Parliament include these words in the bracket, to give an expanded meaning to the term ‘any work’. The Supreme Court, in the Associated Cement co.'s case (supra) clearly pointed out that but for the specific inclusion of those words (i.e, ‘including supply of labour for carrying out any work’), in S. 194C obtaining of supply of labour for carrying out the work would have fallen outside the word ‘work’. The concluding part of the Supreme Court observation quoted above brings out the true purport of the term ‘any work’ in S. 194C.

4.29 ‘Any work’, certainly is a term of wide import; but, it is not so wide, as to comprise within its scope the obtaining of the supply of labour to carry out the work, because, the latter concept is essentially, a concept falling within the sphere of ‘services’. However, the term ‘any work’ is wide enough to cover any kind of work which one can get carried out through another. The essentiality is that, it should be a ‘work’ which is to be ‘carried out’.

4.32 It is most inappropriate to equate rendering of a service to carrying out a work. That is why Parliament thought it expedient to expand the meaning of the word ‘work’ by including in it the supply of labour. It is obvious that because the word ‘work’ would not include within its amplitude the supply of labour, Parliament added the same by ‘including’ the latter in the former, thereby giving the word ‘work’ an extended meaning. The ex-tended meaning cannot travel beyond the actual extended area; the Parliament has stretched the scope of the word to some extent only.

The manner in which the relevant words were understood and the scope of S. 194C was measured, immediately after its enactment, throws considerable light on the point in issue.

4.40 While issuing the impugned circulars, the CBDT has missed the real purport of the decisions of the Supreme Court in Associated Cement Co.'s case (supra). Sec. 194C does not govern the payments of fees towards professional or technical services. The term ‘any work’ in S. 194C is aimed at the type of work resulting in tangible material and by virtue of the special inclusion, supply of labour to carry out any work also is brought into the net of tax deduction at the source. This inclusive clause ropes in the consideration for the ‘supply of labour’. The word ‘supply’ connotes the meaning of ‘procuring’, ‘securing’ or ‘bringing in’, and not rendering of one's own professional or technical services.

4.41 The Board has no power to enlarge the scope of the statutory provision. Its powers are conferred to issue administrative instructions. The impugned circulars travel beyond the provisions of S. 194C and have no legal force and are liable to be quashed. The authorities functioning under the IT Act are not bound by them.

In the result, the two impugned Circulars No. 666 dated 8th Oct. 1993 and No. 681 dt. 8th March, 1994 are quashed to the extent the said circulars govern the payments to the commission agents and brokers for the services rendered by them, further, we declare that S. 194C of the IT Act does not operate on such payments and the respondents are restrained from enforcing them accordingly”.

13. The Bombay High Court, in the decision reported in (1994) 210 ITR 136 (supra) has held as hereunder.

“We have carefully considered the rival submissions. The controversy, in our opinion, is in a very narrow compass. Section 194c has been in the statute book almost in the same form ever since its inception in the year 1972. It provides for deduction of tax at source on payments made for carrying out any work including supply of labour for carrying out any work in pursuance of a contract between the contractor and the persons specified therein. The crux of the section is “payment made for carrying out any work”, which by virtue of specific inclusion also includes supply of labour for carrying out any work. The requirement that such work should be carried out in pursuance of a contract between a contractor and the person/s concerned is an additional requirement. To attract section 194C, it is, therefore, necessary that the payment should be made for carrying out any work. If this condition is fulfilled then and men only the next condition becomes relevant, i.e, such work, should be carried out in pursuance of a contract between the coatractor and the person concerned. The word “contract” is a word of wide import and includes agreements oral or written. There is no dispute in this case that there is a contract or agreement between the transporter and the owner of the goods for carriage of goods. The case of the petitioner is that “carriage of goods” does not amount to “carrying out any work” and the payments made on that account, therefore, cannot be said to be payments made for carrying out any work. We find force in the above submission. The word “any work” has been interpreted by the Central Board of Direct Taxes itself which is the highest authority under the Income-Tax Act for implementation of the provisions of the Act from time to time. It has been made clear in the very first circular on the subject being circular No. 86 (see 1972) 84 ITR (St. 99), dated May 29, 1972, that section 194C applies only to works contracts and labour contracts and it does not apply to contracts for sale of goods. In reply to enquiries from various Trade Associations and members of the public including the petitioner-Association, by Circular No. 93 (see 1972) 86 ITR (St. 30) dated September 26, 1972, it was reiterated that a transport contract cannot ordinarily be regarded as a “contract for carrying out any work” and as such, no deduction in respect of income-tax is required to be made from payments made under such a contract. It was further made clear that in the case of a composite contract involving transport as well as loading and unloading, the entire contract will be regarded as a “works contract” and income-tax will have to be deducted from payments made thereunder. Where, however, the element of labour provided for loading and unloading is negligible, no income-tax will be deductible. In answer to another question it was even clarified that pipeline/pumping charges for use of pipelines owned and operated by Port Trusts for movement of petroleum products by pipeline from refinery to Port installations would not fall within the purview of section 194c of the Act.

