TMI Blog2018 (10) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of sound discretionary powers and based on mere ipse dixit of the Assessing Officer. Secondly, that the power vests with the Assessing Officer. No provision or rule is brought to our notice which would enable the higher authority to govern such discretion of the Assessing Officer statutorily vested in him under subsection (1) of Section 197 of the Act. We do not accept the contention of the petitioner that the notes put up by the Assessing Officer suggesting collection of tax at reduced rate of 1% was expression of his final decision. The Assessing Officer, therefore, not having expressed his final decision his opinion would not be binding to the Department. Petition dismissed - Decided against the assessee. - R/SPECIAL CIVIL APPLICATION NO. 6088 of 2018 - - - Dated:- 11-9-2018 - MR AKIL KURESHI AND MR B.N. KARIA, JJ. For The Petitioner (s) : MR RK PATEL with DARSHAN R PATEL (8486) For The Respondent (s) : MR MR BHATT, SENIOR ADVOCATE with MRS MAUNA M BHATT (174) ORAL ORDER ( PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Petitioner has challenged an order dated 31.3.2018 passed by the respondent Incometax Officer on an appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd advance of ₹ 860 or and interest received interest of ₹ 67.83 crores the average rate comes @ 7.88%. Please explain interest received and paid ? 5. The information received from the petitioner through such correspondence in addition to already supplied alongwith the application was processed by the Assessing Officer who placed his recommendation to the higher authorities for allowing deduction of tax at source in case of the petitioner at a reduced rate of 1% ( as against 10% required to be deducted on payment of interest by the debtors of the assessee company). The notes as produced alongwith the AnnexureR3 by the respondent alongwith the affidavit, read as under :- PUC 29/03/2018 As directed by your goodself the details/explanation vide this office letter dated 27/03/2018 called for and assessee has furnished his reply on 27/03/2018. Further, it is noticed that the calculation of interest shown by the assessee is short and assessee was requested to pleace correct the same thereafter the loss comes to ₹ 26.57 crores. Further assessee has furnished revised provisional income and exp. Account and details of party wise finance cost (long te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of tax at source at 1%. The Commissioner of Incometax had no authority to overrule such opinion of the Assessing Officer. In terms of Section 197 of the Act and Rule 28AA of the Incometax Rules, the Assessing Officer has exclusive statutory powers and functions in this respect. His discretion cannot be governed by the higher authority. Counsel relied on the decision of Patna High Court in case of Bihar Industrial Area Development Authority vs. Assistant Commissioner of Incometax (TDS), reported in (2016) 66 taxmann.com 357 , in which the Court set aside the order refusing to grant exemption under Section 197 of the Act without assigning reasons. Reliance was also placed on the decision of the Bombay High Court in case of Larsen Toubro Ltd., vs. Assistant Commissioner of Incometax (TDS), reported in 326 ITR 514, in which the Court opined that an application under Section 197 of the Act cannot be rejected on whim and caprice of the Assessing Officer. 8. On the other hand, learned counsel Shri Bhatt for the Department submitted that the opinion of the Assessing Officer for granting certificate for deduction of tax at reduced rate was not a final opinion. It was mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest was credited, the question of issuing certificate for nondeduction of tax at source under Section 197 (1) does not arise and that the grievance of the petitioner was to be treated as settled. In this context, the Court had directed the CBDT to consider whether and under what circumstances such a practice has developed and that, if such practice was not permissible, to decide as to what it should do and issue appropriate guidelines in the matter notwithstanding any individual reply sent to the petitioner. 24. It was found that the contractors submitted Certificate dated 9th September 1997 issued by the ITO authorizing deduction of tax at source from one person and the application for certificate was made on 6th August 1997. It also held that the deduction of tax had to be made at the time of credit of the amount; or at the time of payment thereof, by cash or issuance of cheque/draft, and therefore, certificate issued on 9th September 1997 could not have retrospective effect and for the amount paid between 1st April 1997 to 9th September 1997, the default can be said to have been committed, as neither there was any certificate which could have any application for such per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x deduction at source. The statute has used the language that if the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of incometax at any low rates or no deduction of incometax, as the case may be, the Assessing Officer shall on application made by the assessee in this behalf give to him such certificate as may be appropriate. It is undoubtedly true that the deduction of tax at source and depositing it with the Government revenue by the payee does not decide the final tax liability of the recipient of the income which would be the subject matter of assessment of the return. If tax higher than what is actually due to be paid by the assessee to the Department is recovered in form of TDS, the assessee can always claim refund of such excess tax. However, subsection (1) of Section 197 has been enacted to give relief to the assessee, whose income may not justify deduction of tax at full rate or no deduction altogether. Necessarily, therefore, the satisfaction of the Assessing Officer at that stage about the total income of the recipient justifying reduced collection of tax at source would be prima facie in nature. 12. Two things emerge from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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