The Madras High Court has stayed the operation of an Income Tax Act provision, which requires debenture-holders to furnish the Permanent Account Number along with Form 15G to claim exemption from tax deduction at source. Justice KN Basha granted the interim relief to PS Kamala, saying the condition was contrary to the relevant provisions of the Income Tax Act.
In his submissions, Kamala’s counsel Abbudukumar Rajarathinam contended that she purchased non-convertible debentures from two Shriram group companies and that she used to file Form 15G as required by Section 197 A(1A) of the IT Act to enable the IT authorities not to deduct tax at source.
Recently, she received a letter from the IT Department informing her that from April 1, Form 15G will not be accepted by the company unless she furnished her PAN.
Assailing the amendment to Section 206AA of the Income Tax Act, Kamala said many individuals like her were not assessed for income tax and that PAN is an unwarranted hardship to such people.
She wanted the court to stay the operation of Section 206AA of the IT Act, which is to become effective from April 1, 2010.