Again, on October 13, 1972, in a letter written to the petitioner-Association itself, it was specifically stated that the provisions of section 194C were not applicable in respect of transport contractors. The same view was reiterated in yet another letter of February 3, 1982. there is no change in the situation during the last 20 years to justify a departure from the above interpretation of section 194C given by the Central Board of Direct Taxes and accepted by the tax payers. The Central Board of Direct Taxes has reviewed the above instructions and changed the interpretation given by it and acted upon it for more than two decades only on the basis of certain observation of the Supreme Court in the case of Associated Cement Co.'s Case (1993) 201 ITR 435. According to the Central Board of Direct taxes, some of the issues raised in the circulars issued by it earlier from 1972 onwards needed review in the tight of the above judgement. Accordingly, by Circular No. 681 (sec 1994) 206 ITR (St.) 299, dated March 8, 1994 it opined that the provisions of Section 194-C shall apply to all types of contracts for carrying out any work including transport contracts, service contracts, advertisement contracts, broadcasting contracts, telecasting contracts, labour contracts, materials contracts and works contracts. The term “transport contracts” has been defined to cover in addition to contracts for transport and loading/unloading of goods also contracts for plying buses. The term “service contracts” has also been defined to include services rendered by such persons as lawyers, physicians, surgeons, engineers, accountants, architects, consultants, etc. In Writ Petition No. 1052 of 1994 - Chamber of Income-tax Consultants v. CBDT (1994) 209 ITR 660 (Bom), the very same circular was challenged in so far as it purports to include payments made to professionals on account of services rendered by them by including them in service contracts. By our judgment dated July 14, 1994, we have held that section 194C is not applicable to payments made to professionals for services rendered by them. We have also discussed the ratio of the decision of the Supreme Court in Associated Cement Co.'s case (1993) 201 ITR 435.”

“In the light of the above discussion, we are of the clear opinion that the provisions of Section 194C of the Act are not applicable to contracts for mere carriage of goods which do not include any other services like loading or unloading. The circular of the Board No. 681 (See (1994) 206 ITR (St. 299) dated March 8, 1994, in our opinion, is based on an erroneous reading of the decision of the Supreme Court in Associated Cement Co.'s case (993) 201 ITR 435 and certain observations made therein. We, therefore, hold that the said circular is illegal and without jurisdiction in so far as it requires deduction of tax at source under section 194C to contracts for mere carriage of goods which do not include any other services like loading and unloading and are not in anyway connected with any work to be performed by them earlier.

In the result, this Writ Petition is allowed and rule is made absolute in the above terms. Under the facts and circumstances of the case, there shall be no order as to costs.”

