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2020 (10) TMI 870 - HC - Companies LawGrant of Interim Relief - Amounts representing tax/Tax Deducted at Source (TDS) on the price of the FCDs and interest payable to the Respondent, which was required to be deposited in Court, is withheld - HELD THAT:- The purchaser’s liability to pay this amount (namely, the Holdback Amount) into the treasury towards the tax liability of the seller is essentially a matter of their inter se agreement, which is contained in clause 4.5.1 of the SDPA. The payability of the tax for the consideration received under the SPDA may be a matter between the assessee i.e. (the Respondent seller) and the revenue, but so far as the deposit of the Holdback Amount into treasury towards the tax liability of the Respondent is concerned, it is certainly a matter as between the Respondent and its contracting counter party, namely, the Appellants. There is a clear obligation on the part of the Appellants to deposit the Holdback Amount into the treasury; Section 205 of the Income Tax Act has nothing to do with the same. As far as Section 9 of the Act is concerned, it cannot be said that this court, while considering a relief thereunder, is strictly bound by the provisions of Order 38 Rule 5. As held by our Courts, the scope of Section 9 of the Act is very broad; the court has a discretion to grant thereunder a wide range of interim measures of protection “as may appear to the court to be just and convenient”, though such discretion has to be exercised judiciously and not arbitrarily. The court is, no doubt, guided by the principles which civil courts ordinarily employ for considering interim relief, particularly, Order 39 Rules 1 and 2 and Order 38 Rule 5; the court, however, is not unduly bound by their texts - In an appropriate case, where the court is of the view that there is practically no defence to the payability of the amount and where it is in the interest of justice to secure the amount, which forms part of the subject matter of the proposed arbitration reference, even if no case strictly within the letter of Order 38 Rule 1 or 2 is made out, though there are serious allegations concerning such case, it is certainly within the power of the court to order a suitable interim measure of protection. The deductor, both under the Income Tax Act and the contract between the parties (clause 4.5.1 of SDPA), is nevertheless required to deposit the amount deducted (the Holdback Amount) into the treasury. If no tax is payable, the deductee assessee would be entitled to refund of this amount. In any case, there is no way the deductor could retain the Holdback Amount. Appeal dismissed.
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