The Bombay High court allowed the granting of Nil rate certificates to Tata Teleservices.
The Petitioner, Tata Teleservices (Maharashtra) Limited is a company incorporated under the Companies Act, 1956. According to the petitioner, though it has been filing its returns of income regularly, it has accumulated tax losses amounting to Rs.7953 crores (approximately). Estimated loss for the assessment year 2020-21 is Rs.10,94,03,45,957.
The petitioner filed an application seeking issuance of nil rate tax withholding certificates under section 197 of the Act on various grounds for the assessment year 2021-22. In this connection, respondent authority wrote to the petitioner via email seeking certain details which were provided by the petitioner. This was followed by email of the petitioner requesting expeditious disposal of its application.
Despite the petitioner pursuing the matter, respondents failed to process the application of the petitioner. Reminder was issued by the petitioner.
Finally, respondent authority processed the application of the petitioner filed under section 197 and issued the impugned certificates. However, contrary to the request of the petitioner for nil rate certificates, respondent authority issued the impugned certificates at rates higher than nil rate.
Mr. Thakkar, counsel for the petitioner submits that no reasons have been furnished by the respondents as to why instead of nil tax withholding certificates under section 197 of the Act, certificates at higher rates have been issued to the petitioner. In the absence of reasons, such an exercise would be wholly arbitrary. That apart, no order has been passed with regard to issuance of certificates under section 197 of the Act.
The counsel further added that respondents have not complied with the mandate of section 197 of the Act read with Rule 28 AA of the Income Tax Rules, 1962 while issuing the impugned certificates. The factors which are statutorily required to be considered while granting such certificates have not been considered which has vitiated the impugned certificates.
The division bench consisting of Justice Abhay Ahuja and Justice Ujjal Bhuyan stated that they do not know the reasons for not granting nil rate certificates to the petitioner under section 197 of the Act. The contemporaneous order required to be passed under section 197 of the Act is also not available.
The court in the light of the decision in the case of Larsen & Toubro and in Tata Teleservices (Maharashtra) Limited, remanded the matter back to respondent authority for passing fresh order and issuing consequential certificates under section 197 of the Act by complying with the requirements of Rule 28AA of the Rules and after giving due opportunity of hearing to the petitioner. The entire exercise shall be completed within a period of four weeks from the date of receipt of a copy of the present order which shall be communicated to the petitioner.
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