M/S.BIRLA CEMENT WORKS vs CENTRAL BOARD OF DIRECT TAXES

The Supreme Court examined the legality of the CBDT circular dated 8th March 1994 concerning the applicability of Section 194C of the Income Tax Act, 1961, which mandates tax deduction at source for payments to contractors. The Court held that the circular improperly expanded the scope of Section 194C to include transport contracts, which had previously been excluded by earlier circulars. Consequently, the Court ruled that the provisions of Section 194C do not apply to payments made for transport contracts, thereby upholding the appellant's position that no tax deduction was required.