Sec. 197 Certificates Issued on Old TAN Are Valid if Co. Obtained New TAN During Year Due to Change in Jurisdiction

Case Details: Rotex Manufacturers & Engineers (P.) Ltd. vs. Deputy Commissioner of Income-tax - [2024] 163 taxmann.com 114 (Mumbai - Trib.)

Judiciary and Counsel Details

• Girish Agrawal, Accountant Member & Sunil Kumar Singh, Judicial Member
• K.P. Kapadia, CA for the Appellant.
• Smt. Mahita Nair, Sr. DR for the Respondent.

Facts of the Case

The assessee-manufacturer initially held TAN number MUMR05319G. After relocating to a new location, the assessee obtained a new TAN number, PNER14698F. For the first two quarters, the assessee filed its TDS returns and made TDS payments using the old TAN, and for the rest of the next two quarters, compliances were done using the new TAN.

Certain suppliers of the assessee had applied for lower TDS certificates in advance for the transactions pertaining to the relevant year, directing the assessee to deduct TDS at a lower rate. The suppliers had given the lower TDS certificates for the entire year, and their respective transactions were included in TDS returns filed for all four quarters under both the TANs. While processing the TDS returns, the Central Processing Centre (CPC) ignored the lower TDS certificates and raised the demand for short deductions of tax.

On appeal, the CIT(A) held that the assessee was duty-bound to intimate all its suppliers about the other TAN obtained subsequently and request them to resubmit their lower deduction tax certificate from their respective jurisdictional AO(TDS) quoting the new TAN of the assessee. Accordingly, the appeal was dismissed, and the matter was reached before the Mumbai Tribunal.

ITAT Held

The Tribunal held that the assessee, being a company, was responsible for deducting TDS at the rates prescribed in the certificates issued by the respective Assessing Officer (TDS) of the suppliers of the assessee, which were issued in terms of the provision of section 197. It was a fact on record that the assessee had deducted tax at the source at the rates prescribed in the certificates for each supplier and had complied with the necessary requirements for their deposit and filing of returns. The genuineness of the issuance of the certificate under section 197 was not doubted.

Moreover, Rule 28AA(4) contemplates that the certificate issued in terms of section 197 is valid only with regard to the person responsible for deducting the tax specified therein. It contemplates that the certificate shall be valid only with regard to the person responsible for deducting the tax and named therein under advice to the person who made an application for the issue of such certificate.

Thus, in the instant case, the certificates were in the name of the assessee company, directing it to deduct TDS at lower rates. Accordingly, there was no justification to hold that the assessee was in default merely because the certificates had not been issued on the subsequent TAN obtained by it, though the assessee had made all the necessary compliances by using the other TAN from the date it was obtained.

Merely because the assessee had separate TANs would not render the certificates issued in terms of section 197(2) redundant, resulting in tainting the assessee as assessee in default.