Author: inavatiq

Editorial Team – [2026] 184 taxmann.com 76 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. Sri Lanka Releases Draft Bill to Amend the Inland Revenue Act

Sri Lanka has released a draft Bill proposing amendments to the Inland Revenue Act, No. 24 of 2017. The proposed changes, some of which have retrospective effect, are summarised below:

• Capital Gains Tax Rates – Increased from 10% to 15% for individuals and partnerships, and from 10% to 30% for trusts, unit trusts, mutual funds and NGOs (effective from the date of enactment).
• Interest Waiver – The Commissioner-General of Inland Revenue may write off outstanding interest on certain tax underpayments and late payments if the taxpayer pays the full principal tax and penalties within six months (effective from the date of enactment).
• Estimated Tax Statement – The requirement to file a Statement of Estimated Tax (SET) is removed. Instalment payments will generally be based on the taxable income of the preceding year, unless otherwise determined under procedures prescribed by the CGIR (effective 1 April 2026).
• Acceptance of Return – An individual’s return will be accepted without further assessment if the declared tax is at least 120% of the previous year’s tax, the full amount is paid without refund claims, and an affidavit confirms absence of fraud, evasion or wilful default (effective 1 April 2025).
• Cash Transaction Deduction – The restriction on deductions for cash payments exceeding LKR 500,000 is relaxed where the cash is directly deposited into the payee’s bank account (effective 8 May 2023).
• Definition of Reserves – The definition is expanded to include negative retained earnings, accumulated losses and deficits, but excludes revaluation reserves (effective 1 April 2025).
• Carry Forward of Excess Payments – Where qualifying payments to specified government institutions cannot be fully deducted due to insufficient assessable income, the excess may be carried forward to subsequent years (effective 1 April 2025).
• Export-related Payments – A deduction is allowed for payments relating to exports of goods or services from Sri Lanka even if the payment has no Sri Lankan source (effective 1 April 2018).
• Head Office Expenditure – Non-residents operating through a Sri Lankan permanent establishment may deduct head office expenditure up to the lower of the actual expenditure or 10% of assessable business income (effective 1 April 2025).
• Expanded Withholding Tax – The 5% withholding requirement is extended to additional professions such as auditors, personal trainers, actors, musicians, photographers, beauticians, cooks, social media specialists and translators (effective from the date of enactment).
• Return Filing Exemption – Individuals are exempt from filing a tax return where employment income is subject to advance personal income tax and interest income for the year does not exceed LKR 5,000 (effective 1 April 2025).
• Foreign Loan Interest – Interest on foreign loans is exempt where the loan is remitted to Sri Lanka in foreign currency through a bank and used locally (effective 1 April 2025).
• Capital Allowance for New Investments – A 100% capital allowance is available for investments in depreciable assets (excluding intangibles) for new undertakings with investments between USD 250,000 and USD 3 million (effective 1 April 2026).
• Enhanced Capital Allowance for Expansion – Claims for enhanced capital allowance on expansion projects require approval from the Board of Investment (effective 1 April 2026).

Source – Draft Bill

2. Georgia Introduces an Annual Reporting Requirement for International Controlled Transactions

Georgia has issued Order No. 52, dated 24 February 2026, published in the Official Gazette, introducing a new annual reporting requirement for information on international controlled transactions. Taxpayers must submit such information where the total value of international controlled transactions in the preceding calendar year exceeds GEL 500,000. This threshold also includes the market value of controlled transactions carried out at no cost, as well as the amounts of outstanding payables and receivables.

Taxpayers who file standard monthly tax returns are required to report this information through Annex 4, which is to be attached to the March monthly return (generally due on 15 April). The annex requires details such as the relevant related parties, the nature of their relationship, the type of transaction, the transaction value in both the transaction currency and GEL, and the transaction date, among other particulars. Additionally, taxpayers must disclose the status of their transfer pricing documentation, including whether the documentation has been prepared, is under preparation, or is intended to be prepared.

Taxpayers filing annual tax returns must provide the same information through Annex M, which is submitted along with the annual return (generally due on 1 April). The information required in Annex M is identical to that required in Annex 4 for the March monthly return.

Order No. 52 entered into force on 25 February 2026 and applies from the 2025 reporting period.

Source – Order No. 52

Click Here To Read The Full Article

The post [World Tax News] Sri Lanka Releases Draft Bill to Amend the Inland Revenue Act and More appeared first on Taxmann Blog.

