The provisions of rule 28AA of the Rules cannot be read as stipulating that an assessee, to be eligible to make an application under section 197(1) of the Act, should have necessarily filed returns for preceding four years and paid tax for the preceding assessment year, and that the failure in these regards, or the absence thereof, would create an ineligibility to file an application. The Assessing Officer under section 197(1) of the Act will have to be satisfied objectively that the total income of a recipient justifies either deduction at a rate lower than the rates mentioned in the provisions of section 197(1) of the Act or that no deduction is necessary. This objective satisfaction must be based on the determination of the existing and the estimated liability, and the estimated liability and income will have to be determined considering the details mentioned in rule 28AA(2) of the Rules. The Assessing Officer must also be satisfied that issuance of certificate while convenient to the assessee will not adversely affect the Revenue’s interest. Court held, that the reasons assigned by the Assessing Officer to say that the assessee would not be eligible for certificate under section 197 of the Act because of the ambiguity surrounding the transactions with the existing concern were not justified. The rejection of application for a certificate under section 197 was invalid.(AY.2024-25)