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2018 Supreme(Bom) 2212
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.S. Sanklecha, Riyaz I. Chagla, JJ.
M/s. Tata Teleservices (maharashtra) Limited - Appellant
Versus
Deputy Commissioner Of Income Tax (tds)2(3) - Respondent
Writ Petition No. 2701 of 2017
Decided On : 25-01-2018
Tarun Gulati, Ms. Ishita Farsaiya Advocates and Mr. Jas Sanghavi, i/by PDS Legal, for the Petitioner; Mr. Suresh Kumar and Ms. Samiksha Kanani, Advocates, for the Respondent
Headnote:
Constitution of India, 1950 - Article 226 - Income Tax Act, 1961 - Section 197, 194, 194A, 194C, 194I, 194H, 194J, 264, 263, 197(2), 197(1), 49BBB - Wealth tax Act, 1957 - Income Tax Rules 1961 - Rule 28AA(2), 28AA, 28(1), 28AA(3) - Telecommunication Services - Revenue - Huge Losses - Claim to a Refund - Tax Deduction - Petitioner is engaged in providing telecommunication services - In the course of its business, Petitioner earns its revenue from sale of post and prepaid cards, sale/lease of equipments and providing various value added services - Petitioner has huge accumulated losses - Its return of income for the Assessment Years, are loss returns aggregating to Rs. 1330.00 Crores and in which an aggregate claim to a refund of Rs. 121.00 Crores has been made - Petitioner receives various payments for services rendered which are subject to tax deduction at source under Chapter XVII of Act - However, according to Petitioner it would not be liable to pay corporate tax in immediate future in view of likely loss for assessment year and huge carried forward losses - Petitioners applied to Respondent No. 1 seeking an issuance of nil/lower withholding taxes under Section 197 of Act - This was to enable Petitioner to receive its payments from various parties which are subject to tax deduction at source, without deduction at source – Held, So far as ground (b) above viz. outstanding tax demand of Rs. 6.90 Crores is payable to revenue by petitioner - Therefore, certificate cannot be sustained, resulting in its cancellation – Court note that neither Section 197 of Act nor Rule 28AA of Rules provide that no certificate of nil/lower rate of withholding tax can be granted if any demand, howsoever minuscule, is outstanding - In fact Rule 28 AA(2) of Rules requires authority to determine existing/estimated liability taking into consideration various aspects including the estimated tax payable for subject assessment year and also existing liability - Existing and estimated liability would also require taking into account demands likely to be upheld by appellate authorities - In a case like this one where petitioner states that issue is concluded by a decision of Tribunal in its own case, then assessing officer has to consider same and give some modicum of reason why it is prima facie not covered by decision of Tribunal - This is particularly so in back ground of petitioners Appeal with respect to demand of Rs. 6.68 Crores being heard by CIT(A) as far back as in and no order being passed thereon till date - Further, in present case impugned order does not deal with petitioners contention that demand of Rs. 28.00 Lakhs is on account of mistake in application of TRACE system nor does it deal with Petitioners contention that entire demand of Rs. 6.90 Crores can be adjusted against refundable deposit of Rs. 7.30 Crores, consequent to order of Tribunal in its favour - Petition disposed of.
JUDGMENT
M.S. Sanklecha, J. (Oral) - At the request of the parties, this Petition is being disposed of finally at the stage of admission.
2. This Petition under Article 226 of the Constitution of India seeks the following reliefs :-
a) The order dated 23 October 2017 issued by the Deputy Commissioner of Income Tax (TDS), Respondent No. 1, cancelling the certificate dated 4 May 2017 of nil deduction of tax for the period 4 May 2017 upto 31 March 2018 (A.Y. 2018-19) issued under section 197 of the Income Tax Act, 1961 ("the Act" for short), be quashed and set aside; and
(b) The Commissioner of Income Tax (Appeals) ("CIT[A]")Respondent No. 3 be directed to decide the Petitioner''s pending Appeal for the assessment year 2012-13 in respect of a demand of Rs. 6.68 Crores. The hearing of which had taken on 15 February 2017, when detailed written submissions were filed, within a time frame;
3. So far as relief (b) above is concerned, Mr. Suresh Kumar, learned Counsel for the Revenue, on instructions of CIT(A)Respondent No. 3 states that the pending Appeal in respect of assessment year 2012-13 would be disposed of on or before 1 March 2018. Statement accepted. In view of the above statement, this relief is not being pressed by the Petitioner.
4. The relevant facts leading to the filing of this Petition are that the Petitioner is engaged in providing telecommunication services. In the course of its business, Petitioner earns its revenue from sale of post and prepaid cards, sale/lease of equipments and providing various value added services. Petitioner has huge accumulated losses. Its return of income for the Assessment Years 2014-15 to 2016-17, are loss returns aggregating to Rs. 1330.00 Crores and in which an aggregate claim to a refund of Rs. 121.00 Crores has been made.
5. In the course of its business, Petitioner receives various payments for services rendered which are subject to tax deduction at source under Chapter XVII of the Act. However, according to the Petitioner it would not be liable to pay corporate tax in the immediate future in view of the likely loss for the assessment year 2018-19 and the huge carried forward losses.
6. Therefore, on 27 February 2017, Petitioners applied to the Respondent No. 1 seeking an issuance of nil/lower withholding taxes under Section 197 of the Act. This was to enable the Petitioner to receive its payments from various parties which are subject to tax deduction at source, without deduction at source. In support of the above, the application pointed out that their accumulated losses carried forward as on 1 April 2014 is over Rs. 4000.00 Crores - both as per MAT provisions and under the normal provisions. Further, the Petitioner had filed loss returns for Assessment Years 2015-16 and 2016-17. It was also submitted that the estimated loss for Assessment Year 2017-18 is approx. Rs. 1000.00 Crores. Thus, there will be no assessable profit under the Act for the assessment year in 2018-19 in view of huge carry forward losses. Besides, the application points out that there was an amount of Rs. 101.53 Crores up to 10 February 2017 receivable as refund from the Revenue. It was also pointed out that the financial health of the Petitioner is such that it has taken long term debts, at huge interest payments. Therefore, the amounts which are blocked on account of tax deduction at source aggravates its financial hardship including cash crunch. Lastly, it was pointed out that the amount of Rs. 6.68 Crores which is the outstanding tax demand for the assessment year was on account of an issue which already stands concluded in its favour by an order of the Tribunal dated 27 May 2016, on identical issues for assessment years 2009-10 to (upto July 2011). This demand of Rs. 6.68 Crores is thus, likely to be set aside by the CIT(A) as he would be bound by the order of the Tribunal. It was pointed out so far as the demand for the balance amount of Rs. 28.00 Lakhs is concerned it is on account of wrong/unsustainable de