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Case Details: Md Shoriful Islam vs. State of Assam - [2026] 183 taxmann.com 669 (Gauhati)

Judiciary and Counsel Details

• Soumitra Saikia, J.
• R S Mishra, Ms M Dey & Ms B Sarma for the Petitioner.
• M Bhuyan, Ld. Counsel for the Respondent.

Facts of the Case

Demand proceedings were initiated against the petitioner-assessee under Section 73 of the CGST Act and the Assam GST Act in respect of tax or input tax credit not involving allegations of fraud. The petitioner-assessee was issued only a summary of show cause notice in Form DRC-01 which stated that the show cause notice was attached, along with an attachment titled ‘determination of tax’. No separate or detailed show cause notice specifying the reasons and circumstances for invoking the provisions of law was served upon the petitioner-assessee. As no reply was filed, an order was subsequently passed in Form DRC-07 recording that the petitioner-assessee had not submitted any response and had therefore deemed to have agreed with the determination. Aggrieved by the initiation of proceedings and the consequential order passed solely on the basis of the summary and attachment, the petitioner-assessee filed a writ petition challenging the legality of such action. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the statutory scheme governing demands not involving fraud under Section 73 of the CGST Act and the Assam GST Act required issuance of a proper show cause notice specifying the reasons and circumstances for invoking the provisions of law before determination of liability. The Court observed that the statement of determination contemplated under the relevant sub-provisions was distinct from the show cause notice and could not substitute the statutory requirement of issuing a detailed notice. It was further noted that Rule 142 of the CGST Rules and the Assam GST Rules prescribed issuance of a summary in Form DRC-01 or DRC-02 in addition to a proper show cause notice and not as a replacement for it. The Court therefore held that issuance of only a summary along with an attachment containing determination of tax did not satisfy the statutory mandate of a proper show cause notice. Accordingly, the initiation of proceedings and the consequential order founded solely on such summary and attachment were held to be contrary to law and the matter was remanded for fresh action in accordance with law.

List of Cases Referred to

• Silver Oak Villas LLP v. Asstt. Commissioner (ST) [2024] 161 taxmann.com 103/103 GST 713/86 GSTL 161 (Telangana) (para 3)
• A V Bhanoji Row v. Asstt. Commissioner (ST) [2025] 170 taxmann.com 799/94 GSTL 430 (Andhra Pradesh) (para 3)
• NKAS Services (P.) Ltd. v. State of Jharkhand [2022] 136 taxmann.com 138/91 GST 736/58 GSTL 257 (Jharkhand) (para 3)
• LC Infra Projects (P.) Ltd. v. UOI [2019] 109 taxmann.com 141/75 GST 751/28 GSTL 3 (Karnataka) (para 3)
• Railsys Engineers (P.) Ltd. v. Additional Commissioner of Central GST, Appeals-II [2022] 141 taxmann.com 527/94 GST 51/65 GSTL 159 (Delhi) (para 20).

The post HC Quashes GST Order for Lack of Proper SCN appeared first on Taxmann Blog.

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Case Details: Imperial Graphics (P.) Ltd., In re - [2026] 183 taxmann.com 705 (AAR-TAMILNADU)

Judiciary and Counsel Details

• C. Thiyagarajan & B. Suseel Kumar, Member

Facts of the Case

The applicant, registered under the CGST Act and the Tamil Nadu GST Act, had leased certain residential properties situated at Coimbatore to an educational trust for use as hostel accommodation. The applicant collected GST on the rent charged to the tenant for such leasing of residential premises. An application for advance ruling was thereafter filed seeking clarification on whether hostel or residential accommodation supplied by the tenant to students would qualify for exemption under the GST law. The applicant also sought a ruling on whether the incidental activity of supply of in-house food to inmates of the hostel by the tenant would be exempt as a composite supply of exempt services. The application thus sought determination on the taxability and exemption status of services provided by the tenant operating the hostel. The matter was accordingly placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that under the advance ruling mechanism provided in the CGST Act and the Tamil Nadu GST Act, a ruling can be sought only in respect of supplies undertaken or proposed to be undertaken by the applicant. The Authority observed that the queries raised in the application related to the services of hostel accommodation and supply of food being provided by the tenant and not by the applicant. It was therefore held that the issues raised did not pertain to supplies made or proposed to be made by the applicant and consequently fell outside the scope of advance ruling under the statutory scheme. The Authority accordingly concluded that the application was not liable for admission and rejected the advance ruling application as not maintainable.

