Binding Supreme Court precedent on subscription receipts taxability must be followed despite a pending review petition.

A binding Supreme Court ruling on the taxability of subscription receipts had to be followed by revenue authorities, and it could not be ignored merely because a review petition had been filed or was pending. The impugned Section 197 certificate and related order were found unsustainable because they contained no independent reasoning and instead relied on an assessment treating the receipts as royalty under the India-US DTAA. As the Supreme Court decision in Engineering Analysis remained binding under Article 141, the order was set aside and the matter was remitted for fresh consideration in accordance with law.

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Issues: Whether the impugned certificate and the order under Section 197 of the Income-tax Act, 1961 could be sustained when they disregarded a binding Supreme Court decision on taxability of subscription receipts on the ground that a review petition was pending.

Analysis: The order under challenge contained no independent reasoning and proceeded by relying on an assessment order that treated the receipts as royalty under Article 12 of the India-US Double Taxation Avoidance Agreement. The binding effect of the Supreme Court decision in Engineering Analysis Centre of Excellence Pvt. Ltd. was emphasised. It was also noted that the review petition against that decision had already been dismissed, and that a pending review could not justify ignoring a binding precedent. Under Article 141 of the Constitution of India, the decision of the Supreme Court continued to bind the Revenue.

Conclusion: The impugned order could not stand and was set aside.

Final Conclusion: The matter was sent back for fresh consideration by the Assessing Officer in accordance with law, and the petitioner obtained the substantive relief of reconsideration of its withholding-tax application.

Ratio Decidendi: A binding decision of the Supreme Court must be followed by revenue authorities and cannot be disregarded merely because a review petition is pending or has been filed.

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