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TMI Blog2010 (4) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... er envisaged in section 264 and consequently a revision under section 264 was not maintainable. Held that- the commissioner was manifestly in error in holding that the rejection of an application u/s 197 by the Assessing Officer did not result in an order and that the revision power vested in the commissioner under section 264 would not be attracted. The application filed by the assessee had been rejected without application of mind to circumstances germane to the statute. X X X X Extracts X X X X X X X X Extracts X X X X ..... arned any revenues for executing the project. The assessee stated that when payments are required to be made by it, appropriate taxes are withheld and deposited with the authorities together with the interest, if any, for delay in deducting or depositing taxes. 4. On January 5, 2010, the first respondent rejected the application filed by the assessee under section 197 for two reasons : (i) the calculation mech-anism provided in rule 28AA of the Income-tax Rules, 1962, fails as figures for three previous years are unavailable ; and (ii) no eTDS returns were filed by the assessee. The assessee sought reconsideration of the rejection by a letter dated January 6, 2010. Once again by an order dated January 13, 2010, the application was rejected. The first respondent stated that the Rules prescribe a comparison of the current year's projections with figures for previous three years. This mechanism, according to the Assessing Officer, is to ensure that the projection of the current year is compared with figures which have been crystallized after filing of returns for the previous three years. In the absence of figures of earlier years, the first respondent stated that he was not in a pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 195 requires deduction of tax at source in respect of pay-ments made to a non-resident, not being a company, or to a foreign company. Sub-section (2) of section 197 provides that where a certificate is granted, the person responsible for paying the income shall deduct income-tax at the rates specified in the certificate or deduct no tax, as the case may be, until the certificate is cancelled. Sub-section (2A) empowers the Board, having regard to the convenience of assessees and the interests of the Revenue to make Rules specifying (i) the cases in which and the circumstances under which, an application may be made for the grant of a certificate under sub-section (1) ; and (ii) the conditions subject to which such certificate may be granted and providing for all other matters connected therewith. In exercise of the powers conferred upon the Board by sub-section (2A) of section 197, rule 28AA has been made in the Income-tax Rules, 1962. Sub-rule (1) of rule 28AA is to the following effect : "28AA.(1) The Assessing Officer, on an application made by a per-son under sub-rule (1) of rule 28, may issue a certificate in accordance with the provisions of sub-section (1) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 264 has a wide connotation. Sub-section (1) of section 264 provides that in the case of any order other than an order to which section 263 applies, passed by an authority subordinate to him, the Commissioner may either of his own motion or on application by the assessee for revision, call for the record of any proceeding under the Act in which any such order has been passed and after making an enquiry, pass such order thereon not being an order prejudicial to the assessee as he thinks fit. Parliament has used the expression "any order". Hence, any order passed by an authority subordinate to the Commissioner, other than an order to which section 263 applies, is subject to the revisional jurisdiction under section 264. A determination on an application under section 197 requires an order to be passed by the Assessing Officer after application of mind to the circum-stances which are germane under section 197 and the Rules framed under sub-section (2A). The Commissioner was, therefore, manifestly in error when he held that there was no order which would be subject to his revisional jurisdiction under section 264. 8. The manner in which the application filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw. That, however, cannot justify the rejection of the application made by the assessee for the determination of withholding of tax at a lower rate on payments which are to be received by the assessee. In the subsequent application dated January 29, 2010, the Assessing Officer accepted the position that the assessee had paid interest on the delayed payment of tax which was deducted at source. Here again, the submission of the assessee is that the delay, if any, may result in other consequences which are pro-vided for by the Act, including penal consequences under section 271(1). However, that cannot justify the rejection of an application under section 197. 9. The Commissioner has rejected the application of the assessee on the ground that a revision was not maintainable under section 264. That ground has been held earlier in this judgment to be erroneous. The Commissioner also observed that in the event that the assessee has paid excess tax, it would be entitled to a refund of the tax paid together with interest and hence, no prejudice would be caused to the assessee. The entire approach of the Commissioner is, with respect, specious. The Assessing Officer was required, in the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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