Lower withholding tax certificates can operate from the start of the year when timely filing is hindered by technical system limits.

A timely application for a lower withholding tax certificate under Section 197(1) was treated as operative from the start of the relevant financial year where the online filing system initially restricted the number of TANs or parties that could be entered, and the assessee had uploaded the full party list with the application. The later issuance of certificates for those parties confirmed that the technical limitation had prevented completion in the desired format. In these circumstances, the certificates were held effective from 1 April 2019 for FY 2019-20, preventing continued higher tax deduction despite timely pursuit of relief.

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Issues: Whether the lower withholding tax certificates issued under Section 197(1) of the Income-tax Act, 1961, though generated later due to system constraints, ought to be treated as effective from 1 April 2019 for the entire financial year 2019-20.

Analysis: The application for lower withholding was made within time for FY 2019-20, and the record showed that the online system initially limited the number of TANs/parties that could be entered, while the petitioner had also uploaded the full list of parties along with the application. The Revenue subsequently issued certificates for the parties in question, and the Court accepted that the petitioner was prevented by technical limitations from completing the application in the desired format for all parties at once. In these circumstances, denying effect from the start of the financial year would continue the higher deduction burden despite the petitioner having sought relief in time.

Conclusion: The certificates were held to be effective from 1 April 2019 for FY 2019-20, in favour of the assessee.

Ratio Decidendi: Where a timely application for a lower withholding certificate is frustrated by technical constraints of the filing system, and the authority later issues the certificates for the same parties, the certificates may be directed to operate from the beginning of the relevant financial year.

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