List of Cases Referred to

• Thai Mookambikaa Ladies Hostel v. Union of India [2024] 160 taxmann.com 667/103 GST 295/84 GSTL 209 (Madras) (para 1.4)
• Taghar Vasudeva Ambrish v. Appellate Authority for Advanced Ruling [2022] 135 taxmann.com 287/91 GST 750/63 GSTL 445 (Karnataka) (para 1.4)
• Bharatiya Vidya Bhavan’s Residential Public School v. State of Andhra Pradesh [W.P. No. 7417 of 2006, dated 30-1-2023] (para 3.1)
• Uratemp Ventures Limited v. Collins (AP) [2001] UKHL 43 (HL) (para 3.1).

The post AAR Rejects GST Ruling on Tenant’s Hostel Activity appeared first on Taxmann Blog.

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Case Details: N. Manoharan, etc. vs. Administrative Officer - [2026] 183 taxmann.com 358 (SC)

Judiciary and Counsel Details

• Pankaj Mithal & S.V.N. Bhatti, JJ.
• Shrutanjay Bhardwaj, Siddhi Nagwekar, Aayushman Aggarwal, Advs., Raghunatha Sethupathy B., K. Paari Vendhan, Aors & Ms Haripriya Padmanabhan, Sr. Adv. for the Petitioner.
• S.D Sanjay, A.S.G., Ms Aurnima Diwedi, Rajeev Ranjan, Dharmendra Kumar Pandey, Raman Yadav, Saurabh Kumar Kaushik, Advs., Amrish Kumar, Raj Bahadur Yadav & Gurmeet Singh Makker, Aors for the Respondent.

Facts of the Case

In the instant case, the Government of India/DAE issued Office Memorandum No. 12/7/69-(P) for the constitution of a Board to administer the Heavy Water Production Projects of the DAE. The HWP in Tuticorin is one of the Heavy Water Boards established by the DAE. The circumstance precipitating a dispute between the retired employees and HWP can be traced to one of the pension payment orders issued by HWP. The pension payment order in favour of retired employee, was issued under the CCS (Pension) Rules, 1972. The CCS (Pension) Rules, 1972 deal with comprehensively the retirement benefits to which a retired employee is entitled, including gratuity.

The sum payable as gratuity under the PG Act and CCS (Pension) Rules, 1972, is less than the sum payable under the PG Act. This led to an employee of HWP filing an application before the Controlling Authority under the PG Act. The Controlling Authority held that the provisions of the PG Act are attracted to the employees of HWP, and a direction was ordered to pay the difference between the PG Act and CCS (Pensions) Rules, 1972. The Controlling Authority, on jurisdictional fact and the applicability of the PG Act, held that HWP, constitutes an industry under the Industrial Disputes Act, 1947, making the applicant-employee eligible for coverage under Section 1(3)(b) of the PG Act.

HWP, Tuticorin, challenging the Order of the Controlling Authority, filed an appeal before the Deputy Chief Labour Commissioner, and the appeal filed was dismissed. HWP assailed the orders before the High Court in Writ Petition and batch, which were dismissed, resulting in the filing of Writ Appeal. HWP filed Writ Petition and batch challenging the subsequent orders of the Controlling Authority directing payment of the difference of gratuity to the retired employees of HWP.

Supreme Court Held

The Division Bench of the High Court of Madras dealt with the Writ Appeals as lead cases and, by the Impugned Judgment, and allowed the Writ Appeals as well as Writ Petitions filed by HWP. The Impugned Judgment held and declared that the employees of HWP are not covered by the definition of section 2(e) of the PG Act. Then, an appeal was made before the Supreme Court.

List of Cases Reviewed

• Madras High Court order dated 21.06.2023 in Writ Appeal No. 1687 of 2021 (Para 14) affirmed

List of Cases Referred to

• Union of India v. Regional Labour Commissioner (Central) [W. P. Nos. 23577 to 23579 of 2015, dated 29-1-2016] (para 6)
• Municipal Corporation of Delhi v. Dharam Prakash Sharma (1998) 7 SCC 22 (para 7)
• Arun Kumar v. Union of India [2006] 155 Taxman 659 (SC) (para 10)
• Mahalakshmi Oil Mills v. State of A.P. 1990 taxmann.com 1344 (SC) (para 12)
• P. Kasilingam v. P.S.G. College of Technology (1995) supp 2 SCC 348 (para 12).

The post Heavy Water Plant Employees Not Covered by Gratuity Act | SC appeared first on Taxmann Blog.

