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2023 (1) TMI 782 - HC - Income TaxOrders/certificates u/s 197 - rate of withholding tax - although the petitioner had sought issuance of certificates u/s 197 of the Act at “Nil” rate for the aforementioned FYs, the certificates were issued pegging the withholding tax at 4% - HELD THAT:- We are of the view, that the best way forward will be that a certificate under Section 197 is issued, pegging the withholding tax rate at 4%, which was also the position that obtained in FYs 2019-2020, 2020-2021 and 2021-2022. Mr Jolly has informed us, that for FY 2019-2020 (AY 2020-2021) and FY 2020-2021 (AY 2021-2022), return has been filed, wherein subject income was offered for tax at 4%. Mr Jolly says, that intimation under Section 143(1) of the Act has been issued. What is, in substance, the issue, is: whether the subject income earned by the petitioner can be treated as Fees for Technical Services (FTS), as is contended by the respondents/revenue. Concededly, the Double Tax Avoidance Agreement obtaining between India and UAE does not contain any article concerning FTS. The petitioner, who is a non-resident and does not have a PE in India, claims that the subject income is “business income.” It is because of these varying stands, that a dispute arose with regard to the rate at which withholding tax had to be pegged. Thus, for the foregoing reasons, the rate of withholding tax, for the moment, will be pegged at 4%. The respondents/revenue will issue a certificate under Section 197 of the Act as expeditiously as possible, though not later than two weeks from today. The aforesaid direction has been issued without prejudice to the rights and contentions of both parties.
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