IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1719 OF 2019 TLG India Private Limited ...Petitioner Versus Deputy Commissioner of Income Tax(TDS)-2(3) & ors. ...Respondents Mr. Vikram Nankani, Sr. Advocate, Mr. Fereshte Sethna, Mr. Anay Banhatti, Mr. Mrunal Parekh, Mr. Hasmukh Ravaria, Mr. Rishabh Dubey i/b. DMD Advocates, advocate for petitioner. Mr. P.C. Chhotaray, advocate for respondent. CORAM : AKIL KURESHI & S.J. KATHAWALLA, JJ. DATE : 29TH JULY, 2019. P.C.: 1 Heard learned Counsel for parties for fnal disposal of petition. 2 Petitioner is private limited company. petitioner has challenged Certifcate issued vide order dated 4th June, 2019 passed by Deputy Commissioner of Income Tax (TDS), Respondent herein. Such order was passed on application fled by Petitioner under section 197 of Income Tax Act, 1961(hereinafter referred as Act for short) requesting said authority to permit petitioner assessee not to deduct tax at source or to deduct tax at lower rates. Talwalkar ::: Uploaded on - 03/08/2019 ::: Downloaded on - 06/08/2019 10:12:29 ::: 2 13.wp1719.19.doc 3 learned Counsel for petitioner pointed out that in previous order, same authority had permitted deduction of tax at source at rate of 0.02%. In present order, impugned in this petition, authority has prescribed diferent rates of deduction of tax at source ranging from 1% to 1.5%. Counsel submitted that such prescription is excessive. 4 Though impugned order does not specify so, our attention was drawn to documents produced by Petitioner alongwith additional afdavit dated 2nd June, 2019 to contend that original proposal of Income Tax Ofcer (TDS) was for deduction at rate of 0.4%. However, subsequently, taking cognizance of order dated 31st May, 2019, passed against petitioner under section 201 of Act, fnal order came to be passed in which said prescription had been made. 5 order dated 31st May, 2019 passed by Deputy Commissioner of Income Tax (TDS)-2(3) under section 201 of Act was challenged by Petitioner in separate Writ Talwalkar ::: Uploaded on - 03/08/2019 ::: Downloaded on - 06/08/2019 10:12:29 ::: 3 13.wp1719.19.doc Petition No. 1788 of 2019. This Petition is disposed of today by holding that order unde challenge was passed in breach of principle of natural justice. Consequently, order was quashed and proceedings were remanded before original authority for passing fresh order. 6 We noticed that alongwith additional afdavit, petitioner has produdced order sheet dated 15/5/2019, in which Deputy Commissioner of Income Tax(TDS) has recorded that there was proposal for issuing certifcate at rate of 0.4% in relation to sections 194C, 194J, 194H and 194IB of Act. However, subsequently, before fnal order came to be passed on 31st May, 2019, Deputy Commissioner of Income Tax(TDS) made following further noting in his Order sheet alongwith afdavit : 6. As amounts mentioned in computation fled for Al 2020-21 including amounts claimed are on basis of projections and are subject to variation based on actual expenses which would be incurred during said year. Accordingly, considering facts and submissions made, it is proposed to issue certifcate @ 1.14% in relation to 19C, 194J, 194H and 194IB. 7 If application for Lower Deduction of Tax is Talwalkar ::: Uploaded on - 03/08/2019 ::: Downloaded on - 06/08/2019 10:12:29 ::: 4 13.wp1719.19.doc allowed under section 197, tax forgone on account of proposed certifcates works out to Rs. 1238362755/-. PROPOSAL FOR 197 8 In view of above, and after considering facts and circumstances of case, and on basis of material on records, I am satisfed that total income of assessee justifes lower deduction of tax at source @ 1.14% in relation to 194C, 194J, 194H and 194IB. 9 Submitted for kind approval in view of CBDT Notifcation No. S.O. 647 dated 29.03.2011. If satisfed and approved, certifcate for lower deduction of Tax u/s. 197 of Income Tax Act, 1961 shall be issued for deduction of TDS in relation to 194C @ 1.00%, 194J @ 1.50%, 194H @ 1.00% and 194IB @ 1.50%, if approved. 7 Subsequently, Deputy Commissioner of Income Tax(TDS) passed impugned order, which, as can be clearly seen, was infuenced by order dated 31 st May, 2019 passed under section 201 of Income Tax Act, 1961 against Petitioner. said order may not be sole basis, was undoubtedly important element which went into decision making process. Therefore, now that existence of order dated 31st May, 2019 does not survive, Deputy Talwalkar ::: Uploaded on - 03/08/2019 ::: Downloaded on - 06/08/2019 10:12:29 ::: 5 13.wp1719.19.doc Commissioner of Income Tax (TDS) should undertake fresh exercise and decide rate of income tax to be deducted while making payment to Petitioner under diferent provisions mentioned above. For such purpose, impugned order is set aside. Deputy Commissioner of Income Tax(TDS) shall pass fresh order within four weeks from today in view of changed circumstances. 8 However, till this is done, petitioner cannot be left to be verse of then when impugned order was in operation. Therefore, till fresh order is passed, Petitioner would continue to be governed by prescription made in impugned order. This is purely by way of interim arrangement to protect interest of Petitioner as well as Revenue. 9 Writ Petition is disposed of accordingly. (S.J.KATHAWALLA, J.) (AKIL KURESHI, J.) Talwalkar TLG India Private Limited v. Deputy Commissioner of Income-tax (TDS)-2(3) & or