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TMI Blog2021 (12) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... l appears and accepts notice. On service of advance notice, Mr. Agarwal has also filed his submissions. 4. With the consent of parties, we have proceeded to hear the present petition and dispose of same at this stage. 5. The petitioner has preferred the present petition to assail the order dated 07.09.2021 passed by respondent No. 1 under Section 197 of the Income Tax Act ("the Act‟). The petitioner also seeks a direction to respondent to issue an order/ certificate under Section 197 of the Act at "Nil‟ rate. 6. The brief background facts are that the petitioner is a foreign company, tax resident of Ireland and is engaged in the business of aircraft leasing. The petitioner states that it has regularly filed returns of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred. 9. Mr. Jolly - learned counsel for the petitioner, submits that the impugned order passed by the Assessing Officer cannot be sustained for the reason that the same proceeds on extraneous considerations, and the reasons for passing the same - as provided by the respondent, are not relevant and germane. The reasons on which the impugned order is premised and which have been provided to the petitioner, read as follows:- "Order u/s 197 of the Income Tax Act, 1961 M/s Celestial Aviation Trading 64 Limited ("CAT 64‟) is a tax resident of Ireland. The assessee is engaged in the business of aircraft leasing. The applicant has entered into Aircraft Specified Lease Agreements dated 21.10.2016 regarding lease of aircraft with Air Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in the form of Operating Lease rent of Rs. 52,67,46,907/- and Supplementary Lease rent of Rs. 1,28,26,220/- i.e. total lease rent of Rs. 53,95, 73, 1271- on which no TDS has been deducted. It is also observed that the assessee has not filed its return of income for the F. Y. - 2012-13 relevant to A. Y. - 2013-14 ........... " 2. The following cases are reopened u/s 147 of I. T. Act, 1961 in Celestial Aviation Trading 9 Limited: S. No. A.Y. Return Income Quantum of Amount (In Rs.) Issue Involved Outcome 1 2012 -13 Not filed 129,69,27,387/- TDS not deducted while making lease rent payment Notice u/s 148 has been issued. 2 2013 -14 Not filed 53,95,73,127/- TDS not deducted while making lease rent payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Mr. Jolly submits that Section 197 itself is made subject to Rule 28AA of the Income Tax Rules. He has referred to the said Rule, and the relevant part thereof reads as follows: "28AA . (1) Where the Assessing Officer, on an application made by a person under sub-rule (1) of rule 28 is satisfied that existing and estimated tax liability of a person justifies the deduction of tax at lower rate or no deduction of tax, as the case may be, the Assessing Officer shall issue a certificate in accordance with the provisions of sub-section (1) of section 197 for deduction of tax at such lower rate or no deduction of tax. (2) The existing and estimated liability referred to in sub-rule (1) shall be determined by the Assessing Officer after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Aviation Limitation ("Interglobe‟) and upon a search conducted on Interglobe, it was allegedly found that there was evasion of tax, the "Nil‟ rate of tax deduction certificate was denied to the petitioner. 13. Mr. Jolly submits that there is no concept of group liability under the Income Tax Act. The lease entered into between the petitioner and Air India Limited is a separate and independent transaction with which CAT-9 has no concern, and similarly, the petitioner has no concern with the transaction between CAT-9 and Interglobe. 14. Mr. Jolly submits that the petitioner undertakes to file his return for the Assessment Year in question and also to pay the taxes, and other liabilities towards interest, or penalty, if any, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -9. That, by itself, cannot be a justification for denying the "Nil‟ rate certificates to the petitioner. The reasons now brought out by Mr. Agarwal do not form part of the reasons contained in the impugned order and the respondents are precluded from citing those as reasons to justify the impugned order issued to the petitioner. 18. We, accordingly, quash and set aside the impugned order dated 07.09.2021 and remand the matter back to the Assessing Officer, who may pass a fresh order within four weeks from today. The petitioner is directed to provide whatever relevant information is called for by the Assessing Officer without any delay, so that the order is passed within the time frame fixed by us. 19. In the interim, the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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