2026 (2) TMI 410

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.....2025 passed by the office of the Circle Income Tax 1(1)(2) (hereinafter referred to as 'competent authority') deciding petitioner's application under Section 197 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961') and consequential certificate dated 18.06.2025 whereby the respondent has required its counterpart in India to deduct tax at the rate of 15% on the payments made and credited to the petitioner. 2. The petitioner is engaged in the business of providing Software as a Service ('SaaS') based products/offerings which help its customers in generating links which can be used to share content over social media, provide links to apps on app-store, links to websites in e-mails, etc. The customers can also obtain a....

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....d is wholly without application of mind. 6. While maintaining that the stance taken by the competent authority is per se erroneous and unsustainable, he argued that the premise on which the impugned order rests, is the judgment of Authority for Advance Ruling (AAR) in the case of Shell India Markets (P.) Ltd., In re reported in [2012] 18 taxmann.com 46 (AAR-New Delhi), completely ignoring the fact that the same has been overruled by the Bombay High Court in Shell India Markets Pvt. Ltd. v. Union of India and Others, [2024] 463 ITR 222 (Bom). 7. Explaining in detail the nature of transactions, which the petitioner has undertaken in India, learned Senior counsel submitted that by no stretch of imagination any tax can be imposed or recov....

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.... as 'Tribunal') and the judgment has been reserved by the Tribunal. 12. He submitted that the petitioner is hopeful of succeeding in the appeal and in any case, the certificate at NIL rate ought to be issued to it, as there is no possibility that the petitioner would not abide by and deposit any tax levied under the Act of 1961, subject of course to its right of challenging such order, if so advised. 13. As a via-media, it was suggested by Mr. Jolly that for the ensuing period, including year AY 2026-27, the respondent be directed to issue a certificate of NIL rate and once the appeal is decided by the Tribunal, subject of course to rights of either of the parties to challenge the same. 14. He alternatively submitted that since the....

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....or amount the petitioner has been paying up to 31.03.2025. 19. The appeal of the petitioner against the order of DRP is pending before the Tribunal and pronouncement of the order of the Tribunal may take some more time. In the meanwhile, if at the end of financial year (i.e. on 31.03.2026), the petitioner's application for issuance of certificate under Section 197 of the Act of 1961 shall be rendered redundant. Hence, as a temporary measure, we direct the competent authority to issue a certificate under Section 197 of the Act of 1961 at 2% rate. Same shall be issued within a period of 15 days from today. 20. The impugned order, purportedly dated as 02.05.2025 and the certificate dated 18.06.2025 are hereby set aside. 21. The petiti....