2023 (3) TMI 824

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....according to the petitioner, was received on 11.02.2022. To be noted, the Financial Year (FY) in issue is FY 2021-2022. 2. The record shows, that the petitioner had filed an application under Section 197 of the Income Tax Act, 1961 [in short, "the Act"] for being granted lower withholding tax certificate. The petitioner had sought a certificate, at "NIL" rate of tax. 3. The impugned certificate, however, pegs the rate of tax at 9.99%. Quite obviously, the petitioner's prayer has been rejected. The reasons for rejecting the prayer made in the petitioner's application are contained in the order dated 19.05.2021. Broad facts: 4. The petitioner is a non-resident company, incorporated under the laws of Denmark. The petitioner, admittedly, ha....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nto between India and Denmark. 6. Mr Sanjay Kumar, senior standing counsel, who appears on behalf of the respondent/revenue, vociferously opposes the relief claimed by the petitioner. 6.1 It is Mr Kumar's contention, that while examining an application preferred under Section 197 of the Act, the concerned officer is not carrying out an assessment, and therefore, the parameters which apply for assessing taxable income would not get triggered, while rendering a decision qua an application filed under the aforementioned provision. 6.2 It is also Mr Kumar's contention, that under the provisions of Section 195, deduction of withholding tax is the rule, and issuance of a lower withholding tax certificate under Section 197 of the Act is an exce....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ce, the concerned authority could not have side stepped the judgment, based on the fact that the review petition had been preferred. It would have been another matter, if the concerned officer had, on facts, distinguished the judgment of the Supreme Court in Engineering Analysis. 10.1 That apart, in our view, the least that the concerned officer ought to have done was to, at least, broadly, look at the terms of Distributor Agreement, to ascertain as to what is the nature of right which is conferred on the distributor partner and/or the reseller. 11. We find, that there is no reference whatsoever to any of the clauses of the Distributor Agreement. The concerned officer has, instead, picked up one of the remitters i.e., the distributor part....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... stage, the Assessing Officer (AO) was not required to employ the statutory tools, which an AO brings into play while carrying out the assessment, is a submission with which one cannot quibble. That said, clearly, the concerned officer was required to examine the application, in the background of the parameters set forth in Rule 28AA of the Rules. Concededly, that exercise has not been carried out. 13. Insofar as Mr Kumar's argument is concerned, that reduction of withholding tax under Section 195 is the rule, it is required to be borne in mind, that deduction of withholding tax morphs into an obligation, only if the sum received is chargeable to tax. The petitioner's entire case is, that the sum that it receives under the Distributor Agre....