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The Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) has invited comments from stakeholders on an exposure draft issued by the International Accounting Standards Board (IASB) relating to amendments to IAS 28, Investments in Associates and Joint Ventures.

Indian Accounting Standards (Ind AS) are largely converged with the IFRS Standards issued by the IASB under the IFRS Foundation. Before issuing new standards or amendments, the IASB releases consultative documents such as Discussion Papers (DPs) and Exposure Drafts (EDs) to seek feedback from stakeholders worldwide. In line with this process, the ASB of ICAI circulates these consultative documents in India to provide an opportunity for Indian stakeholders to submit their views at an early stage of international standard-setting. This also enables entities in India to remain informed about potential changes and prepare for the implementation of Ind AS in line with global developments.

Recently, the IASB issued an exposure draft proposing amendments to IAS 28, specifically relating to the fair value option. The exposure draft proposes amendments to paragraphs 18 and 19 of IAS 28 to clarify that an entity whose main business activity involves investing in particular types of assets, as described in paragraph 49(a) of IFRS 18, would be eligible to elect the fair value option for investments in associates and joint ventures.

Stakeholders may submit their comments on the exposure draft by 2nd April 2026.

Click Here to Access the ICAI Notification

Click Here To Read The Full Story

The post ICAI Invites Comments on IAS 28 Exposure Draft appeared first on Taxmann Blog.

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Case Details: Sahjun Impex Trading (P.) Ltd. vs. Patheja Forgings & Auto Parts Manufacturing Ltd. - [2026] 184 taxmann.com 39 (HC-Bombay)

Judiciary and Counsel Details

• Arif S. Doctor, J.
• Zubin Behramkamdin, Sr. Adv., M. Damania, Ms Sakshi Kashyap & Ms Kaizeen Mistry, Advs. for the Applicant.
• Siddharth Samantray, Vinod Kothari, Kshitij Parekh, Manoj Vishwakarma, Ms Vishakha B., Ms Niyati Merchant, Ranjeev Carvalho, Satyajit Roul & Anil Bhagure, Advs. for the Respondent.

Facts of the Case

In the instant case, the company was already under the winding-up when the applicant, an assignee holding more than 50 per cent of the financial debt, sought transfer of proceedings to the National Company Law Tribunal (NCLT) under section 434(1)(c) of the Companies Act, 2013 for initiation of the Corporate Insolvency Resolution Process (CIRP) under Insolvency Bankruptcy Code (IBC), contending that the winding-up had not reached an irreversible stage.

The Official Liquidator disclosed that some assets were with the Debt Recovery Tribunal (DRT) Receiver, some had been sold outside the winding-up, certain assets remained in its possession, one Pune property had been sold under the court order, and claims of about 476 workmen and creditors were under verification.

In the Opposing transfer, the Official Liquidator submitted that irreversible steps had been taken and that workmen would be prejudiced under the IBC, while seeking protection for their pending claims before the NCLT.

The IFCI and the other supporting creditors opposed the transfer, citing the DRT recovery proceedings, the sale of the mortgaged assets, the Board for Industrial and Financial Reconstruction (BIFR) history, the company’s non-viability, and alleged suppression by the applicant.

In rejoinder, the applicant submitted that the secured creditors’ enforcement outside winding-up did not bar the transfer, the Official Liquidator had taken only limited steps, and no irreversible stage had been reached.

It was noted that the IBC is a special enactment intended to provide a comprehensive, uniform and time-bound mechanism for the resolution of corporate insolvency, replacing the earlier regime under the Companies Act.

Further, the legislative intent and scheme of the IBC is to give primacy to resolution over liquidation. The transfer of winding-up proceedings to the NCLT ought to be refused only when the Court reaches an irresistible conclusion that the company has reached the stage of ‘corporate death’, rendering revival impossible.

High Court Held

The High Court observed that the sale of assets by the secured creditors enforcing a security interest while standing outside a winding-up does not, by itself, constitute an irreversible step to bar transfer under section 434(1)(c) of the Companies Act, 2013.

Further, the High Court observed that the fact that revival under the Sick Industrial Companies Act (SICA) did not materialise is not by itself sufficient to assume that revival under the IBC would fail. The objection that transfer to the NCLT would prejudice the workmen could not be accepted as a ground for refusing the transfer.

The High Court held that the transfer of the company petition to the NCLT would not ipso facto invalidate actions taken by the secured creditors or orders passed by the High Court in pending legal proceedings. Thus, the applicant had made out a case for transfer of proceedings to the NCLT under section 434(1)(c) of the Companies Act, 2013.

