TaxTMI 
TaxTMI 
2026 (1) TMI 1206
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to the petitioner. 2. Mr. Ajay Vohra, learned Senior Counsel appearing on behalf of the petitioner, read the impugned order passed under Section 197 of the Income Tax, 1961 (hereinafter referred to as 'the Act of 1961') and submitted that the competent officer has proceeded with pre-occupied mind and was swayed by the revenue collection rather than objectively going into the essence of transaction and considering legal position. He added that such approach of the competent officer is apparent from the fact that in earlier part of his order he had asked the petitioner as to why his application should not be transferred to Bengaluru and in subsequent part instead of transferring the matter to Bengaluru, he went ahead and issued a certificate at 10% rate instead of certificate at nil rate as claimed by the petitioner. 3. Mr. Vohra informed that the petitioner is a resident of the Republic of Ireland within the meaning of Article 4 of the India-Ireland Double Taxation Avoidance Agreement (hereinafter referred to as 'DTAA'), and is engaged in the business of operating Customer Relationship Management ('CRM') offering applications and platforms including, sales, service, marketin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the petitioner. 9. Having read the impugned order in its entirety, learned Senior Counsel submitted that though the respondent was cognizant of the above noted facts that the orders which were issued by him requiring deduction at 10% and 2% for the FYs 2023-24 and 2024-25 respectively have been set aside by this Court in the writ petitions filed by the petitioner yet he has mechanically passed the order under challenge that too without giving any reason as to how the transactions which the petitioner has made or likely to make during this year (F.Y. 2025-26) are liable for tax under the Act of 1961. 10. It was contended that the competent officer was moved by the volume of sales which the petitioner has effected in India (Rs. 1083,17,25,062/-) and has cursorily passed the order requiring the payer-SDFC India to deduct tax at the rate of 10% justifying his action by noting that this is only advance tax and subject to final adjustment on the completion of assessment proceedings. 11. Learned Senior Counsel argued that the provisions of Section 197 of the Act of 1961 are required to be read and considered in light of the purpose for which they have been inserted and unless....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ath v. Syed Ahmad Ishaque & Ors. reported in [1954] 2 SCC 881 in order to apprise the Court about the nature and scope of writ of certiorari and contended that if the impugned order does not contain sufficient reasons or the same has not been drafted properly, Court can go into the contentions advanced by the Department's counsel. Judgment dated 23.12.2025, passed by this Court in the case of ZSCALER INC v. Deputy Commissioner of Income Tax Circle 3(1)(1), New Delhi, NC: 2025:DHC:11752-DB was cited to pray that the matter be remanded back to the competent officer to pass an order afresh after considering all material facts. 16. Mr. Vohra, learned Sr. Counsel in his rejoinder arguments submitted that even if the arguments advanced by Mr. Aggarwal are considered, the petitioner's rights to get a certificate at nil rate cannot be denied. He submitted that so far as the statutory scheme is concerned, it cannot be presumed that the Courts while passing the orders was not aware of the sections, provisions and the effect of Section 195 and 197 of the Act of 1961. 17. He further submitted that the judgments in petitioner's case passed earlier takes into account not only these provisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dia, cannot be held to be a company resident in India within the meaning of Section 6(3) of the Act of 1961. For such purpose, one has to see the statutory provisions and according to which, the mandatory requirement is, that entire business of such company should be managed/controlled in India. Neither any finding has been recorded by the competent officer nor does it emanate from the record produced before us, that the petitioner company is resident in India or is having a PE in India. 23. The mere fact that Form 13 and 10F have been filed by Mr. Himank Bhatia-a resident of India (admittedly having a Power of Attorney in his favour), makes hardly any difference to petitioner's right to get a certificate of nil rate. The petitioner can neither be non-suited on such flimsy grounds nor can it be held as a company incorporated or situated in India. 24. Mr. Aggarwal's contention that Income Tax Act proceedings are separate for each year is correct. If considered in abstract, there cannot be any divergence of opinion on this aspect. But it is for the AO or the competent authority to bring on record difference in the fact-situation or some new fact must emerge which changes the re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r has been arbitrary and propelled, rather impelled by the revenue considerations. In the over-enthusiasm of fetching extra revenue that too in the form of TDS, he has even side-tracked two previous judgments of this Court, passed in petitioner's own case. 29. True it is, that in an appropriate case, the AO can take a detour from the view which has been taken by the High Court for a preceding year, but for that, he must record a concrete finding in relation to the change that has taken place during the relevant period, so also the fact that how the transactions being carried out by the petitioner are exigible to tax under the prevailing regime of the Act of 1961. 30. Having not done so, the officer has failed to discharge his statutory duties, envisaged under Section 197 of the Act of 1961. Mere use of expression 'may' given under Section 197 of the Act or purported discretion, the competent officer cannot be allowed to take whatever view he wishes to take. "Not to follow the binding precedents of the High Court cannot be countenanced in any manner and such approach renders the order a nullity". 31. The present authority and the authorities dealing with the application und....