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December 2022

(A) Double taxation avoidance — Deduction of tax at source — Effect of section 90 — Provisions of DTAA applicable wherever more beneficial to assessee — Contract between Indian company and American company — Provisions of DTAA more beneficial for purposes of deduction of tax at source — Provisions of DTAA applicable — Definition in DTAA of technical services more beneficial to assessee — Tax not deductible at source as payment to American company by way of reimbursement of employees of American company seconded to it.
(B) Deduction of tax at source — Certificate for deduction at lower rate or nil deduction — Difference between sections 195 and 197 — Application u/s 195 to be made by person making payment.

By K. B. Bhujle, Advocate
Reading Time 6 mins
57. Flipkart Internet Pvt. Ltd. vs. Dy. CIT(IT)
[2022] 448 ITR 268 (Kar.)
A.Y.: 2020-21
Date of order: 24th June, 2022
Ss. 90, 195 and 197 of ITA, 1961 and
Art.12 of India-US DTAA

(A) Double taxation avoidance — Deduction of tax at source — Effect of section 90 — Provisions of DTAA applicable wherever more beneficial to assessee — Contract between Indian company and American company — Provisions of DTAA more beneficial for purposes of deduction of tax at source — Provisions of DTAA applicable — Definition in DTAA of technical services more beneficial to assessee — Tax not deductible at source as payment to American company by way of reimbursement of employees of American company seconded to it.

(B) Deduction of tax at source — Certificate for deduction at lower rate or nil deduction — Difference between sections 195 and 197 — Application u/s 195 to be made by person making payment.

The assessee was engaged in the business of providing information technology solutions and support services for the e-commerce industry. In the course of its business, the assessee made payments in the nature of ‘pure reimbursements’ to W of USA for the A.Y. 2020-21 and requested the Department for issuance of a ‘certificate of no deduction of tax at source’. The payment of salaries to the deputed expatriate employees was made by W for administrative convenience and the assessee made reimbursements to W. W
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