14. In yet another decision reported in 210 I.T.R 152 (supra) the Division Bench of the Bombay High Court has held as hereunder:

“3. We have considered the submissions of Mr. Bharucha, the learned counsel for the petitioners. We had occasion to deal with the scope and ambit of Section 194C in regard to fees paid to professionals like Solicitors, Advocates, Chartered Accountants, etc., in Writ Petition No. 1052 of 1994 filed by the Chamber of Income-Tax Consultants and others. We have delivered judgment in the above case on 14.7.1994 In the above judgment, we have set out the provisions of section 194C and have dealt at length with various circulars issued from time to time both by the Ministry of Finance and by the CBDT in regard to the applicability of the provisions of Section 194C. We had also occasion to deal with the said section in another Writ Petition No. 1277 of 1994 filed by the Bombay Goods Transport Association challenging the very same circular of the CBDT dated 8.3.1994 with regard to the applicability of section 194C to payments made to transport operators for carriage of goods. In the petition filed by the Chamber of Income-tax Consultants and others we have held that Section 194C does not apply to payments by way of professional fees. In the petition filed by the Bombay Goods Transport Association, by our judgment dated 28 and 29.7.1994 we have held that the provisions of section 194C do not apply to contracts for mere carriage of goods, i.e, transport contracts. The ratio of the above two decisions squarely applies to the case of payments made to advertising agencies for professional services rendered by them.

4. In this connection, it may be expedient to mention that by Circular No. 93, dated 20.9.1972 (See Taxmann's Direct Taxes Circulars, 1991 edn. p. 2076) issued by the Deputy Secretary to the Government of India in reply to a query whether the requirements of Section 194C would apply to payments made to advertising agents rendering professional services, it has been categorically stated that service contracts not involving carrying out of any work are outside the scope of Section 194C. Earlier also by Circular No. 86, dated 29.5.1972 (p. 2073) it was made clear that the provisions of section 194C are applicable only to works contracts and labour contracts. There is no change in the law since then. Further the above interpretation has been accepted and acted upon both by the revenue and the assessees including the petitioners. It is only recently on 8.3.1994 that the CBDT by Circular No. 681 withdrew its earlier circulars on the point purportedly on the basis of the decision of the Supreme Court in Associated Cement Co. Ltd.'s case (supra).

5. We have discussed the decision of the Supreme Court in Associated Cement Co. Ltd.'s case (supra) in our above two judgments. We have there come to a clear conclusion that the Supreme Court in the said judgment has in no way extended or amplified the scope of Section 194-C. It has merely held that the said section is not confined to works contracts but also applies to labour contracts. This is also the interpretation given by the CBDT althroughout in the past. The Supreme Court in that case was required to consider the question of applicability of Section 194C to labour contracts because the contention of the assessee there was that the said section was applicable only to works contracts. It was this contention that was repelled by the Supreme Court. In other words, as aforesaid, the Supreme Court merely affirmed the interpretation put by the CBDT on section 194C to include not only works contracts but also labour contracts.

6. Following the ratio of the above two decisions or this Court, we hold that the impugned circular of the CBDT dated 8.3.1994 is illegal and without jurisdiction in so far as it requires deduction at source from payments made to advertising agencies for professional services rendered by them”.

15. I have carefully considered the submissions of the learned counsel appearing on either side in the light of the various decisions relied upon and the relevant provisions of the Act. The plea of the respondent based upon the decision of the Division Bench of the Gujarat High Court in (1994) 76 Taxman 307 (supra) may be considered first. I have been taken through the said judgment but in my view the disposal of that type will do no real or effective justice to the parties who approached the Court at least in the type of cases before us. The threat posed by the Impugned circular orders is real and substantial and the consequence and effect of the constraining influence of the same upon the authorities functioning under the Act, having regard to the authority which issued the same and the source of power claimed therefor, cannot be completely erased except by quashing and setting aside the impugned circular. If the respondent is really sincere that the circular was meant to be a guideline and instruction, with option for the authorities under the Act to follow it or not, the mandatory and commanding nature of language need not have been employed. Even that apart, if the object of the respondent was also to leave a free hand in tax matter to the authorities under the Act, nothing prevented the Central Board of Direct Taxes to simply revoke or cancel the earlier circulars with a mere indication that the authorities shall be at liberty to objectively decide the matter independently. Therefore, it is futile for the respondents to contend that there is no need to quash the circular orders and the same can be allowed with a mere clarification of the petition. Further, if on the face of it, even on indisputable facts on record, there is absolutely no statutory liability to pay tax as the provisions of the Act stand at present and it is the circular which attempts to fasten liability upon such persons, the circular is liable to be set aside as illegal and unconstitutional so that no room will be left for any doubt in this regard. Hence, the need to go into the merits of the contentions raised before me.

