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TMI Blog2020 (12) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 might have recorded reasons for issuance of certificates not at nil rate but learned counsel for the petitioner submits that petitioner has not been served with copy of any such order. The same has also not been annexed to the reply affidavit filed on behalf of the respondents. Respondents are required to pass an order u/s 197 either rejecting the application for such certificate or allowing such application resulting in issuance of certificates which may be at rates higher than nil rate sought for by the assessee, such an order must be supported by reasons. In the instant case, we do not know the reasons for not granting nil rate certificates to the petitioner under section 197 of the Act. The contemporaneous order required to be passed under section 197 of the Act is also not available. Referring to law laid down by this Court in Larsen Toubro [ 2010 (4) TMI 414 - BOMBAY HIGH COURT] as well as in Tata Teleservices (Maharashtra) Limited [ 2018 (2) TMI 192 - BOMBAY HIGH COURT ] we have no other alternative but to set aside and quash the impugned certificates dated 07.08.2020. Matter is remanded back to respondent No.1 for passing fresh order and issuing consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the consumer mobile business. Scheme of demerger was sanctioned by the National Company Law Tribunal, Mumbai on 04.12.2018 and by the National Company Law Tribunal, New Delhi on 30.01.2019. It became effective on and from 01.07.2019. Under the scheme of demerger, the consumer mobile business of the petitioner stood transferred to Bharti Airtel Limited. 6. However, issuance of certificates under section 197 of the Act at higher rates has only aggravated the financial condition of the petitioner. 7. Petitioner filed application on 17.04.2020 seeking issuance of nil rate tax withholding certificates under section 197 of the Act on various grounds for the assessment year 2021-22. In this connection, respondent No.1 wrote to the petitioner via email on 05.05.2020 seeking certain details which were provided by the petitioner on 12.05.2020. This was followed by email dated 26.06.2020 of the petitioner requesting expeditious disposal of its application. Despite petitioner pursuing the matter, respondents failed to process the application of the petitioner. Reminder was issued by the petitioner on 30.07.2020. 8. Finally on 07.08.2020, respondent No.1 processed the application of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned certificates. 12.1. Per contra, Mr. Kumar submits that the impugned certificates have been issued after due application of mind and after complying with the requirements of law. It is a voluminous exercise which the respondents have carried out with due diligence. In so far order passed by respondent No.1 under section 197 of the Act is concerned, he submits that the same may be available in the official record. 13. Submissions made by learned counsel for the parties have been considered. 13.1. Short point for consideration is whether respondents were justified in issuing lower rate tax certificates to the petitioner under section 197 of the Act for the assessment year 2021-22 corresponding to the financial year 2020-21 as against the request for such certificate at nil rate? 14. At the outset we may advert to section 197 of the Act which deals with certificate for deduction at lower rate. Section 197 is extracted hereunder:- Certificate for deduction at lower rate. 197 . (1)Subject to rules made under sub-section (2A), where, in the case of any income of any person or sum payable to any person, income-tax is required to be deducted at the time of cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years; (iii) existing liability under the Income-tax Act, 1961 and Wealth-tax Act, 1957; (iv) advance tax payment, tax deducted at source and tax collected at source for the assessment year relevant to the previous year till the date of making application under sub-rule (1) of rule 28; (3) The certificate shall be valid for such period of the previous year as may be specified in the certificate, unless it is cancelled by the Assessing Officer at any time before the expiry of the specified period. (4) The certificate for deduction of tax at any lower rates or no deduction of tax, as the case may be, shall be issued direct to the person responsible for deducting the tax under advice to the person who made an application for issue of such certificate: Provided that where the number of persons responsible for deducting the tax is likely to exceed one hundred and the details of such persons are not available at the time of making application with the person making such application, the certificate for deduction of tax at lower rate may be issued to the person who made an application for issue of such certificate, authorising him to receive income or sum after d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... festly in error when he holds that the rejection of an application under Section 197 by the Assessing Officer does not result in an order and that the revisional power which is vested in the Commissioner under Section 264 would not be attracted. Sub-section (1) of Section 197 permits an assessee to submit an application to the Assessing Officer to issue a certificate for the deduction of income tax at a lower rate or for no deduction of income tax, as the case may be, where in the case of any income of any person or sum payable to any person, income tax is required to be deducted at the time of credit or, at the time of payment at the rates in force under the provisions inter alia of Section 195. Subsection (1) of Section 195 requires deduction of tax at source in respect of payments 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes 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 circumstances 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. 18. In the case of the petitioner itself i.e., M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re issuance of certificates under section 197 of the Act, the same must be preceded by an order. That order must disclose reasons and is an order passed in exercise of quasi-judicial powers. Such an order can be assailed in revision under section 264 of the Act. Therefore, an order under section 197 of the Act must not only contain reasons but the same has also to be provided to the assessee who seeks a certificate under section 197. Otherwise, how will such an assessee assail the order in revision under section 264? 21. In the course of hearing, learned standing counsel submitted that respondent No.1 might have recorded reasons for issuance of certificates not at nil rate but learned counsel for the petitioner submits that petitioner has not been served with copy of any such order. The same has also not been annexed to the reply affidavit filed on behalf of the respondents. 22. As has already been discussed above, since the respondents are required to pass an order under section 197 of the Act either rejecting the application for such certificate or allowing such application resulting in issuance of certificates which may be at rates higher than nil rate sought for by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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