Appeals remanded for reassessment: no withholding if foreign payee finally determined non-taxable; no retrospective withholding; apply section 90(2)

SC remanded the appeals to the file of the CIT(A) with directions: (i) if the appellant shows a final determination that a foreign corporation is not taxable on payments made by the appellant, no withholding tax arises; (ii) payments made prior to the Finance Act, 2012 are not subject to retrospective withholding based on the subsequent amendment; and (iii) for payments after that Act, CIT(A) must assess each year's agreements to decide if payments constitute "royalty" under domestic law or the Treaty, applying section 90(2) if not. Notice issued, dasti service permitted, and the High Court order stayed.

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The Court, after hearing senior counsel for the petitioner, directed: "Issue notice"; "Tag with Civil Appeal No. 2431/2020"; and "Dasti service, in addition, is permitted." Further, the Court ordered that, "In the meantime, the impugned Judgment and Order passed by the High Court shall remain stayed from its operation." The operative relief is therefore an interim stay of the High Court's judgment and an administrative directive to synchronize the matter with an existing civil appeal and to permit expedited service. No substantive determination on merits was made; the order preserves the status quo pending further proceedings in the tagged appeal and ensures service to the respondent(s) by dasti process.

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