Infrastructure Development Authority vs ACIT (Patna High Courts)
In the case of Infrastructure Development Authority vs ACIT, the Patna High Court addressed the rejection of applications filed under Section 197 of the Income Tax Act by the Assessing Officer (AO), which sought a nil TDS deduction on interest income from banks. The AO’s decision, based on an outstanding tax demand for the assessment year 2018-19, led to the rejection of the application on the grounds that the pending demand precluded the granting of a lower or nil rate of TDS. However, the petitioner argued that the demand had been stayed by the Principal Commissioner of Income Tax pending the outcome of the First Appeal. The High Court emphasized that the AO’s authority under Section 197 is limited to assessing whether the total income of the recipient justifies a lower or nil tax rate. The Court determined that the existence of a pending tax demand should not automatically lead to the summary rejection of the application. Consequently, the High Court set aside the orders of the AO, ruling that they had relied on extraneous factors, and restored the application for reconsideration in line with the law. The writ petition was ultimately disposed of, ensuring the applicant’s rights to a proper evaluation of their request for a lower TDS deduction.
