TaxTMI 
TaxTMI 
2018 (10) TMI 611
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....ed necessary documents and details which included its provisional profit and loss accounts for the year ending on 31.3.2018 alongwith projected tax payable. The petitioner also annexed copies of certificate under Section 197 issued by the Department for lower deduction of tax for last two years. In the application the petitioner projected a negative income of Rs. 47.96 crores (rounded off) for the said assessment year 2018-19. This application came to be rejected by the respondent which was communicated to the petitioner under letter dated 31.3.2018. In this letter it was conveyed to the petitioner as under :- "In this connection, I hereby intimate you that your application for Lower Deduction Certificate is hereby filed after approval of higher authorities. This is for your kind information." 3. It emerges from the affidavitinreply filed by the Department in this petition that upon receipt of the application from the petitioner, the Assessing Officer called for certain details under a communication dated 19.3.2018, as under :- "In this connection, you have shown profit of Rs. 1,48,00,384/on total revenue of Rs. 65,23,63,808/i. e. 2.27%, whereas loss of Rs. 47,....
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....fit." 6. On these notes the Chief Commissioner of Incometax (TDS) Ahmedabad expressed his opinion as under :- "The assessee company submitted application for lower TDS @ NIL in Form No.13 showing loss of Rs. 47.96 cr. on total interest receipt of Rs. 68.63 cr. in the projected P & L A/c. Whereas in the P.Y. there was profit of Rs. 1.48 cr. on total revenue of Rs. 65.23 cr. After being questioned about the genuineness/rational of huge losses, the assessee has submitted revised working reducing losses to Rs. 26.57 cr. after showing higher income. Submitted for approval to reject the applicationThe assessee's projections are questionable as the only business of the assessee is obtaining loans from outside parties and advancing loans/making investments in group companies at marginally higher rates than the charges payable. However, in this year assessee is showing huge payments to outside parties for loans arrangements but not charged to group companies. I am of the view that the projected accounts are not acceptable and hence the application may be considered for rejection. Submitted for approval to reject the application and inform the PAN A.O. about....
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....ate and Investments Pvt. Ltd., vs. Assistant Commissioner of Incometax, reported in 246 ITR 254, which was at interim order, in which the Court noted that in certain cases application for exemption under Section 197 were being granted which applications were made after crediting the tax deducted at source with the Department. The Court desired CBDT should look into this issue of permissibility of entertaining such applications. (ii) In case of Division Bench of this Court in Essar Oil Ltd., vs. Incometax Officer, reported in (2013) 30 taxmann.com 39, in which following observations were made :- "12. In case of Sarika Estate & Investments Private Limited v. Assistant Commissioner of Income Tax, reported in 246 ITR 254, in a writ petition seeking benefit of Section 197 of the Incometax Act, 1961, a claim was made inter alia that there was no time limit for making an application under Section 197 of the Incometax Act, 1961, for issuance of certificates and it was contended further that the authorities had been issuing certificates after payment or crediting amount of interest. This Court held that grant of certificates under Section 197 on applications made after the....
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....eduction to be made, such amount will be refunded. (iv) In case of Infoparks vs. Deputy Commissioner of Incometax (TDS) reported in 329 ITR 404, in which the learned Single Judge of Kerala High Court also expressed an opinion that the issues of the assessee's tax liability cannot be decided in the proceeding under Section 197 of the Act, can only be a subject matter of assessment proceeding. 9. Section 197 of the Act pertains to certificate of deduction at low rate. Subsection (1) of Section 197 reads as under :- "(1) [Subject to rules made under subsection (2A) [where, in the case of any income of any person [ or sum payable to any person], incometax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections 192, 193 (194) 194A, [194C] 194D, [194G] [194H] [194I] [194J] [194K] [***] [194LA] [194LBB, 194LBC] and Assessing Officer is satisfied] that the total income [***] of the recipient justifies the deduction of incometax [***] at any lower rates or no deduction of incometax [***] at any lower rates or no deduction of incometax [***], as the case may be, the [Assess....
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.... out of the assessee's accounts formed a prima facie opinion that the loss of the assessee would come to Rs. 26.57 cr. He therefore suggested collection of tax at reduced rate of 1%. The Commissioner of Incometax however expressed an opinion that the losses projected by the company do not appear to be genuine. It was noted that such projections are questionable, since only business of the assessee is obtaining loans from the outside agencies and advancing loans or making investments in group companies. During the year under consideration large amount of interest were paid to outside parties on loans but similar charges were not collected from the group companies to whom advances were made. 14. In view of our conclusion above that it is the power and duty of the Assessing Officer to decide applications under Section 197(1) of the Act, we would have ordinarily requested the Assessing Officer to reconsider the issue and take a final decision without being guided or governed by any outside influence. 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 decis....