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Google Asia Pacific Pte Ltd vs Commissioner Of Income Tax & Ors on 14 September, 2022

Author: Manmohan

Bench: Manmohan, Manmeet Pritam Singh Arora

                              $~2
                              *     IN THE HIGH COURT OF DELHI AT NEW DELHI
                              +     W.P.(C) 12045/2022 & C.M.No.36000/2022
                                    GOOGLE ASIA PACIFIC PTE LTD                             ..... Petitioner
                                                       Through:     Mr.Deepak Chopra with Mr.Anmol
                                                                    Anand and Ms.Priya Tandon,
                                                                    Advocates.
                                                       versus

                                    COMMISSIONER OF INCOME TAX & ORS. ..... Respondents
                                                       Through:     Mr.Sunil Agarwal, Sr.Standing
                                                                    Counsel for the Revenue with
                                                                    Mr.Tushar Gupta and Mr.Utkarsh
                                                                    Tiwari, Advocates.
                              CORAM:
                              HON'BLE MR. JUSTICE MANMOHAN
                              HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
                                                ORDER

% 14.09.2022

1. Present writ petition has been filed challenging the certificate dated 18th July, 2022 issued under Section 195(2) of the Income Tax Act, 1961 ('the Act') directing the Google Cloud India Pvt. Ltd. (GCI) i.e., Respondent No.3 to deduct tax at source at the rate of 10% at the time of making payment to the Petitioner. The Petitioner further seeks a direction to permit GCI to make payments to the Petitioner without deduction of tax at source during financial year 2022-23 relevant to assessment year 2023-24 under the Google Cloud Services Reseller Agreement dated 01.08.2017.

2. Learned counsel for the Petitioner submits that WP(C) 8720/2021 i.e., Sumo Logic vs. Commissioner of Income Tax International Taxation & Signature Not Verified Digitally Signed By:JASWANT SINGH RAWAT Signing Date:15.09.2022 19:25:31 Anr, which involves similar issue and where pleadings are complete, is next listed for hearing before this Court on 13th January, 2023.

3. Learned counsel for the Petitioner also submits that similar issue had come up in the Petitioner's case for the earlier financial year, which is under challenge in WP(C) 215/2022, whereby, this Court vide order dated 03rd February 2022 had directed the Respondent Nos.1 and 2 to file their counter affidavits within six weeks. He states that the said counter affidavits have been filed on 26th August, 2022 and that the Petitioner will file its rejoinder affidavits within four weeks. Accordingly, he prays that the present writ petition be listed on 13th January, 2023 along with WP(C) 8720/2021 for final hearing.

4. Issue notice. Mr. Sunil Agarwal, learned senior standing counsel accepts notice on behalf of Respondent Nos.1 and 2. He prays for and is permitted to file a counter affidavit within six weeks. Rejoinder affidavit, if any, be filed before the next date of hearing.

5. Registry is directed to tag the present writ petition along with WP(C) No.8720/2021 and list for final hearing on 13th January, 2023.

6. In support of the interim application, learned counsel for the Petitioner relies on the arrangement accepted by this Court in C.M. No.603/2022 in WP(C) 215/2022, whereby this Court had permitted the Petitioner to receive payments from GCI under the Google Cloud Reseller Agreement dated 01st August, 2017 subject to a deduction of 8% (inclusive of cess and surcharge) to be paid by it to the Respondent No.2 progressively.

7. Learned counsel for the Petitioner submits that appropriate directions may be issued in this regard towards the interim arrangement in connection with financial year 2022-23 relevant to the assessment year 2023-24 as well. He submits that given this interim arrangement, although the impugned order directs 10% withholding, the deposit of 8% by GCI plus 2% Equalisation Levy admittedly being paid by GCI on remittances to the Petitioner should not be construed as any non-compliance of the impugned order so as to attract the provisions of Section 201 of the Act on GCI.

8. We have perused the operative part of the impugned order (page 81 of the writ petition), wherein the Respondent No. 2 has made the payments under consideration liable for a withholding at the rate of 10% in accordance with section 115A of the Act read with the DTAA. We direct that purely as an interim measure, the Petitioner would be entitled to receive its payment from GCI subject to a deduction of 8% to be paid progressively for financial year 2022-23 relevant to assessment year 2023-24 as well. This interim arrangement is being made under the orders of this Court. The deposit of 8% should not be treated as any non-compliance of the impugned order.

9. With the aforesaid direction, present application stands disposed of.

MANMOHAN, J MANMEET PRITAM SINGH ARORA, J SEPTEMBER 14, 2022/KA Signature Not Verified Digitally Signed By:JASWANT SINGH RAWAT Signing Date:15.09.2022 19:25:31