9911796707
TMI Blog2021 (8) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income Tax Act, 1961 (hereinafter referred to as the 'Act') for the Assessment Year 2022-23, directing withholding of the tax deducted at source (TDS) at the rate of 1% for the petitioner. The petitioner further prays for a direction to the respondent nos.1 and 2 for issuing a fresh certificate under Section 197 of the Act, directing withholding of NIL TDS in terms of Article 8 of the Double Taxation Avoidance Agreement entered between India and the United Kingdom (hereinafter referred to as 'DTAA'). 2. The petitioner is a foreign company incorporated in the United Kingdom under the laws of United Kingdom and is registered in India under Section 592 of the Companies Act, 1956, as a branch office of a foreign company. 3. The petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot accept NIL rate of tax, therefore, certificate under Section 197 of the Act was issued applying a nominal rate of TDS at 0.01%. The petitioner claims to have not challenged the same because the amount was insignificant. 7. On 30.03.2021, the petitioner again applied for the issuance of certificate under Section 197 of the Act at NIL rate of tax, however, instead was issued the Impugned Certificate dated 02.06.2021, increasing the TDS withholding amount to 1%. The respondent no.2 also uploaded the Impugned 'speaking order' on its website, observing as under: "Sir/Madam, Sub: Speaking order In view of submissions filed by the applicant and similar to earlier withholding tax order, it is noticed the projected receipts claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ternate efficacious remedy in form of a Revision Petition under Section 264 of the Act. He further submits that the Assessing Officer had duly noted the response received from the petitioner to the queries raised by the Assessing Officer and as the petitioner failed to supply the necessary documents to substantiate its claim of earnings being non-taxable, the Assessing Officer was of the opinion that though the profit derived from the main business of the petitioner being the operation of aircraft in international traffic was not taxable in India by virtue of Article 8 of DTAA, yet the petitioner might be engaged in incidental businesses. Therefore, with a view to safeguard the Revenue interest, certificate under Section 197 of the Act to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EIR ACTION BEING INVALIDATED. CONSEQUENTLY, THE IMPUGNED ORDER IS QUASHED ON THE GROUND THAT THE DECISION MAKING PROCESS IN THE PRESENT CASE IS CONTRARY TO LAW. 25. However, this Court is in agreement with the submission of learned standing counsel for the respondent that it is the decision making process and not the decision that can be impugned in a writ petition. To appreciate the decision making process, it is necessary to outline the provision under which the TDS rates have to be determined under Section 197 of the Act. Rule 28AA of the Income Tax Rules prescribes the procedure to be followed by the assessing officer in determining the 'existing and estimated liability'. The relevant portion of Rule 28AA of the Income Tax Rules reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed [See: Amarjit Singh Ahluwalia v. State of Punjab & Ors., (1975) 3 SCC 503 : (1975) 3 SCR 82 and Ramana Dayaram Shetty v. International Airport Authority of India & Ors.; (1979) 3 SCC 489]. Consequently, the assessing officer cannot ignore the mandate of Rule 28AA and proceed on any other basis. 28. However, in the present case, the assessing officer has not followed the aforesaid rule as there is no reference in the impugned reason to any computation carried out under Rule 28AA. 29. In fact, this Court vide order dated 8th December, 2020 had granted time to the respondent to place on record the computation of TDS rates under Rule 28AA, if any. Despite the said opportunity, neither any computation was filed nor was any reasonable expl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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