Cochin International Airport Limited V. The Deputy Commissioner of Income Tax, Circle 1 (1) Range I and Deputy Commissioner of Income Tax (TDS) and The Commissioner of Income Tax (TDS) and Central Board of Direct Taxes, Ministry of Finance, Government of India

WP(C)/6858/2009

AI Insights

Cochin International Airport Limited filed a writ petition challenging the withdrawal of tax deduction certificates issued under section 197 of the Income Tax Act, 1961. The certificates were initially issued by the Deputy Commissioner of Income Tax, Circle-I, who was later found not to have the jurisdiction to issue such certificates, as per a notification from the Central Board of Direct Taxes. The petitioner argued that the certificates had been acted upon and payments made without deduction of tax based on these certificates. The court examined the legal authority of the officers involved and the implications of retrospectively canceling the certificates. Ultimately, the court decided to uphold the withdrawal of the certificates but limited the effect to prospective application only.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 815707 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 01-04-2009
• Assessment Year: misc
• Other Referred Cases: Pushpadevi M. Jatia Vs. M.L. Wadhawan, Additional Secretary, Government of India and others [1987 (3) SCC 367], M/s.Beopar Sahayak (P) Ltd. and others Vs. Vishwa Nath and others [1987 (3) SCC 693], Central Bank of India Vs. C.Bernard [1991 (1) SCC 319]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: E K NANDAKUMAR; A K JAYASANKAR NAMBIAR; K JOHN MATHAI; P BENNY THOMAS; ANIL NAIR
• Keywords: Certificate under Section 197; Income Tax; Jurisdiction; Retrospective effect; Withdrawal of Certificate
• Section: 197; 120

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH WEDNESDAY, THE 1ST APRIL 2009 / 11TH CHAITHRA 1931 WP(C).No. 6858 of 2009(B) ------------------------- PETITIONER(S): --------------- COCHIN INTERNATIONAL AIRPORT LIMITED, HAVING ITS REGISTERED OFFICE AT NO.35, 4TH FLOOR, GCDA COMMERCIAL COMPLEX, MARINE DRIVE, KOCHI-31, REPRESENTED BY ITS GENERAL MANAGER (FINANCES) R. SURESH KUMAR BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.ANIL D. NAIR RESPONDENT(S): --------------- 1. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 (1) RANGE I, C.R. BUILDINGS, I.S. PRESS ROAD, KOCHI -18. 2. DEPUTY COMMISSIONER OF INCOME TAX (TDS),C.R. BUILDINGS, I.S. PRESS ROAD, KOCHI -18. 3. THE COMMISSIONER OF INCOME TAX (TDS), C.R. BUILDINGS, I.S. PRESS ROAD, KOCHI-18. 4. CENTRAL BOARD OF DIRECT TAXES, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NEW DELHI. ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01/04/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M. JOSEPH, J. ```````````````````````````````````````````````````` W.P.(C) No. 6858 OF 2009 B ```````````````````````````````````````````````````` Dated this the 1st day of April, 2009 J U D G M E N T Petitioner applied for the grant of certificate under section 197 of the Income Tax Act, 1961. Under section 197, it is open to the authority to certify that assessee is entitled to payment without deducting tax at source. Accordingly, on the basis of the application, petitioner obtained Ext.P2 series. Subsequently, after serving notice on him and affording an opportunity for hearing to the petitioner, the impugned order has been passed, namely Ext.P4. The certificate is withdrawn with effect from the date of issuance. The only reason is that the jurisdiction for issuance of certificate under section 197(1) is stated to be rest with the Commissioner of Income Tax(TDS). The certificates were issued by the Deputy Commissioner of Income Tax, Circle-I(respondent No.1). It is pointed out that such certificates are without jurisdiction. 2. I heard learned counsel for the petitioner and learned standing counsel. Learned counsel for the petitioner points out WPC.6858/09 : 2 : that under the Act, the Deputy Commissioner is the assessing officer. The petitioner has filed an application before the assessing officer. After considering the same, the certificates were issued. They have been acted upon and the third parties have made payments on the strength of these certificates. He would further contend that at any rate, the revocation of the earlier certificates with retrospective effect is unsustainable. Learned counsel for the petitioner points out that the certificates were withdrawn by the 2nd respondent even though the power is vested with the Commissioner. 3. Per contra, learned standing counsel would contend that though the 1st respondent is assessing officer, Ext.P5 notification is issued by the Central Board of Direct Taxes by which power is conferred on the Commissioner of Income Tax (TDS), Cochin. This notification is issued prior to the date of the application filed by the petitioner and, therefore, it is not open to the petitioner to contend that even after the issuance of the notification, the 1st respondent had power in the matter. It is pointed out that the Commissioner has, acting under the powers WPC.6858/09 : 3 : available under section 120 of the Income Tax Act, empowered the 2nd respondent to exercise his powers which is permissible in law. 4. Learned counsel for the petitioner, of course, relied on the decisions of the Apex court relating to the principle of de facto doctrine in Pushpadevi M. Jatia Vs. M.L. Wadhawan, Additional Secretary, Government of India and others [1987 (3) SCC 367], M/s.Beopar Sahayak (P) Ltd. and others Vs. Vishwa Nath and others [1987 (3) SCC 693] and Central Bank of India Vs. C.Bernard [1991 (1) SCC 319]. Learned standing counsel would point out that the decisions may not apply as the 1st respondent was fully aware at the time he was acting that there was no power with him. So also, ignorance of law cannot be excused. When the notification is issued by the 4th respondent and the petitioner filed the application after the notification, there was no basis for granting certificate by an unauthorized person, it is submitted. 5. It is true that the 1st respondent is the assessing officer. But, when the notification is issued by the Central Board of Direct Taxes conferring the power in relation to issuance of certificate WPC.6858/09 : 4 : under section 197 on the Commissioner of Income Tax(TDS), who I find is the authority empowered in all the States, it may not be open to the petitioner to contend that the 1st respondent continued to retain the authority in law to issue the certificate. Likewise, it is not open to the petitioner also to dispute the authority of the 2nd respondent as a statutory delegate of power under section 120 deriving his power from the authorization given by the Commissioner. Therefore, there may not be any doubt that the order was issued initially by the 1st respondent without the authority of law. So also, there is no merit in the contention that the 2nd respondent was not empowered to withdraw it. However, having regard to the sequence of facts and the passage of time, which took place after the grant of certificates and the payments which are effected on the strength of the certificates, it is not fair to allow the retrospective cancellation of the certificates. Obviously, everybody acted on the basis of the certificates. Payments were made without deduction on the strength of the certificates. The 1st respondent cannot be said to be a person who is totally unconnected with the administration of the Income Tax Act. In WPC.6858/09 : 5 : such circumstances, while I repel the contention of the petitioner about the absence of authority with the 2nd respondent or the presence of the authority with the 1st respondent after the notification is issued, I would think that it would be equitable if I sustain the impugned order but with prospective effect. I do so. Writ petition is partially allowed as above. Sd/- (K.M.JOSEPH, JUDGE) aks // TRUE COPY // P.A. TO JUDGE "