Wp/25500/2024 Of Sheladia Associates Inc v. Assistant Director Of Income Tax

HIGH COURT FOR AT HYDERABAD(SPecial Original Jurisdiction) TUESDAY HE TWO THOUSAND PRESENT THE HONOURABLE ANDTHE HONOURABLE [DR. ][JUSTICE G.RADHA ] WRIT PETITION[NO:][ 25500 ][0F ][2024] Between: SheladiaAssociateslnc,l5S25ShadyGroveRoad,Suitel00'.Rockville'lVlDzosso, [-usn. ][nepieslntlo- ][uy ][itd ][cenerat ][Manager ][(Accounts ][and]Administration), [Ir/r. ][Shaiiu ][Sebastian ]...PET|TIONER AND .1 . Assistant Director of lncome Tax, office of ADIT (lNT TAXN)-2 HYD, AayakarBhavan, HYderabad [- ][500004]Bhavan, HYderabad [- ][500004] 2. Joint Commissioner [oiln"or" ][Tax, (lnternational Taxation), Aayakar ][Bhavan,]Hvderabad [- ]500004Hvderabad [- ]500004s. - ij'.il; of Finance, Department [of Revenue' ][Rep'' ][by ][its]S""ietr.V "1l"aii,-rrrtinistrv (Revenue), North Block -New Delhi - 110001 S""ietr.V "1l"aii,-rrrtinistrv (Revenue), North Block -New Delhi - 110001 ...RES'ONDENTS Petition under Artlcle [226 ][of the ][constitution ][of ][lndia ][praying ][that ][in ][the]circumstances stated [in ][the ][affidavit ][fileci ][therewith, ][the ][High Court ][may ][be]pleasedtoissueaWritordirectionorordermoreparticularlyinthenatureofaWritof Certiorarified [fvlandamus, ][calling ][for ][the ][records ][and ][quashing ][the ][lmpugned]orderdatedog.o8.2o24,bearingDlNandorderNosot2o072o24l629673andRequest Number. [625673 ][for ][the ][Financial ][Year ][2024-25 ]' [passed ][by ][the ][1st]Respondent under [Section ]['197 ][of ][the ][lncome Tax ][Act, ][1961 lmpugned ][Order ][and]theconsequentTDScertificatedatedog.os.2024grantedbythe,lstRespondentissuedattherateofg.6percentasbeingillegal,arbitrary'inexcessofthelstRespondent's [jurisdiction ][and ][in ][violation ][of ][established Principles ][of ][Natural]Justice and directing [the ][1st ][Respondent ][to ][grant ][the ][Petitioner Company ][a ] rate TDS deduction [certificate ][under ][Section ]['197 ][of ][the ][lncome Tax ][Act' ][1961 ]['] lA NO: 1 OF 2024 Petition under section '151 cpc praying that in the circumstances stated inthe affidavit filed in support of the petition, the High court may be preased tothe affidavit filed in support of the petition, the High court may be preased todispense with the firing of certified copy of rmpugned order dated og.oB.2024,bearing DIN and order No sor2oo72o24r62g6?3 and Request Number. 629613for the FinanciarYear 2024-zs, pending disposar of the main writ petition.for the FinanciarYear 2024-zs, pending disposar of the main writ petition. lA NO: 2 OF 2024 Petition under Section '1s1 cpc praying that in the circumstances stated inthe affidavit filed in support of the petition, the High court may be preased to directthe l st Respondent to permit the petitioner to receive payments under the JointVenture Agreernent dated 28.06.20 21 and 02.a1 .2024 between the petitronei andMIS lntercontinenta consurtants & Technocrats prrvate Limited without any TaxDeducted at Sourcer in rndia under Section 1g5 or any other provisions of thelncome Tax Act, ['1961 ]. counsel for the petitioner: sRr swARoop M.v FoR sRr MyrRr TNDUKURUcounsel for the Respondent Nos.1 & 2: sRr vrJHAy K puNNA, sgr.rron sC Counset for the Respondent No.3: a*, oor,t?Xll?* or.SOLICITOR GENERAL ^rmo*, OF INDIASOLICITOR GENERAL ^rmo*, OF INDIA The Court made the following: ORDER THE HONOURABLE [SRI JT'STICE ] ANDTHE HONOI'RABLE [DR. JUSTICE G.RADHA ] V'RIT PET[ITION No.25][soo ][oF ][2024] ORDER: [(per ][Hon'ble Justice ][Suiog Poul)] Sri Swaroop [M.V, learned counsel appears ][for ][the ][petitioner]and Sri Vijhay [Punna, ][learned Senior Standing Counsel for Income]Tax Department, [appears ][for ][respondent Nos'1 and ][2'] 2. With the consent, [hnallY ][heard'] counsel for the petitioner: sRr swARoop M.v FoR sRr MyrRr TNDUKURUcounsel for the Respondent Nos.1 & 2: sRr vrJHAy K puNNA, sgr.rron sC Counset for the Respondent No.3: a*, oor,t?Xll?