Authority: High Court of Judicature at Patna

Order Date: 14-10-2026

Case Overview

  • Parties: South Bihar Power Distribution Company Ltd and North Bihar Power Distribution Company Ltd (appellants) versus Asst. Commissioner of Income Tax (TDS), TDS Circle, Patna (respondent). The appeals correspond to Miscellaneous Appeal Nos. 299, 298, 301, 302, 303, 305, 307 and 311 of 2020 (CNR No. BRHC010492732020).
  • Nature of proceedings: Appeals under Section 260A of the Income Tax Act challenging a common order dated 06‑12‑2019 passed by the Income Tax Appellate Tribunal, Patna Bench, regarding liability to deduct tax at source under Section 194C for payments under turnkey contracts for supply of materials and erection of electrical infrastructure.
  • Background: The companies argued that the tender resulted in two separate contracts – one for supply of materials/equipment and another for erection works – and that TDS should be deducted only on the erection portion. The Assessing Officer and the Tribunal treated the two components as a single composite contract, deeming the companies assessees in default under Sections 201(1) and 201(1A) for failure to deduct TDS on the supply portion. The same view was upheld by the Commissioner of Income Tax (Appeals) on 06‑10‑2018.
  • Legal questions framed on 24‑02‑2026: (i) Whether the Tribunal erred in holding the contract composite despite separate agreements; (ii) Effect of the Finance (No. 2) Act, 2009 amendment to Section 194C on such contracts; (iii) Whether the Tribunal ignored relevant High Court and Tribunal precedents; (iv) Liability to deduct TDS when the deductee incurs losses and does not pay tax.
  • Proceedings: On 13‑10‑2026 the Revenue Senior Counsel submitted a supplementary affidavit citing orders dated 19‑03‑2020 (Annexure‑P/4 series) issued by the Assessing Officer after the Tribunal order, confirming the companies as assessees in default and directing payment of tax and interest under Sections 201(1) and 201(1A). These orders were not disclosed in the appeal memoranda filed in December 2020.

Final Outcome

  • The Court held that the appellants’ failure to disclose the 19‑Mar‑2020 Assessing Officer orders amounted to suppression of material facts and unfair conduct. Consequently, the appellants are disentitled to any relief, and all the listed appeals are dismissed. The Court refrained from imposing heavy costs on the appellants.

Topics: TDS Liability, Judicial Procedure, Power Distribution