2013 (11) TMI 969 - HC - Income Tax

No deduction of tax certificate Held that - The application made by the petitioner under Section 197 has been rejected without giving details as to the outstanding demand and as to whether the petitioner s case falls within the scope of section 197 and the rules made thereunder or not - No reasons were assigned as to why the application of the petitioner has been rejected - Revenue is directed to reconsider the application made by the petitioner in the light of the various materials which have been placed by the petitioner and in accordance with law The issue was restored.

Summary

Issues Involved:
Challenge to communication dated 8.8.2013 rejecting application under Section 197 of the Income Tax Act, 1961.

Analysis:
The petitioner filed an application under Section 197 of the Income Tax Act, 1961, seeking a no deduction of tax certificate due to continuous losses from 2010-11 to 2013-14. After appearing before the authority, the communication dated 8.8.2013 (Annexure-K) rejecting the application was challenged in the writ petition. The petitioner argued that the parameters for granting the certificate were not considered, and the communication lacked details on outstanding dues and reasons for rejection. The court noted the cryptic nature of Annexure-K and quashed it, directing the first respondent to reconsider the application with proper evaluation of the petitioner's case in accordance with the law.

The main contention was that the application was rejected without proper consideration of the parameters for issuing a no deduction of tax certificate under Section 197 of the Act. The petitioner's continuous losses were cited as the basis for seeking the certificate. However, the communication rejecting the application was found to be lacking in detail and reasoning, failing to address whether the petitioner's case fell within the scope of the relevant section and rules. The court emphasized the need for a proper assessment based on the materials presented by the petitioner and in compliance with legal requirements.

The learned counsel for the respondents argued in support of the rejected communication, citing outstanding dues from the petitioner as a reason for the unfavorable consideration of the application. However, the court found the communication inadequate as it did not provide specific reasons for the rejection, leading to the decision to quash Annexure-K and instruct the first respondent to reevaluate the application. The court directed the petitioner to appear before the first respondent without further notice, emphasizing the need for a proper reconsideration of the application in line with legal provisions and the materials presented by the petitioner.