CONSTITUTION OF INDIA, 1950

Article 226

Writ petition - Certificate for 'NIL' deduction of tax at source - Maintainability of -

Petitioner was incorporated and existing under the laws of United Arab Emirates. Present writ petition filed by petitioner sought a writ of certiorari quashing the certificate under section 197(1) issued by DCIT rejecting the application of petitioner to grant a certificate for 'NIL' deduction of tax at source, on the payments made to it by ONGC-Deductor. Further, petitioner sought for issuance of a writ of mandamus directing AO to grant a certificate authorizing the deductor to make payments to petitioner without deducting tax at source. Held: Supreme Court in Ishikawajima-Harima Heavy Industries: (2007) 288 ITR 408 (SC) : 2007 TaxPub(DT) 0876 (SC) held that for a non-resident entity to be taxed in India, it should carry on business through a PE in India, and income taxed is on the basis of extent appropriate to the part played by PE in those transactions, and that only such part of the income, as is attributable to operations carried out in India can be taxed in India. Therefore, Revenue could not be directed to hold that petitioner did not have a PE and give consequent effect of such finding while deciding an application under section 197. The manner of determination of issues relating to tax deduction and regular assessment are inherently and fundamentally different. The question of existence of PE, which required a detailed enquiry, was not envisaged at the stage of deciding application for issuance of certificate under section 197 and full fledged investigation can be done by AO during the course of assessment. Thus, petition was dismissed.

REFERRED :

FAVOUR : Petition dismissed

A.Y. :

SUBSCRIBE FOR FULL CONTENT