The Main Contention Of The Learned Counsel For The v. On A Bare Reading Of The Aforesaid Judgment, It Is

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 13/03/2003 CORAM THE HONOURABLE MR. JUSTICE P.K. MISRA WRIT PETITION NO.4307 OF 2003AND WPMP.NOs.5397,5398 & 5399 OF 2003 Ansaldo Engergia S.p.A.a Company registered underthe laws of Italy, having itsregistered office atVia Nicola Lorenzi 8-16152Genova, Italy, representedby its Authorised Signatory .. Petitioner -Vs- 1. Income Tax Officer,(International Taxation)-IIVIIth Floor, Old Annexe Building121, Nungambakkam High Road,Chennai 600 034. 2. Neyveli Lignite Corporation Ltd.represented by its ChairmanNeyveli House135 E.V.R. Salai,Chennai 600 010. 3. Union of Indiarepresented by Secretaryto Government,Ministry of Finance,New Delhi. .. Respondents Petition filed under Article 226 of the Constitution of India for theissuance of Writ of Certiorarified Mandamus as stated therein. For Petitioner : Mr.Mohan ParasaranSenior Counsel forMr. Sathish Parasaran For Respondent -1 : Mrs. Pushya Sitaraman(Income Tax) :J U D G M E N T Petitioner is a foreign company registered in Italy. The petitionerhad entered into contracts with Neyveli Lignite Corporation, the secondrespondent. It is claimed that the contracts were on Turnkey basis forimplementation of a comprehensive Power Project for the second respondent. Itis the contention of the petitioner that the petitioner is entitled to thebenefits under Section 44BBB of the Income Tax Act (hereinafter referred to asthe Act) and on that basis application for an order under Section 197 of theAct was made and on the basis of such application, the Deputy Commissioner ofIncome Tax by order dated 9.3.1999 and 29.4.1999 authorised the secondrespondent to deduct tax at 5%. The certificates issued were valid till31.3.1999 and 31.3.2000 respectively. The similar certificates for thesubsequent financial years 2000-2001, 2001-2002 and 2002-2003 were granted asrequested by the petitioner. In the last such certificate dated 1.5.2002 itwas indicated that such certificate was to be valid till 31 .3.2003, unless itis cancelled. While the matter stood thus, the petitioner received animpugned communication dated 22.11.2002 whereunder the Certificate dated1.5.2002 has been cancelled. 2. The impugned communication dated 22.11.2002 is extracted hereunder :- � . . . The certificate u/s.197(1) of the Income Tax Act, date 1st May 2002 issued by this office in the case of M/s. Ansaldo Energia SpA, c/oArthur Anderson, 8th Floor, West Minister, 108, Dr. Radhakrishnan Salai,Mylapore, Chennai 600 004 authorizing you to deduct tax at the rate of 4.2% onpayment of the other sums due under the Agreement No.007/005T/HTSIEXPN(1)A-01/97, dated December 10, 1998 to M/s. Ansaldo Energia SpA is herebycancelled. You are hereby directed to deduct tax at the rates applicable as perthe Income Tax Act. . . .� 3. The petitioner has contended that such cancellation is illegal and contrary to the provisions contained in Section 197(1) and (2)read with Section 44BBB of the Act and is vitiated by non-application of mindand violative of the principles of natural justice. 4. The contention of the learned counsel appearing for the petitioner to the effect that the petitioner is entitled to the benefits underSection 44BBB of the Income Tax Act, is a matter relating to the question ofassessment. Any discussion on the questions raised by the petitioner or therespondents at this stage is uncalled for as the matter is required to beconsidered by the appropriate authority and any opinion expressed at thisstage would likely prejudice either of the parties. Legality of the impugnedorder dated 22.11.2002 has to be considered not in reference to the merits ofthe assessment order, has such question is to be determined by the appropriateauthority. 5. The main contention of the learned counsel for the petitioner is that before issuing the impugned notification, the principles of petitioner to the effect that the petitioner is entitled to the benefits underSection 44BBB of the Income Tax Act, is a matter relating to the question ofassessment. Any discussion on the questions raised by the petitioner or therespondents at this stage is uncalled for as the matter is required to beconsidered by the appropriate authority and any opinion expressed at thisstage would likely prejudice either of the parties. Legality of the impugnedorder dated 22.11.2002 has to be considered not in reference to the merits ofthe assessment order, has such question is to be determined by the appropriateauthority. 5. The main contention of the learned counsel for the petitioner is that before issuing the impugned notification, the principles of natural justice have not been followed. For the aforesaid purpose, thelearned counsel appearing for the petitioner has relied upon a decision ofMadhya Pradesh High Court reported in (1994) 122 CTR Reports ( M.P) 19 (SANGHIBROTHERS (INDORE) LIMITED vs. INSPECTING ASSISTANT COMMISSIONER OF INCOMETAX). In the said case, the petitioner was granted Certificate under Section197(3) of the Act certifying that � The dividend be issued declaring that 100%of such dividends are exempt� and on the strength of such certificate, thepetitioner had issued dividend warrants to the shareholders without making anydeduction of tax and such certificate was subsequently cancelled after aboutthree years without giving any opportunity of hearing to the petitioner.Learned single Judge of the High Court quashed such order of cancellation onthe ground that such order had been issued without giving any show causenotice and opportunity of hearing. 6. On a bare reading of the aforesaid judgment, it is apparent that the petitioner in that case was very much prejudiced as on thebasis of the certificate action had been taken by the petitioner havingfinancial ramifications. Even assuming that such decision is applicable, inthe present case it is apparent that certain information have been called forfrom the petitioner. It cannot be said that the present action by therespondents is contrary to the principles of natural justice. Moreover, evenif the certificate for deduction at source at a lower rate is withdrawn, theconsequence of such withdrawal would be that deduction has to be made at ahigher rate, but ultimately the question of liability is to be decided inassessment proceedings. The liability of the petitioner is not being finallydetermined at the time of the withdrawal of the certificate. If ultimately itis found that the petitioner is liable to pay tax at a rate lower than thededuction to be made, it is obvious that the amount paid is to be refunded. 7. For the aforesaid reasons, I do not find any merit in this writ petition which is accordingly dismissed. It is however made clear thatno opinion is expressed on merits of the contentions with regard toapplicability of 44BBB of the Act and such matter is to be decided by theappropriate authority in accordance with law notwithstanding the stand whichhas been indicated in the counter affidavit. No costs. Consequently, theconnected Miscellaneous petitions are closed. Index : YesInternet : Yesdpk To 1. Income Tax Officer,(International Taxation)-IIVIIth Floor, Old Annexe Building121, Nungambakkam High Road,Chennai 600 034. 2. Neyveli Lignite Corporation Ltd.represented by its Chairman Neyveli House135 E.V.R. Salai,Chennai 600 010. 3. Union of Indiarepresented by Secretaryto Government,Ministry of Finance,New Delhi. �