Nil withholding certificate for Matching solution services upheld where receipts were not taxable in India under the India-US DTAA.

A taxpayer was found entitled to a nil withholding certificate for Matching solution services under section 197 because, on a prima facie review of the agreements and legal position, the receipts were not chargeable to tax in India and did not constitute fees for included services under Article 12(4) of the India-US DTAA. The competent authority was held to have no sustainable basis to deny nil rate for that component, and the denial was set aside to that extent.

---

---

Issues: Entitlement to a certificate at NIL rate of tax under Section 197 of the Income-tax Act, 1961 in respect of the Matching solution services covered by the distribution agreement.

Analysis: The petitioner sought NIL withholding in respect of the Matching solution services on the basis that the receipts were not chargeable to tax in India and did not fall within fee for included services under Article 12(4) of the India-US Double Taxation Avoidance Agreement. The agreements and the legal position were considered on a prima facie basis, and the issue was found to be covered in favour of the petitioner. The Court also noted that the competent authority had no sustainable basis to deny NIL rate for this component.

Conclusion: The petitioner was held entitled to a certificate at NIL rate for the Matching solution services, and the impugned order was set aside to that extent.

---