SARIKA ESTATE and INVESTMENTS (P.) LTD. vs ASSISTANT COMMISSIONER OF Income Tax

Abichandani, J. - Rule. Matter to come up for final hearing on 1-4-1998.

We have heard both the sides on the question of interim relief. The grievance of the petitioner is that there is no time-limit for making an application for a certificate u/s 197 of the Income Tax Act, 1961 (''the Act'') nor is there any time-limit for issuance of such certificate, and even though till now, in numerous cases, certificates have been issued u/s 197 even where the applications are presented later than giving of credit the authorities have been granting certificates. The case of the department is that the Commissioners have been making mistakes and erroneously granting certificates and they have now suddenly realized that certificates cannot be granted u/s 197(1) when applied for after the amount of interest was credited.

In the impugned order dated 22-7-1997, the Commissioner had informed the Chartered Accountant of the petitioner that since the interest was supposed to have been paid or credited before the application was made for certificate u/s 197(1), the question of permitting non-deduction of tax at source from such payment or credit of interest does not arise and, therefore, the Commissioner regretted his inability to interfere with the action of the Assessing Officer in this regard. It appears that the C1313T in this regard wrote a letter dated 9-10-1997, a copy of which is at Annexure-A to the petition, to the petitioner reiterating that since the certificate was applied for after the amount of interest was credited, the question of issuing certificate for non-deduction of tax at source u/s 197(1) does not arise and that the grievance of the petitioner was to be treated as settled. From the said letter it appears to us that this is not a general guideline and that the CBDT was answering only to the individual case of the petitioner. It transpires before us from the affidavits which have been filed by and the submissions made on behalf of the revenue that in numerous cases, the applications which were made after the amount of interest was credited have been entertained and certificates issued. According to the revenue, this was being done erroneously and in violation of the express provisions of law. Assuming that, this was being erroneously done by the revenue and that issuance of certificate after giving the credit of interest was not permissible, one important aspect that strikes is that, since so far certificates have been issued in almost all cases as stated by the petitioner''s counsel and not seriously controverted by the other side, there would be a class of people, who expecting similar treatment may have applied for the certificate after the credit of interest is given, expecting that the certificate will be issued in their case also having been led to a bona fide belief that such practice has come to stay. We, therefore, believe that this is a case where the CBDT should consider whether and under what circumstances such a practice has developed and that, if such practice is not permissible, to decide as to what it should do and issue appropriate guidelines in the matter notwithstanding any individual reply sent to the petitioner, which guidelines, of course, would operate so far as the Assessing Officers are concerned in all such cases including in cases of those who expected the certificates to be issued where the applications were made late and direct the CBM to consider the matter and respond to this interim direction expeditiously placing on record of the petition whatever decision it may take before the next date- of hearing.