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2018 (10) TMI 2025 - HC - Income TaxApplication made u/s 197 rejected - respondents, on instructions, states that the respondents withdraw the impugned letter of rejection issued to the petitioner by the respondent No.1 and further that the petitioners application for issuance of the certificate in terms of section 197 would be decided afresh and a speaking order will be passed within a period of ten days from today - HELD THAT - We issued the clarifications and to the following effect While we allow withdrawal of these certificates and impugned in this Writ Petition with liberty to issue fresh certificates in accordance with law, we clarify that no functionary other than the officer referred to in the relevant statutory provision, namely Section 197 and the Rule 28AA of the Income Tax Rules, 1962 would be permitted to take over the jurisdiction or interfere in the exercise of the discretionary power envisaged by this statutory provision. This writ petition is also disposed of in the above terms. In the circumstances, there will be no order as to costs. We direct that until the petitioners application is disposed of by a speaking order in terms of the undertakings given to this Court, there shall be no recovery of the demand by resorting to coercive means.
Issues:
- Petition for writ of certiorari and mandamus under Article 226 of the Constitution of India - Validity and legality of Rule 28AA of the Income Tax Rules - Continuation of lower deduction of tax at source on the petitioner's income Analysis: Issue 1: Petition for Writ of Certiorari and Mandamus The petitioners sought relief through a writ petition under Article 226 of the Constitution of India. They requested the court to quash the impugned letter of rejection issued by Respondent No.1 and to direct the withdrawal, revocation, and granting of the petitioner's application under Section 197 of the Act. After extensive arguments and the filing of an affidavit-in-reply by the respondent, the respondent agreed to withdraw the impugned letter of rejection and to decide the petitioner's application afresh within ten days. The court accepted these undertakings as given to the court, similar to a previous case cited by Mr. Mistri. The court disposed of the writ petition based on these undertakings, with no order as to costs, and directed no recovery of the demand by coercive means until the petitioner's application is decided. Issue 2: Validity of Rule 28AA of the Income Tax Rules The petitioners also requested the court to examine the validity and legality of Rule 28AA of the Income Tax Rules and to strike down the rule as ultra vires Section 197 of the Act. However, since the respondent agreed to withdraw the impugned letter and reconsider the petitioner's application under Section 197, the court did not delve into the examination of the rule's validity. The court disposed of the writ petition based on the respondent's undertakings, without addressing the specific issue of the validity of Rule 28AA. Issue 3: Continuation of Lower Deduction of Tax at Source The petitioners further requested the court to direct the continuation of lower deduction of tax at source on the petitioner's income until the application is decided. The court ordered that there shall be no recovery of the demand by coercive means until the petitioner's application is disposed of by a speaking order in accordance with the undertakings given to the court. This directive ensures that the petitioner's income tax deductions remain at the lower rate until a decision is made on the application under Section 197 of the Act. In conclusion, the High Court of Bombay disposed of the writ petition based on the respondent's undertakings to withdraw the impugned letter of rejection and reconsider the petitioner's application under Section 197 of the Income Tax Act. The court also directed the continuation of lower tax deductions at source until a decision is made on the application, without addressing the specific validity of Rule 28AA of the Income Tax Rules.
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