16. The scope and ambit of Section 194-C may next be considered before actually taking up the claim of the various professional bodies in respect of the nature and character of the services rendered by their constituent members to their clients or customers. Section 194-C(1) mandates any person responsible for paying any sum to any resident, to be referred to thereafter as contractor, for carrying out any work, including supply of labour for carrying out any work, in pursuance of a contract between the contractor and any one of the authorities specified in clauses (a) to (i) to deduct an amount equal to 2 per cent of such sum at the time of credit of such amount to the account of the contractor or at the time of payment thereof in cash or by the issue of a cheque or draft or any other mode whichever is earlier, as income tax on the income comprised therein. The mere feet that the word ‘a resident’ otherwise meant to refer to a person who is a resident in India within the meaning of section 6, has been referred to in Section 194-C as the Contractor, does not have the effect of dispensing away once and for all the element of contract from consideration for the purpose of identifying the nature of work or the quality of work which alone is sought to be roped into the area of consideration for inclusion in the words ‘any work’ used in the provision. The words ‘any work’ take their colour from the words ‘contractor’ and ‘contract’ and the gamut of the words ‘any work’ gets crystallized and confined in the process of consideration to the category and quality of work involving activities which are predominantly physical and tangible in juxtaposition to activities involving intellectual aspect playing a dominant role as in the vocations of Lawyer, Doctor, Architect or Chartered Accountant. The words ‘any work’ used in Section 194 C(1), therefore, cannot be construed divorced from their context and the texture inbuilt in the provisions themselves and the other conglomeration of words and phrases used therein. Thus viewed and considered, in my view, the provisions of Section 194-C(1) have the effect of taking within their purview the category of services rendered in return for the fee paid in contrast to a work performed for a price as its consideration.

17. The next aspect of consideration should be as to whether the decision of the Supreme Court of India reported in (1993) 201 I.T.R 435: Associated Cement Companies Ltd. case, on which great reliance is placed to justify the issue of the impugned circular, really warrant the expanded meaning to be given to Section 194-C(1) as desired by the impugned circular. The case before the Supreme Court was one wherein under the terms and conditions of an agreement between the appellant before the Court and a contractor, the contractor was to be paid at a flat rate for loading packed cement bags into wagons or trucks, fixed on the basis of daily basic wages, dearness allowance etc., and clause 13 of the contract stipulated reimbursement by the appellant to the contractor in case of certain increase in the dearness allowance, etc. payable by the contractor to the workmen employed by him. The appellant appears to have paid the contractor the amount stipulated at a flat rate as also amounts by way of reimbursement under clause 13 referred to. The deduction made by the appellant fell short of the deduction required to be made and when a show cause notice was issued by the assessing authority, the appellant contended that it was not liable to deduct any amount on payments made for loading and unloading as Section 194-C was applicable to only payments made in execution of works contracts, which produce a tangible property and not in respect of other works. It was only in the context of such a claim and in the teeth of the only question raised therein before the Apex Court as to whether Section 194-C was confined to ‘works contracts’ only, the Court held that there was no reason or justification, to curtail or cut down the meaning of the plain words ‘any work’ so as to confine or restrict them to ‘works contracts’ and that the same have a wide import and cover any work which one or the other of the organisations specified in the sub section can be carried out through a contractor under a contract, express or implied. The question as to whether professional services are also covered by the said provision was never before the Supreme Court for its consideration and it is purely on surmises and assumptions the Central Board of Direct Taxes thought that the Court in that case also must be considered to have decided such an issue, by implication. There is no warrant whatsoever for this premise or assumption. As a matter of fact, the observations of their Lordships of the Supreme Court, “further it includes obtaining by any of such organisations supply of labour under a contract with a contractor for carrying out its works which would have fallen outside the ‘work’ but for its specific inclusion in the sub-section”, would go to show that the words ‘any work’ did not carry such wide import as now sought to be ascribed to it by the impugned circular and at any rate the ratio of the decision of the Supreme Court does not lend support for such wide construction. The fact that the services of professionals like Lawyers, Tax Practitioners, Solicitors, Chartered Accountants etc., are obtained may be and at times are appointed under resolutions of the Board or orders passed by the governing Executive Authorities to secure their services for the authorities concerned do not by itself alter the character or quality of their services and render them any the less professional services or convert them as contractual services or contracts for the supply of labour for carrying out any work.

