Court Allows Interim 8% Tax Deduction for Google Cloud India Pending Final Hearing on 10% Mandate.

The HC addressed a writ petition challenging a certificate under Section 195(2) of the Income Tax Act, 1961, mandating a 10% tax deduction by Google Cloud India Pvt. Ltd. The court allowed an interim arrangement for the financial year 2022-23, permitting payments with an 8% tax deduction. The court scheduled a final hearing for January 13, 2023, and directed the Respondents to file counter affidavits within six weeks. The 8% deduction does not constitute non-compliance with the impugned order, and the application was disposed of with these directions.

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Issues:
1. Challenge to certificate directing tax deduction at source
2. Similar issue in another case pending
3. Interim arrangement for payment deduction

Analysis:
The writ petition challenges a certificate issued under Section 195(2) of the Income Tax Act, 1961, directing Google Cloud India Pvt. Ltd. to deduct tax at a 10% rate when making payments to the Petitioner. The Petitioner seeks permission for GCI to make payments without tax deduction during the financial year 2022-23. The Petitioner's counsel highlights a similar issue in another case, Sumo Logic vs. Commissioner of Income Tax International Taxation & Anr, scheduled for a hearing. In a previous case, the court directed counter affidavits to be filed, with the Petitioner set to file rejoinder affidavits. The court accepts notice, permits Respondent Nos.1 and 2 to file a counter affidavit within six weeks, and directs the petition to be listed for final hearing on 13th January, 2023, along with another related case.

Regarding an interim application, the Petitioner relies on a previous arrangement allowing payments subject to an 8% deduction to be paid progressively to Respondent No.2. The Petitioner requests appropriate directions for a similar interim arrangement for the financial year 2022-23. Despite the impugned order directing a 10% withholding, the court directs that the Petitioner can receive payments subject to an 8% deduction for the financial year 2022-23. This interim arrangement is made under the court's orders, and the deposit of 8% should not be considered non-compliance with the impugned order. The court disposes of the present application with this direction.

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