2026 (1) TMI 759

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....ung (EMEIA) Services Limited from the date of section 195(2) application till 31.03.2026. And/ Or (iii) Issue any other appropriate writ, order or direction which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case." 2. In substance the challenge in this petition is to the certificate and order dated 17.09.2025 passed under Section 195 of the Income Tax Act, 1961 (the Act), whereby the respondent has concluded and authorised the petitioner herein to pay or credit any payment covered under the nature of payment being business income by withholding tax at the rate of 5.25%. 3. We may reproduce paragraph no.4 of the impugned order, which reads as under:- "4. It has further claimed that the amount expected to be paid to recipient does not satisfy the 'make available' test and thus does not fall within the ambit of Fees for Technical Services ('FTS') as defined under Article 13 of India-UK DTAA as already held by Authority of Advance Ruling in AAR No. 820/2009. Further, the applicant contended that the recipient does not have any Permanent Establishment ('PE') in India and in this respect, it has submitted No PE Declaration and T....

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....matter of interpretation in Clifford Chance (supra). 6. Before proceeding further, similarities between the said provision in India-UK DTAA and India-Singapore DTAA are tabulated below:- Article 5(2)(k) of the India-UK DTAA Article 5(6) of India-Singapore DTAA 2. The term "permanent establishment" shall include especially (k) the furnishing of services including managerial services, other than those taxable under Article 13 (Royalties and fees for technical services), within a Contracting State by an enterprise through employees or other personnel, but only if: (i) activities of that nature continue within that State for a period or periods aggregating more than 90 days within any twelve-month period; or (ii) services are performed within that State for an enterprise within the meaning of paragraph 1 of Article 10 (Associated enterprises) and continue for a period or periods aggregating more than 30 days within any twelve-month period: Provided that for the purposes of this paragraph an enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provide....

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....instant petition is misconceived and not maintainable either in law or on facts and is liable to be dismissed in view of the availability of an efficacious statutory remedy under Section 264 of the Act for the simple reason that Article 226 of the Constitution of India cannot be invoked to bypass statutory remedies in the absence of a lack of jurisdiction or violation of the principles of natural justice, neither of which arises here. 10. It is his contention that the proceedings under Section 195(2) of the Act are protective and prima facie in nature, confined to safeguarding the interests of the Revenue, and judicial review is therefore limited to the decision-making process and not the merits. As such, the impugned reasoned order warrants no interference, as held by this Court 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). The determination of withholding tax @ 5.25% is fully justified and flows directly from the existing and subsisting assessment position of the recipient entity, EMEIA, for AY 2022-23, wherein the assessing officer after detailed examination, ....

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...., thus, the income from India is liable to be taxed as business income under Article 5(k) of the DTAA. The contention of Mr. Sawhney is that this being the solitary ground for the respondent to reject the application, the same is untenable in law. 15. Suffice it to state, the issue of virtual service permanent establishment had come up for interpretation before us in the case of Clifford Chance (supra) though in the context of the provisions of the India-Singapore DTAA. The comparative table, as reproduced by us above, makes it clear that the provisions relevant to the instant case, in the India-UK DTAA and the India-Singapore DTAA are pari materia. In Clifford Chance (supra) we interpreted the words "within a Contracting State through employees or other personnel" as under: 42. Article 5(6)(a) of the DTAA reads "An enterprise shall be deemed to have a permanent establishment in a Contracting State if it furnishes services... within a Contracting State through employees or other personnel...". The words "within a Contracting State" and "through employees or other personnel" contemplates rendition of services in India by the employees of the non-resident enterprise, whil....