18. That apart, the other evidence aliunde available before me to justify or strengthen the same would be the very intention of the Parliament in that in the year 1987, there was an attempt to insert Section 194-E of the Act by the Finance Bill, 1987 requiring deduction of Tax at source from ‘other income’ which included commission or brokerage as well as fee for professional services, fee for technical services, rent etc., but the said proposal was not ultimately pursued and it was dropped when the Act was passed. Equally, Finance (No. 2) Act, 1991 inserted Section 194-H with effect from 1.10.1991 to provide for deduction of tax at source from commission or brokerage etc., but the said provision, by virtue of the words “but before the 1st day of 1992,” inserted subsequently with effect from 1.6.1992 by the Finance Act, 1992, became ineffective from 1.6.1992 It is also seen from the Budget presented in Parliament last week that once again provision is being inserted making that obligation or tax deduction at source to be extended so as to specifically include fee for professional and technical services, service contracts, etc., of course, when the proposal gets finally incorporated in the Finance Act that may be passed ultimately, it will have the force of law. These factors would also go to lend strong support or credence to the claim made on behalf of the petitioners.

19. Further, the view taken by the learned judges of the Division Benches of the Bombay High Court and the Delhi High Court in the decisions referred to supra accords with my above referred conclusions and, therefore, I am in respectful agreement with the ratio laid down therein, and I adopt their reasoning also as part of my reasons, in addition, to resting my conclusions in these cases, with great respect to the learned Judges of the Gujarat High Court who decided the case reported in (1994) 76 Taxman - Tax Reports, 307, it will provide no effective or final solution to the problem posed before Courts and would only pave the way further to avoidable litigation which may, if need be, avoided and not encouraged.

20. In view of the above, there is no need to decide some of the other incidental issues raised before me at the time of hearing of these writ petitions. On the view expressed be me as to the scope and ambit of Section 194-C(1), it becomes inevitably necessary to declare that the impugned circular No. 681 dated 8.3.1994 issued by the Central Board of Direct Taxes in so far as it purports to issue directions in paras 7 and 8 in derogation of the scope of Section 194-C shall stand hereby quashed as being violative of Articles 14 and 265 of the Constitution of India and opposed to Section 194-C of the Act, in so far as it requires deduction at source from payments made by way of professional fees to Advocates, Solicitors, Chartered Accountants, Tax Practitioners, etc., for the services rendered by them.

21. So far as the “Transport Contracts” are concerned, my conclusion is that the impugned circular is illegal and without jurisdiction in so far as it casts an obligation for deduction of tax at source under Section 194-C in respect of contracts for mere carriage of goods which do not include any other services like loading and unloading and are not in any way connected with any work to be performed by the carrier. So far as Advertising Contracts are concerned, payments made to the Advertising Agencies or Agents for rendering professional services alone cannot be held to be within the scope of Section 194-C(1) and the impugned circular is illegal and without jurisdiction in so far as it requires deduction at source in respect of such payments.

22. The writ petitions are, therefore, allowed to the extent indicated and in the above terms. But in the circumstances of the case, there shall be no order as to costs.

KA/CH/VCS

Madras Bar Associati... v. The Advocates Associ...