SFDC Ireland Limited Vs CIT (Delhi High Court)
The Delhi High Court examined a writ petition challenging an order dated 26 September 2025 and a corresponding certificate dated 11 September 2025 issued under Section 197 of the Income Tax Act, 1961, which required deduction of tax at source at 10% on payments made to the petitioner. The petitioner, a company incorporated and tax resident in Ireland, is engaged in providing standardized, cloud-based customer relationship management platforms through a reseller in India. It asserted that it had no place of business, employees, or permanent establishment in India under the India–Ireland Double Taxation Avoidance Agreement.
The petitioner contended that in earlier financial years, certificates requiring deduction at 10% and 2% had been set aside by the High Court, and nil-rate certificates were ultimately issued. For the year under consideration, despite no change in facts or nature of transactions, the competent officer again issued a 10% certificate, followed by a brief order stating that Section 197 certificates were only interim and subject to final assessment. The petitioner argued that the order was mechanical, lacked reasons on taxability, ignored binding precedents in its own case, and was driven by revenue considerations rather than an objective assessment.
