IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition No. 1891 of 2010 (M/S) M/s Sime Darby Engineering SDN BHD Through its Director Ms. Chow Mei Mei Mezzanine Florr, Kompleks Sime Darby Persiaran Kewaljipan, USJ 7 47600 Subang Jaya, Selangor Darul Hasan Kuala Lumpur, Malaysia. ……Petitioner Versus Union of India and others …….Respondents Mr. C.S. Agarwal, Senior Advocate assisted by Mr. P.R. Mullick, counsel for petitioner. Mr. Arvind Vashistha, Advocate for Income Tax. Dated:-29-11-2010 Hon’ble B.S.Verma, J. Heard learned counsel for the parties. By means of this petition, the petitioner has sought writ in the nature of certiorari quashing the impugned order dated 18.06.2010 (Annexure No. P1 to the petition), passed by respondent No. 2. A further writ in the nature of mandamus has been sought directing respondent No. 2 to grant certificate under Section 197 of the Income Tax Act, 1961, authorizing ONGC to deduct tax at source at nil rate, on payments made to the petitioner company or in the alternative deduct tax at the rate of 0.27%. According to the petitioner, the petitioner company is a tax resident of Malaysia as per provisions of Article 4 of the India- Malaysia Tax Treaty (for short herein after referred as the Treaty). The tax residency certificate issued by the Malaysian Tax Authorities to this effect is annexed as annexure P3 to the 2 petition and petitioner company is eligible to the benefits of the Treaty. In order to determine the taxability in India of the contractual revenues of petitioner company from execution of abovementioned contract with ONGC, the provisions of the Act would apply to the extent beneficial to petitioner company. On 26.05.2010, the petitioner company filed an application in the Form No. 13 under Rule 28(1) of Income Tax Rules, 1962, before Deputy Director of Income Tax (International Taxation), Dehradun i.e. respondent no. 3 seeking certificate under Section 197 of the Act, authorizing M/s Oil and Natural Gas Corporation Limited to make payments to the petitioner company without deducting tax at source. The petitioner company has also filed a letter dated 26.05.2010 before Deputy Director of Income Tax (International Taxation), Dehradun-respondent No. 3 in which it was submitted in detail the reasons for requesting to grant a withholding tax certificate under Section 197 of the Act authorizing ONGC to make the payment under the subject contract without deducting any tax. The petitioner company alternatively requested to grant certificate under Section 197 of the Act authorizing ONGC to make the payment after withholding tax at the rate of 0.27% for installation activities. Respondent No. 3 passed the impugned order dated 18.06.2010 under Section 197 of the Income Tax Act, 1961, directing M/s Oil and Natural Gas Corporation Ltd. to deduct tax at the rate of 10% on the Gross Contractual Payments including the payments arising on account of all types of expenditures and reimbursements etc. to be made to the non resident. 3 Learned Senior Advocate appearing on behalf of the petitioner company, submitted that it is unjustified on the part of respondent No. 2 in refusing to grant certificate under Section 197 of the Act authorizing ONGC to deduct tax at source at nil rate on payments made to petitioner company, since the payment to be received by it from ONGC is not taxable in India. It is further submitted that as per Article 7(1) of the Treaty, the business profits of petitioner company shall be taxable only in Malaysia unless the petitioner company conducts business in India through a Permanent Establishment (for short referred as PE) situated in India as per provisions of Article 5 of the Treaty. The petitioner company cannot be regarded to have a PE in India as per provisions of Article 5(2) (j) of the Treaty which provides that “a building site or construction, installation or assembly project which exists for more than nine months.” A counter affidavit has been filed on behalf of respondents No. 2 and 3. In para-69 of the counter affidavit, a preliminary objection has been raised stating that petitioner has an alternative remedy to file revision before Director of Income Tax (International Taxation), Delhi and against the determination that has been made under Section 197 of the Income Tax Act, 1961. Section 264 of the Income Tax Act, provides as under:- “In the case of any order other than an order to which Section 263 applies passed by an authority subordinate to him, the Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such inquiry or cause such inquiry to be 4 made and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit.” In view of the provision of Section 264 of the Income Tax Act, 1961, learned Senior Advocate appearing on behalf of the petitioner company has further contended that this remedy is not efficacious remedy. In view of the provision of Section 264, the remedy available is efficacious and statutory in nature, therefore, this Court is not inclined to entertain the writ petition. Petitioner is given liberty to raise all the grounds of writ petition in the revision. The writ petition is dismissed on the ground of alternative remedy, available to the petitioner. However, in the interest of justice, it is directed that Director of Income Tax (International Taxation), Delhi, shall decide the application for revision, if moved by the petitioner within a period of four weeks from the date of presentation of the revision without unnecessary delay. Certified copy of this order be issued to learned counsel for the parties by tomorrow i.e. 30.11.2010 on payment of usual charges. (B.S.Verma, J.) 29-11-2010 S 5