JUDGMENT

Akil Kureshi, J. - This application is filed for granting interim relief pending Writ Petition. Main prayer of the applicant - original petitioner is as under:-

"a. That pending the hearing and final disposal of the Writ Petition, this Hon''ble Court be pleased to grant an injunction restraining the respondent from applying / implementing the provisions of Section 201(1) / (1A) of the Act, against the Applicant."

2. In the Writ Petition, the petitioner has challenged an order dated 9.5.2018 passed by the Authority for Advance Rulings ("AAR" for short) in which the AAR was of the opinion that the petitioner is not correct in contending that it had no obligation to deduct tax at source under section 195 of the Income Tax Act, 1961 ("the Act" for short).

Consequently, the petitioner would have the liability to pay the interest under Section 201(1A) of the Act.

3. At the time of admission of the petition, by an order dated 3.1.2019, the question of ad-interim relief was kept open at that stage. The petitioner points out that subsequently, the department has issued notices under Sections 201(1) and 201(1A) of the Act. The petitioner has, therefore, filed this Civil Application seeking stay against such proceedings.

4. Learned counsel for the petitioner submitted that the petitioner is US based company. Its shareholders are also individuals and institutions situated outside India. The question of deducting tax at source while making payment to such shareholders for extinguishing the shares is at issue. The petitioner relies heavily on the explanations 6 and 7 to clause (i) to sub-section (1) to Section 9 of the Act inserted by Finance Act, 2015 w.e.f. 1.4.2016 to contend that in absence of substantial value of the assets located in India of the asset in question, the liability to deduct tax at source would not arise. The case of the petitioner also is that in any case by virtue of explanation 7, the liability would only be proportionate and would not attach to the entire amount in question. Both these contentions have been turned down by the AAR. The petitioner has, therefore, filed the said petition.

5. The case of the department as put forth by the counsel is that explanation 5 below clause (i) to sub-section (1) of Section 9 was inserted by Finance Act, 2012 but with retrospective effect from 1.4.1962. He submitted that in view of this amendment, the decision of the Supreme Court in the case of Vodafone International Holdings BV vs. Union of India, (2012) 6 SCC 613 would have no applicability. He submitted that the AAR has undertaken a detail analysis of the statutory provisions and relevant decisions and given the decision which calls for no interference. He further pointed out that the transaction in question took place at a time when the decision of the Bombay High Court in case of Vodafone International Holdings B.V. vs. Union of India, (2010) 329 ITR 126 (Bom) was holding the field and the decision of the Supreme Court in the case of Vodafone International Holdings B.V.; (2012) 6 SCC 613 was not yet rendered. The petitioner, therefore cannot take shelter of the contention that the Revenue is expecting the petitioner to discharge an impossible liability.

6. The issues require further detail consideration. This is precisely for this reason that the Writ Petition has already been admitted. We notice that the petitioner has kept a sum of Rs. 10 Million US Dollors in escrow account which would be by and large sufficient to meet with its TDS requirement if ultimately so arises. Pending the petition, allowing the department to proceed further with the hearing of show cause notices under Sections 201 (1) and 201(1A) of the Act, would lead to multiplicity of the proceedings. In order to avoid this and also in order to protect the interest of the Revenue, the Civil Application is disposed of with following directions:-

i. Pending the Writ Petition, further proceedings in connection with the notices issued to the petitioner und