Income Tax Officer, Central Circle, Jodhpur vs Jaipur Udyog Limited

Under the provisions of Section 18(3F) of the Indian Income Tax Act, 1922, the respondent company applied to the Income Tax Officer to determine the appropriate proportion of the dividend on which income tax or super tax was not payable by the recepients. The Income Tax Officer made such determination, as the High Court found. It was however, the case of the successor Income Tax Officer that the determination was faulty and accordingly, he invoked the power u/s 18(7) and declared the respondent company in default in respect of the tax which, according to him, ought to have been deducted. The respondent company approached the High Court of Rajasthan by way of a writ petition and the order u/s 18(7) was quashed, particularly on the ground that once the determination had been made by the Income Tax Officer u/s 18(3F) and the respondent company had acted in accordance with it, the respondent company could not said to be in default under the provisions of Section 18(7). Having heard learned Counsel for the Revenue and perused the impugned judgment, we are of the view that the High Court justified in the view that it took.

Accordingly, the appeals are dismissed. There shall be no order as to costs.