Section 198

Section 198 — the law in short

What the courts have decided on section 198, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Tirunelveli District Central Co-op Bank v JCIT High CourtHelps taxpayerPartly overruled — read this first
  Must I deduct under 194N on cash withdrawals that are not the account holder's income?
  No. Section 194N requires a sum to be deducted 'as income-tax', and income-tax is a levy on income — where no income results, there is no levy, and the TDS machinery is not itself a charging provision. The bank must be allowed to lead evidence that the payee bore no tax liability on the sum withdrawn.
• Swayam Prabha Jain v ACIT ITATHelps taxpayerSuperseded by amendment
  My tenant deposited the disputed rent in court and the TDS was deducted then, but the money only reached me two years later when the suit was settled. The officer has taxed it in the earlier year. Which year is it taxable in, and what happens to the TDS credit?
  The rent is taxable in the year it is actually received, not the year it was deposited in court, and the addition made in the earlier year was deleted. The TDS, however, does not simply follow the money: under Rule 37BA(3)(ii) the credit is allowed across the years in the same proportion in which the income is assessable, so the officer was directed to give proportionate credit in both years.
• DCIT v Rajeev G Kalathil ITATHelps taxpayer
  The only thing against my supplier is that the indirect-tax authorities have put him on a list. Is that enough to make my purchase bogus?
  No, not by itself. A supplier being declared a hawala dealer by the sales tax department is a good starting point for further investigation, but the Assessing Officer left the job at the initial point, and suspicion of the highest degree cannot take the place of evidence. The listing shifts the officer's attention; it does not discharge his burden. Two limits sit on the face of the order. Only one of the two suppliers in issue was on the listing - for the other the number on the bills returned no result at all - and the holding is conditional on what the officer failed to do: he had not called for the suppliers' bank accounts to look for an immediate cash withdrawal, movement of the goods to site was not in doubt, and part of the goods was in closing stock.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.