THE MARTHOMA CHURCH EDUCATIONAL SOCIETY vs. THE ASSISTANT COMMISSIONER OF INCOME TAX
What did the High Court hold?
The High Court held that the rejection order (Ext.P3) by the Assistant Commissioner of Income Tax cannot be sustained. The Court noted the submission by the revenue's counsel that since the demands for assessment years 2015-16 and 2016-17 have been stayed and there are presently no demands against the petitioner, the rejection on the ground of pending demands was erroneous. The Court found that the petitioner had deposited 20% of the demands, and the balance was stayed, making the ground for rejection invalid. The Court set aside Ext.P3 and directed the 2nd respondent (Income Tax Officer, TDS Circle) to consider the issuance of the certificate under Section 197, taking into account that the demands for 2015-16 and 2016-17 are stayed and no demand is currently outstanding. The needful was to be done within two months.
What were the facts?
The petitioner, The Marthoma Church Educational Society, is registered under Section 12A of the Income Tax Act. For assessment years 2015-16 and 2016-17, demands were raised, and statutory appeals are pending. The petitioner deposited 20% of these demands, and the balance was stayed. The petitioner applied for a certificate under Section 197 of the Income Tax Act for the year 2022-23 to receive amounts without TDS. This application was rejected by the Assistant Commissioner of Income Tax (respondent 1) via Ext.P3, citing pending demands for 2015-16 and 2016-17. The petitioner filed a writ petition challenging this rejection.
What were the issues?
1. Whether the rejection of the petitioner's application for a certificate under Section 197 of the Income Tax Act, 1961, on the ground of pending demands for assessment years 2015-16 and 2016-17, is sustainable when such demands have been stayed upon deposit of 20% of the amount. The assessee argued that since the demands for assessment years 2015-16 and 2016-17 were stayed after depositing 20% of the demand, the rejection of the Section 197 certificate application on the basis of pending demands was incorrect. The assessee relied on the fact that for assessment years 2020-21 and 2021-22, certificates under Section 197 were issued. The revenue, through its counsel, conceded that the rejection order cannot be sustained because the demands for 2015-16 and 2016-17 are stayed and there are currently no demands pending against the petitioner.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT The petitioner is a society registered under the Registration, Travancore-Cochin, Literary, Scientific and Charitable Societies Act, 1955. It has been issued with Ext.P1 certificate of registration under Section 12A of the Income Tax Act. For the assessment years 2015-16 and 2016-17, certain demands were raised on the petitioner. It is stated that the statutory appeals filed in respect of the assessment years 2015-16 and 2016-17 are pending consideration before the appellate authority and all demands are stayed on the petitioner depositing 20% of the demand raised for each of those years. The petitioner applied for the issuance of a certificate under Section 197 of the Income Tax Act to enable the petitioner to receive amounts without deduction of tax at source. That request of the petitioner has been denied by Ext.P3 on the ground that there are pending demands against the petitioner in respect of the assessment years 2015-16 and 2016-17. 2. The learned counsel appearing for the petitioner points out that since the demands have been stayed on the WP(C) NO. 23945 OF 2022 3 petitioner remitting 20% of the demands for those years, the certificate requested for by the petitioner (for the year 2022- 23) could not have been rejected on the ground that there were pending demands.
Heard the learned counsel appearing for the respondent Department also.
The learned counsel for the respondents very fairly states that since the demands in respect of the years 2015-16 and 2016-17 have been stayed and presently there are no demands against the petitioner, Ext.P3 order by which the request of the petitioner has been turned down (on the ground that there are pending demands for years 2015-16 and 2016- 17) cannot be sustained. It is also pointed out that for the years 2020-21 and 2021-22 certificates have been issued under Section 197 of the Income Tax Act.
Having regard to the facts and circumstances of the case and having heard counsel as above, this writ petition is allowed and Ext.P3 order is set aside. The 2nd respondent will consider the issuance of the certificate under Section 197 of the Income Tax Act after taking note of the fact that the demands
WP(C) NO. 23945 OF 2022 4 for the assessment years 2015-16 and 2016-17 are stayed and presently there is no demand in respect of those years against the petitioner. The needful shall be done within a period of two months from the date of receipt of a certified copy of this judgment. The writ petition will stand disposed of as above. GOPINATH P. JUDGE DK
WP(C) NO. 23945 OF 2022 5
Appendix — schedule of exhibits
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