AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 760
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....t. Ltd. (Nord India, hereinafter), to which the petitioner extends routine management and administrative support services, including marketing and communication, human resources, finance, IT, and corporate development, which are subsequently recovered on a strict cost-to-cost basis without any markup. 3. According to Dr. Shashwat Bajpai, learned counsel for the petitioner, the services rendered by the petitioner are purely managerial in nature and do not partake the character of Fees for Technical Services (FTS) under Section 9(1)(vii) of the Act. More importantly, under Article 13 of the India-UK DTAA, only technical or consultancy services that make available technical knowledge, skill, or know-how are taxable. Managerial services are outside its scope. The services of the petitioner do not make available any such technical knowledge to its Indian affiliates, and as such, the consideration received by it is not taxable in India. 4. According to him, the Income Tax Appellate Tribunal (the Tribunal, hereinafter) in the case of the petitioner itself for the Assessment Years (AY) 2020-21 and 2021-22, categorically held that the consideration received for services in the nature ....
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....an application under Section 197, the assessing officer is mandated to consider earlier four assessment years. The assessing officer in the present case has failed to consider the position of the earlier assessment years, especially the years where the Tribunal has rendered findings favourable to the petitioner on the exact same issue. Reliance in this regard is placed by Dr. Bajpai on the judgments of this Court in the cases of Manpower Services India Pvt. Ltd. v. CIT, (2021) 430 ITR 399 (Delhi), Virgin Atlantic Airways Ltd. v. PCIT, W.P.(C) 5978/2021 dated 29.07.2021, and Hero Wind Energy Private Limited v. CIT (TDS) Delhi, W.P.(C) 6184/2021. 7. Further, the petitioner in its application has made detailed submissions regarding the nature of services rendered by them and categorical explanation as to why their case particularly does not fall within the ambit of FTS. However, neither has any finding been recorded, nor any reasons been provided in the impugned order with regard to the said submissions. Even the judgments relied upon by the petitioner, and also the orders of the Tribunal in the case of the assessee for AYs 2020-21 and 2021-22 have also not been dealt with in the i....
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....Income Tax, [2016] 72 taxmann.com 1 (Delhi), Commissioner of Income Tax v. Kotak Securities, [2016] 67 taxmann.com 356 (SC), Commissioner of Income Tax v. De Beers India Minerals Pvt. Ltd., [2012] 346 ITR 467 (Kar), Director of Income Tax v. Guy Carpenter & Co. Ltd., [2012] 20 taxmann.com 807 (Delhi) and Commissioner of Income Tax v. Bio Rad Laboratories [Singapore], (2023) 459 ITR 5. It is submitted that these judgments have been relied upon by the Tribunal while passing the orders for the AYs 2020-21 and 2021-22. 10. He added that as the primary activity of managerial support services falls outside the scope of FTS, any ancillary activities linked thereto, such as the reimbursements received by the petitioner for expenses incurred on behalf of its Indian group entities also fall outside the purview of FTS and are, therefore, not taxable under the India-UK DTAA. 11. He has also controverted the reliance placed by the learned counsel for the Revenue on the judgment in National Petroleum Construction Co. v. Deputy Commissioner of Income Tax, Circle-2(2)(2), International Taxation, New Delhi [2019] 112 taxmann.com 364 (Delhi) by stating that the same was rendered in the context....
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....n if the Tribunal has taken a particular view for earlier assessment years, the assessing officer is neither barred nor estopped from independently examining the issue for the relevant financial year, particularly at the stage of Section 197 proceedings. Reliance in this regard is placed on the judgments in National Petroleum Construction Co. (supra) and New Jehangir Vakil Mills Co. Ltd. v. Commissioner of Income Tax, [1963] 49 ITR 137 (SC). 16. Mr. Chandra has further contended that the impugned order is a speaking order, as the assessing officer has expressly recorded that issuance of a Nil Withholding Certificate would be premature, as determination of taxable income for FY 2025-26 cannot be undertaken at that stage. The impugned order clearly records that, in order to protect the interest of revenue, tax is required to be deducted at a specified rate on a prima facie basis. This reasoning squarely aligns with the statutory scheme of Sections 195 and 197, which permit provisional safeguards pending regular assessment. He stated that a speaking order in the context of Section 197 of the Act cannot be equated with a reasoned assessment order under Section 143(3) of the Act. The....
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....arily that as an assessment is not possible at the time of consideration of the application, tax is to be deducted at 15% to safeguard the interests of the Revenue. Relevant part of the order of the assessing officer reads as under:- "3. The applicant entered into an agreement with above mentioned Indian entities to provide services in the nature of educational quality improvement, financial consulting, improved personnel strategy, business advisory services, corporate affairs, marketing, consulting, computer and information technology advisory services. As per description of the services in the services agreement, it is seen that the services are of the nature of Fees for Included Services (FIS) as per India-UK DTAA. 4. The business operations of the Assessee is primarily providing management and support services for learning technology and consultancy services to its group entities, which in turn manage the schools in their respective jurisdictions. The Assessee receives license fees for providing access to the online platform to the afore-mentioned three educational societies. 5. Certificate u/s 197 of the Income-tax Act is a very premature stage for d....
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....he previous year till the date of making the application. 26. As is apparent, the impugned order does not state whether these factors were really considered by the assessing officer while reaching his conclusion. There are already two determinations by the Tribunal of AY 2020-21 and AY 2021-22, which have been decided on 18.02.2024 and 25.10.2024. It is the case of the Revenue that they have filed an appeal with regard to AY 2020-21 before this Court and a Miscellaneous Application for AY 2021-22 before the Tribunal. However, this argument would not help the case of the Revenue, as the Supreme Court in the case of Kamlakshi Finance Corporation Ltd. (supra) has unequivocally stated as under:- "7. ... The position now, therefore, is that, if any order passed by an Assistant Collector or Collector is adverse to the interests of the Revenue, the immediately higher administrative authority has the power to have the matter satisfactorily resolved by taking up the issue to the Appellate Collector or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the o....
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....owever, this Court is in agreement with the submission of learned standing counsel for the respondent that it is the decision making process and not the decision that can be impugned in a writ petition. To appreciate the decision making process, it is necessary to outline the provision under which the TDS rates have to be determined under Section 197 of the Act. Rule 28AA of the Income Tax Rules prescribes the procedure to be followed by the assessing officer in determining the 'existing and estimated liability'. ... "26. Perusal of the aforesaid Rule shows that the considerations prescribed under clause (2) are mandatory and the department is bound to determine the yearly TDS rates on the four parameters prescribed therein. 27. It is settled law that the Government is bound to follow the rules and standards they themselves had set on pain of their action being invalidated [See: Amarjit Singh Ahluwalia Vs. State of Punjab & Ors.; 1975 (3) SCR 82 and Ramana Dayaram Shetty Vs. International Airport Authority of India & Ors.; (1979) 3 SCC 489]. Consequently, the assessing officer cannot ignore the mandate of Rule 28AA and proceed on any other basis. ....