List of Cases Reviewed

• A. Navinchandra Steels (P.) Ltd. v. SREI Equipment Finance Ltd. [2021] 125 taxmann.com 50 (SC) (para 35) followed

List of Cases Referred to

• Action Ispat & Power (P.) Ltd. v. Shyam Metalics & Energy Ltd. [2020] 122 taxmann.com 147 (SC)/[2021] 164 SCL 375 (SC) (para 4)
• A. Navinchandra Steels (P.) Ltd. v. SREI Equipment Finance Ltd. [2021] 125 taxmann.com 50 (SC) (para 5)
• Moser Baer Karamchari Union v. Union of India [2023] 150 taxmann.com 43 (SC)/[2023] 178 SCL 229 (SC) (para 30)
• Forech India Ltd. v. Edelweiss Assets Reconstruction Company Limited and Anr [2019] 101 taxmann.com 451 (SC)/[2019] 152 SCL 145 (SC) (para 31).

The post HC Allows Transfer to NCLT Under Section 434 appeared first on Taxmann Blog.

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G.S.R. 158(E), dated 05-03-2026

The following are the key amendments that have been introduced in the Rules:

a) The definition of the term “central bank digital currencies” has been inserted in the Explanation to Rule 114F(1)(a).

b) The threshold limit of USD 10,000 has been inserted for the depository account, which represents all specified electronic money products held for the benefit of a customer.

c) The term “financial asset” has been amended to include any interest (including a futures or forward contract or option) in a relevant crypto-asset.

d) The definition of the term “depository institution” has been amended to include an entity that holds specified electronic money products or central bank digital currencies for the benefit of customers.

e) The term “exchange transaction” has been defined to mean any exchange between relevant crypto-assets and fiat currencies and any exchange between one or more forms of relevant crypto-assets.

f) The term “relevant crypto-asset” has been defined to mean any crypto-asset that is not a Central Bank Digital Currency or specified electronic money product or for which the reporting crypto-asset service provider has adequately determined that it cannot be used for payment or investment purposes.

g) The term “Specified Electronic Money Product” has been defined to mean any product that satisfies the following criteria:

1) A digital representation of a single fiat currency;

2) Issued on receipt of funds for making payment transactions.

3) Represented by a claim on the issuer denominated in the same fiat currency;

4) Accepted in payment by a natural or legal person other than the issuer; and

5) Redeemable at any time and at par value for the same fiat currency upon the holder’s request.

Click Here To Read The Full Update

The post CBDT Amends Rules 114F–114H for Crypto Reporting appeared first on Taxmann Blog.

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ORDER NO. S.O. 1163(E), Dated: 06.03.2026

The Central Government has authorised the Chairperson of the Debts Recovery Appellate Tribunal (DRAT), Chennai to also discharge the functions of the Chairperson of the Debts Recovery Appellate Tribunal, Mumbai for deciding the appeal in the matter of ‘Bharti G. Patel vs Punjab National Bank & Ors.’

1. Additional Charge for Specific Appeal

The authorisation allows the Chairperson of DRAT Chennai to hear and decide the appeal pending before DRAT Mumbai in the above-mentioned matter. This assignment is granted in addition to his existing responsibilities as the Chairperson of DRAT Chennai.

2. Purpose of the Authorisation

The decision has been taken to facilitate the adjudication of the appeal and ensure the continuity of appellate proceedings before DRAT Mumbai in the specified case.

3. Case Covered Under the Authorisation

The authorisation specifically applies to the appeal in the case of ‘Bharti G. Patel vs Punjab National Bank & Others.’

Accordingly, the Chairperson of DRAT Chennai will exercise the powers and functions of the Chairperson of DRAT Mumbai solely for the purpose of deciding this appeal.

Click Here To Read The Full Update 

The post Govt. Authorises DRAT Chennai Chairperson for Mumbai Case appeared first on Taxmann Blog.

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Case Details: Sumit H. Bhagchandani vs. Deputy Commissioner of Income-tax [2026] 183 taxmann.com 686 (Ahmedabad-Trib.)

Judiciary and Counsel Details

• Siddhartha Nautiyal, Judicial Member & Narendra Prasad Sinha, Accountant Member
• Parin Shah, AR for the Appellant.
• Yogesh Mishra, Sr. DR for the Respondent.

