The Tax Publishers2019 TaxPub(DT) 4928 (Del-HC) : (2019) 311 CTR 0677 : (2019) 267 TAXMAN 0333

INCOME TAX ACT, 1961

Section 197

As apparent, lower withholding certificate simply stated that rate of TDS should be 5%, which obviously did not satisfy the requirements of law as decision which was quasi-judicial in nature, had to be taken by AO under section 197(1) on objective criteria giving reasons for fixing TDS rate under section 197(1). As there was clear violation of requirement of section 197 read with rule 28AA decision in respect of TDS for the immediate preceding assessment year @ 1.5% would continue to apply Till fresh decision was communicated to assessee.

Tax deduction at source - Lower tax withholding certificate - Validity - No reasons communicated to assessee before fixing TDS rate

Assessee based at US by way of writ petition challenged 'lower withholding certificate' issued by ITO under section 197 directing deduction of tax at source (TDS) @ 5% from payments made to assessee by its Indian customers on the ground that no reasons have been given for arriving at the withholding rate of 5%. Held: As apparent, lower withholding certificate simply stated that rate of TDS should be 5%, which obviously did not satisfy the requirements of law as decision which was quasi-judicial in nature, had to be taken by AO under section 197(1) on objective criteria giving reasons for fixing TDS rate under section 197(1). As there was clear violation of requirement of section 197 read with rule 28AA, decision in respect of TDS for the immediate preceding assessment year @ 1.5% would continue to apply. Till fresh decision is communicated to assessee.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2002-03



IN THE DELHI HIGH COURT

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com