COMMISSIONER OF INCOME TAX, CHANDIGARH vs. M/S PARLE BISCUITS PVT LTD, JHAJJAR

ITA/207/2012HC Punjab & HaryanaPHHC01099280201228 January 2013Author: MR. JUSTICE HEMANT GUPTA,MS. JUSTICE RITU BAHRI6 pages
AI SummaryDismissed

What were the facts?

The Revenue appealed against an order of the Income Tax Appellate Tribunal (ITAT) which upheld the Commissioner of Income Tax (Appeals) decision. The assessee, M/s Parle Biscuits Pvt. Ltd., made payments for contract work to eight parties. These contractors furnished certificates under Section 197 of the Income Tax Act, 1961, allowing the assessee to deduct tax at a lower rate than prescribed under Section 194C. The Assessing Officer (AO) raised a demand of Rs. 55,80,301/- for short deduction of tax, citing that the assessee had a separate Tax Deduction Account Number (TAN) for its Mumbai unit compared to its Bahadurgarh unit, implying they were separate entities for TDS purposes. The CIT(A) and ITAT found no fault with the certificates issued under Section 197, as their genuineness was not doubted by the AO.

What did the High Court hold?

The High Court held that the argument raised by the Revenue was not tenable. Section 194C of the Act makes any person responsible for paying any sum for carrying out any work liable to deduct tax at the time of credit or payment. Section 197 allows the AO to issue a certificate for deduction of tax at a lower rate or no deduction if the total income justifies it. Rule 28AA(4) of the Income Tax Rules, 1962, states that a certificate issued under Section 197(1) is valid only with regard to the person responsible for deducting tax and named therein. Rule 28AA(5) mandates that the certificate shall be issued direct to the person responsible for deducting the tax. The AO of the contractors had furnished certificates under Section 197 to the Principal Officer of Parle Biscuits Pvt. Ltd., Mumbai, who is the person responsible for deducting tax under Section 204(iii) of the Act. The mere fact that the assessee had separate TANs for its Bahadurgarh and Mumbai units did not render the Section 197 certificates redundant. The certificates were correctly issued to the Principal Officer of the company as the person responsible for tax deduction. Therefore, the order of the CIT(A) and the Tribunal was not suffering from any illegality. The appeal was dismissed.

What were the issues?

1. Whether on the facts and in law, the ITAT erred in deleting the demand of Rs. 55,80,301/- raised on account of short deduction of tax from payments totaling Rs. 46,83,10,501/- made for contract work. 2. Whether on the facts and in the circumstances of the case, the CIT(A) erred in holding that the AO may not be aware of various TANs of deductors and that Section 197 certificates are issued by the AO in the name of the deductor as requested by the deductee applicant. Assessee's Contention (implied through ITAT's affirmation): The certificates issued under Section 197 by the AO of the contractors were valid and addressed to the principal officer of Parle Biscuits Pvt. Ltd., Mumbai, as the person responsible for deducting tax. The existence of separate TANs for different units of the assessee did not invalidate these certificates. Revenue's Contention: The assessee was responsible for deducting tax at source as per Section 194C. Since tax was not deducted at the prescribed rates, the order of the AO raising the demand was wrongly set aside by the lower appellate authorities. The separate TANs indicated distinct entities for TDS purposes.

Which sections of the Income-tax Act were involved?

Section 260A,Section 197,Section 194C,Section 204

AI-generated summary — verify with the full judgment below

ITA No. 207 of 2012 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 207 of 2012 (O&M)

Date of decision: 28.01.2013 Commissioner of Income Tax (TDS), Chandigarh ...Appellant versus M/s Parle Biscuits Pvt. Ltd. ..Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI Present:- Mr. Yogesh Putney, Advocate for the appellant.

Mr. Girish K. Dave, Advocate, Mr. Satyen Sethi, Advocate and Mr. Ashim Aggarwal, Advocate for the respondent. HEMANT GUPTA, J. (ORAL)

The present appeal under Section 260A of the Income Tax Act, 1961 (for short 'the Act') is against an order dated 07.03.2012 passed by the Income Tax Appellate Tribunal, Delhi Bench 'F' New Delhi (for short 'the Tribunal) in ITA No. 100/Del/2012, whereby the Revenue's appeal was dismissed holding that the tax deduction certificates were validly issued under Section 197, therefore, the order passed by the Commissioner of Income Tax (Appeals), Rohtak does not warrant any interference.

The Revenue has framed the following substantial questions of law in the present appeal: “(i)

Whether on the facts as well as in law, the Hon'ble Income Tax Appellate Tribunal, Delhi Bench, New De

The order continues below.

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