Facts of the Case

The assessee had long-term capital gains arising from the sale of a plot of land. He claimed exemption under section 54F. The assessee computed long-term capital gains on his one-fourth share in the sale of land. The total sale consideration attributable to the assessee was Rs. 3.82 crores. Against the said capital gains, the assessee claimed a deduction under section 54F comprising actual expenditure of Rs. 33.36 lakhs incurred towards the construction of a residential house and a sum of Rs. 2.25 crores deposited in the Capital Gains Account Scheme.

Assessing Officer (AO) applied a statutory formula under section 54F and restricted the deduction to the proportionate amount. The AO contended that the entire amount claimed as a deduction under section 54F was not invested in the new residential house, and an excess deduction was claimed. On appeal, the CIT(A) upheld the order of the AO. The aggrieved assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that section 54F provides an exemption from long-term capital gains, subject to the fulfilment of specified conditions, and prescribes an unambiguous formula for determining the deduction quantum. The deduction allowable is equal to the capital gain multiplied by the ratio of the cost of the new asset to the net consideration received. Section 54F(4) permits the assessee to deposit the unutilized portion of the net consideration in the Capital Gains Account Scheme before the due date of filing of the return to preserve the eligibility for exemption. However, the said provision does not dispense with the computation mechanism prescribed under section 54F(1).

In the instant case, the figures were undisputed. The assessee considered the actual expenditure on the construction of a new residential house and the amount deposited in the CGAS as the cost of the new asset. Upon application of the statutory formula, the allowable deduction was computed, leaving an excess claim of Rs. 3.91 lakhs. The AO neither denied the benefit of section 54F nor disputed the assessee’s eligibility. The disallowance was purely arithmetical and arose from the application of the statutory formula.

The CIT(A) rightly held that mere deposit in the Capital Gains Account Scheme does not automatically entitle the assessee to the deduction of the entire amount claimed unless such deposit is translated into actual or irrevocably committed investment towards the new residential house. Accordingly, the appeal was to be dismissed.

List of Cases Referred to

• Humayun Suleman Merchant v. Chief CIT [2016] 73 taxmann.com 2/242 Taxman 189/387 ITR 421 (Bombay) (para 14)
• CIT v. K Ramachandra Rao [2015] 56 taxmann.com 163/230 Taxman 334 (Karnataka) (para 14).

The post ITAT Upholds Disallowance of Excess Section 54F Claim appeared first on Taxmann Blog.

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Case Details: British Airways PLC vs. Assistant Commissioner of Income-tax, (Int. Tax) [2026] 184 taxmann.com 3 (Delhi)

Judiciary and Counsel Details

• Dinesh Mehta & Vinod Kumar, JJ.
• Vishal Kalra, Anil Kumar & S.S. Tomar, Advs. for the Petitioner.
• Anurag Ojha, SSC for the Respondent.

Facts of the Case

The petitioner, British Airways PLC, was a company and a tax resident of the United Kingdom. The disputed services fall under Airline services, which are essentially “Operation of Airline & Cargo Service”. The petitioner was operating in India under a Tax Residency Certificate issued by the UK authorities. The petitioner’s income was exempt under Article 8 of the India-UK Double Taxation Avoidance Agreement (DTAA), read with Section 90 of the Income Tax Act.

The petitioner applied for a certificate under Section 197 of the Income Tax Act from the competent authority. The application was made for the transactions, which amounted to roughly Rs. 3.98 crores. Surprisingly, a certificate at 0.1% has been issued to it, even though a NIL rate certificate was issued for the earlier part of the current Financial Year (2025-26).

Aggrieved by the order, the petitioner filed a writ petition to the Delhi High Court.

High Court Held

The High Court held that the main reason for issuing the certificate at 0.1% was the fact that there were outstanding demands for assessment years 2013-14, 2014-15, 2015-16 and 2016-17, as per the ITBA portal, which turned out to be incorrect. It was to be noted that the petitioner’s assessment had been made, and so far as airline services are concerned, no tax was payable.

Further, it was noted that a certificate at NIL rate had been issued for the last fifteen-sixteen years, and even for part of the current financial year, a certificate at 0.1% cannot be countenanced. It reflected the non-application of mind by the competent authority on the one hand, showed an inconsistent approach by the officers of the country, and thus portrayed an unhealthy picture of the bureaucracy.

Accordingly, the writ petition was allowed, and the impugned order and certificate were set aside. The competent authority was directed to issue a certificate at a NIL rate.

The post HC Directs NIL TDS Certificate for British Airways Under DTAA appeared first on Taxmann Blog.

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