* or.SOLICITOR GENERAL ^rmo*, OF INDIASOLICITOR GENERAL ^rmo*, OF INDIA The Court made the following: ORDER THE HONOURABLE [SRI JT'STICE ] ANDTHE HONOI'RABLE [DR. JUSTICE G.RADHA ] V'RIT PET[ITION No.25][soo ][oF ][2024] ORDER: [(per ][Hon'ble Justice ][Suiog Poul)] Sri Swaroop [M.V, learned counsel appears ][for ][the ][petitioner]and Sri Vijhay [Punna, ][learned Senior Standing Counsel for Income]Tax Department, [appears ][for ][respondent Nos'1 and ][2'] 2. With the consent, [hnallY ][heard'] 3. In this petition [liled ][under ][Article ][226 of the ][Constitution ][of]India, the challenge [is ][mounted ][to the ][certihcate dated ][Og ]['Oa'2O24](Annexure P.2) [issued ][under ][Section 197 ][of ][the ][Income ][Tax ][Act']1961 (for short "the [Act').] 4.Theadmittedfactsbetweenthepartiesarethatthepermanentestablishment [at ][Hyderabad preferred ][an application under ][Section]195(2) of the [Act ][for ][issuance ][of the ][certi{icate' ][The ][certilicate ][was]prayed for "NIL" [deduction, ][whereas, ][the ][impugned certihcate' ][so]granted, was for [lower ][deduction']Assailing the [certificate, ][the]present petition [is ][filed.] 5. The principle [ground of ][attack to ][this ][certihcate ][is ][based on ][a]previous adjudication [by ][Division ][Bench ][of this ][Court ][in ][Sheladirr]Associateslnc.v.AssistcntDirectoroJlncomeTaxandothef,decided on 25.01.2024. [karned ][counsel ][for ][the petitioner ][submits]that in the [said case, ][the Financial Yeals ][in ][question ][were ][2023-24 ][']r.18328 of2023 The petitioner Company was same, whose branch office is situated atHyderabad, but, entire construction/engineering activiq. in the saidcase was carried out in Bangladesh. Since, a certihcate underSection 797 r>f the Act was the subjecl matter of challenge in theSection 797 r>f the Act was the subjecl matter of challenge in theearlier round of litigation, this Court after hearing the parties, cameto hold that ro taxable event had taken place within the territory ofIndia and therefore, the certificate was set aside.to hold that ro taxable event had taken place within the territory ofIndia and therefore, the certificate was set aside. 6. Learned counsel for the petitioner fairly submittecl that whenan applicatiorL under Section 195(2) of the Act was preferred in theinstant case, the petitioner has not informed and.relied on theprevious round of adjudication in W.p.No. 1832g of 2023. yet, it isstrenuously contended that if the clauses of contract in the instantcase are examined in jr,rxtaposition to the relevant clauses, whichbecame subje<:t matter of consideration in W.p.No.lg32g of 2023, itwill be clear that no taxable activit5r/event has taken place within theterritory of this country and therefore, the certificate for "NIL"deduction shorrld have been issued. 7. Per contra, iearned Senior Standing Counsel for lncome TaxDepartment submits that in the counter it is made clear that thecontract, which was subject matter of adjudication in the previousround was relzrting to "lndependent Engineering Services,,, whereas,the contract in hand relates to "Consultation Services".Apartfrom this. it is submitted that possibility of income in IndiaunderSection 5(2) of the Act cannot be ruled out_ To eiaborate, it issubmitted that while exercising the power under Section 197 of theI I r. tr / 7. Per contra, iearned Senior Standing Counsel for lncome TaxDepartment submits that in the counter it is made clear that thecontract, which was subject matter of adjudication in the previousround was relzrting to "lndependent Engineering Services,,, whereas,the contract in hand relates to "Consultation Services".Apartfrom this. it is submitted that possibility of income in IndiaunderSection 5(2) of the Act cannot be ruled out_ To eiaborate, it issubmitted that while exercising the power under Section 197 of theI I r. tr / Act, the authority [was ][reQuired ][to ][undertake ][a ][limited ][exercise' ][This]covered [by ][a ][judgment ][of ][High ][Court ][of Delhi ][in ][National]point is petroleum construction co. [v. Deputg ][comtnissioner ][of ][Income]Tox2, whereinit [was ][held ][that ][the ][A"".""i.,g ][Officer ][while ][exercising]its power under [Section ][197 of ][the ][Act' ][during tlte ][course of ][enquiry]cannot [undertake ][an ][exhamstive ][exercise ][to ][determine ][this ][issue]conclusively. [It ][is ][further ][submitted ][that ][the ][petitioner ][has ][not ][relied]on the [judgment ][of this ][Court ][of ][the ][previous ][round ][in ][his]application [hled under ][Section 195(2) ][of the ][Act']even otherwise, [the ][said ][judgment ][was ][relating ][to a ][different contract]and for a [different ][nature ][of ][activity' ][The ][principle ][ol ][res-judicoto]cannot [be pressed ][into ][service ][for ][a subsequent ][year' which ][is ][also ][a]laid [down ][by ][Delhi High Court ][in ][National ][Petroleum]principle Construction's [case (suPra)'] 8. The next [reliance ][of learned Standing ][Counsel ][is ][on a ][Division]Bench [Judgment ][of ][High ][Court ][of ][Madhya ][Pradesh ][in ][Goel Cargo](P.) Ltd.v. [Commissio ][net ][oJ ][Income'tc-r3 to ][bolster ][his ][submission]that limited [scope ][of ][judicial ][review ][in ][a ][case ][of ][this ][nature ][is ][to]examine [the ]['decision ][making ][process' and ][not ][the ][decision' ][No ][fault]can be found [in ][the ][decision ][making ][process ][and ][therefore']interference [maY ][be ][declined'] g. karned counsel [for ][the petitioner ][in ][his ][rejoinder submission]reiterated [thal ][if ][clauses ][of ][present ][contract ][are ][read and ][compared] II , taxmann.com [364 (Delhi)] 61 taxmann.com [358 (Madhya ][Pradesh)] I[I] with the clauses, whiCh were considered in the previous round oflitigation, the Court may come to the same conclusion. 10The parties conhned their arguments to the extent indicatedaboveabove 1 1. We have bestowed our anxious consideration on the rivalcontentions arrd perused the record.contentions arrd perused the record. 12. It is an admitted fact between the parties that the contract in the previous round of litigation was different and relating to adifferent natur.e of activity and it is equally admitted between theparties that the petitioner did not rely upon the previous judgment,while preferrir_.lg the application under Section 195(2) of the Act,which resulted with issuance of impugned certihcate under Section197 of the Act. 13. We find force in the contention of learned Senior StandingCounsel that in exercise of writ jurisdiction, this Court is mainlyconcerned wittL the legality, validily and propriety of tl-rc decisionmaking process:. The decision making process to be judged as perSection 195 rea:d. with Section l9Z of the Act. The Madhl.a pradeshHigh Court, whiie considering the ambit and scope of Section 197 ofthe Act, came to hold in the same line and opined that thecorrectness of decision making process can be subject matter ofjudicial review. lt could not be pointed out that in decision makingprocess adopted by Assessing Officer, he has committed any breach\of any statutory provision. He has foilowed the provision and issubd f.i.::,-..r'il"\,\ 13. We find force in the contention of learned Senior StandingCounsel that in exercise of writ jurisdiction, this Court is mainlyconcerned wittL the legality, validily and propriety of tl-rc decisionmaking process:. The decision making process to be judged as perSection 195 rea:d. with Section l9Z of the Act. The Madhl.a pradeshHigh Court, whiie considering the ambit and scope of Section 197 ofthe Act, came to hold in the same line and opined that thecorrectness of decision making process can be subject matter ofjudicial review. lt could not be pointed out that in decision makingprocess adopted by Assessing Officer, he has committed any breach\of any statutory provision. He has foilowed the provision and issubd f.i.::,-..r'il"\,\ the certi{icate [for ][lower deduction ][of ][tax' ][The ][petitioner ][is ][not]remedy [less. ][The ][petitioner can Iile a ][return and ][in ][due course' ][can]ask for [the ][refund ][of ][the ][tax ][paid ][over ][and ][above' the payable ][tax'] 14. It [will ][not ][be ][out ][of ][place ][to ][mention ][that ][although' ][in ][the]round [of ][litigation' this ][Court ][observed ][that the ][petitioner]previous has an [alternative ][remedy ][under ][Section ][264 ][of ][tt,.e ][Act' ][However' ][a]plain reading [of ][Section ][264 ][of the ][Act ][makes ][it ][clear ][that ][remedy]can be [availed ][only ][against ][an ]['order'' ][Section ][264(l) of the ][Act]reads [thus:] "264 l3l [the ][case ][of ][aly,-aldq ][other ]authority [than ][subordinate ][an ][o1$er ][to ][to ][which][him ]'seclion [263 ]"ppli"" [p'"ttdfi:# ]the Principal [Chief ][Commislioner ][or ][Chief ][Comrnissioner ][or]PrincipalCommissionero.^co..i""io''ermay,eitherofhisownmotion or on [an ][apphcat ][lo""[y''f'" ]"""""""" [iot ][revision' call for]the record [of ][,ny ][proctedit';'Ji;th* ot'--+**@]- Iri* rr." [i"." ]["""*"a ][u''i ][-uy ][make ][such ][inquiry ][or ][cause]to the [provisions ][of ][this]such inquiry [[o ][be ][made ]'ii' "Ltittt Act. mav [pass ][such ][cltat' ][fr"]t""'-i"i ][being ][an order prejudicial]io *t" as he [thinks fit ]["]"=""t".". "=""t".". 15. The [said ][remedy ][cannot ][be ][availed against ][a ][certificate ][issued] under [Sectio ][o ][197 ][ol ][the ][Act' In ][view ][of ][language employed in]Section [264, which ][was ][not ][considered ][in ][previous ][round' ][the earlier]ordertotheextentofremedyisdistinguishable.Thus,wearenotrelegating [the petitioner ][to ][avail ][the remedy of ][revision' ][but' ][leaving ][it]open [for ][him ][to ][file ][return ][and at appropriate ][stage seek ][refund' ][We]findnoflawinthedecisionmakingprocess.Thejudicialreviewunder Article [226 ][of ][the ][Constitution ][is not ][directed against ][the]decision, [but ][is ][mainly ][confrned ][to ][the ][decision ][making ][process ][(see] I I ! { Bachan Singh v. Unio of Indiaa). Reference may be made to the judgment of t he Supreme Court in ttre case of Kalinga MiningCorpn. V. Utrion of Indias, wherein it is held as under: "6? It is by now well setfled that judicial review of theadministrative action/quasi judicial irders passed by thefundament:rl procedural Government is limited only iequirements to correcting ["*t ]the errors of lead law ortobased.on manifest injustice. evidence, When the same the conclusions cannot be re-appreciated of l"t -.y the authorit5z by ttrearecourt in ex<_.rcise of its powers of judicial .eview. The court doesnot exercise the powers of an appellate court in exercise of itspowers of judicial review. It is oniy in cases where either frndingsrecorded by the administrative/quasi judicial authority .r" b.sJdon no evidence or are so perverse ihat no reasonable would have reached such a conclusion on the basis personof thematerial avarilable that the court would be justified to interfere inthe decision. The scope of judicial .."i;; i; [mited to thedec-ision making process and. not to the decision itself, evenif the same appears to be erroneous." (Emphasis Suppiied) (Emphasis Suppiied) 16. Since the decision making process, does not warrant anyinterference, we find no reason to interfere in the present matter. 17. Accordingly, the writ petition is dismissed with the aforesaidobservations. No costs. Interlocutory applications, if any pending, shall also standclosed. i [2008(e)]'(201s) [5][scc ]scc [161]252 SD/- T. JAYASREEASSrsrANr TG!!]'RAR //TRUE COPY// SECiION Toi. '1 . 5;; One CC d6 i; to SRI MYTRI [SHr ][ViLnAV ]INDUKURU,-Advo^cate [k-punNA, ][sEftoB ][sqIgR ][OP!C][rrD ][IoPUCI]5 6;; dd i; [sRi cAor pnevEer'i ][(u-unn, ][Dv ][sollcrroR ] [oF]INDIA [oPUC]4Two CD CoPiesPSK.GJP HIGH COURT DATED:1011212024 ORDER WP.No.25500 of 2024 DISMISSING THE WRIT PETITIONWITHOUT COSTS. //t30/z[,/z+] ,i.i.o'"'-i', .a. , ,l_r.)i..:0 I ,,AtJ 2025Zt,c) !:t,.rss*i.....>:rcFrEL)