2020 (7) TMI 689 - HC - Income Tax

Certificate u/s 197 - refusal to grant a certificate of deduction of tax at source at NIL rate, on payments to the petitioner company by its customers - petitioner prays to reconsider the petitioner s application and grant Certificate under Section 197 of the Income Tax Act, 1961 for deduction of tax at source at NIL rate - petitioner contends that the impugned order is contrary to the principle of rule of consistency as the 0.9% rate specified in the impugned order is higher than the 0.7% rate of tax deduction at source determined in the immediately preceding year - HELD THAT - Ms. Lakshmi Gurung, learned counsel accepts notice on behalf of the respondent. She states that the respondent while issuing the impugned certificate has placed detailed reasons on record. Since detailed reasons are stated to be available on record, the present writ petition and the pending application are disposed of with a direction to the respondent to furnish a copy of the reasons to the petitioner within a week. In the event the petitioner is aggrieved by the said reasoned order, it shall be open to the petitioner to file appropriate proceedings in accordance with law.

Summary

Issues:
Challenge to Certificate under Section 197(1) of the Income Tax Act for tax deduction at NIL rate.

Analysis:
The petition challenges a Certificate dated 30th June, 2020, issued under Section 197(1) of the Income Tax Act, which refused to grant a certificate of deduction of tax at source at NIL rate on payments to the petitioner company by its customers. The petitioner seeks a direction to reconsider the application and grant the Certificate under Section 197 for deduction of tax at source at NIL rate. The petitioner argues that the impugned order violates the rule of consistency, as the 0.9% rate specified is higher than the 0.7% rate determined in the preceding year by the respondent. The petitioner contends that the order lacks reasoning and explanation.

The Court notes the urgency expressed in listing the petition and conducts the hearing via video conferencing. The respondent, through learned counsel, states that detailed reasons for issuing the impugned certificate are on record. The Court directs the respondent to provide a copy of the reasons to the petitioner within a week. It further clarifies that if the petitioner remains aggrieved by the reasoned order, they have the option to pursue appropriate legal proceedings. The Court emphasizes that all rights and contentions of the parties remain open for future action.

In conclusion, the Court allows the applications subject to exceptions and disposes of the petition with the direction to provide reasons to the petitioner. The order is to be uploaded on the website promptly, and a copy is to be sent to the respective counsels via email. The judgment ensures transparency and procedural fairness in addressing the challenge to the Certificate under the Income Tax Act, maintaining the parties' legal rights for further recourse if needed.