Delhi HC Quashes Denial of MakeMyTrip’s NIL Withholding Tax Certificate Application [Read Order]

In a recent ruling, the Delhi High Court set aside the Income Tax Department’s rejection of an application for a NIL/lower withholding tax certificate under Section 197 of the Income Tax Act, 1961, holding that the rejection was arbitrary and unsupported by statutory reasoning.

The matter arose after MakeMyTrip filed an application in May 2025 seeking a NIL withholding certificate under Section 197 of the Act, or a certificate at the rate of 0.30%, for FY 2025‑26. The Deputy Commissioner of Income Tax (TDS), Gurugram, rejected the request in July 2025, citing outstanding demands of over ₹23.80 crore against the company’s Tax Deduction and Collection Account Number (TAN).

The petitioner, MakeMyTrip, argued that it had substantially carried‑forward losses, resulting in NIL taxable income for FY 2025‑26. It further submitted that, in the three preceding years, the Revenue had consistently granted certificates at 0.30%, and that no change in facts or law justified a departure and pointed out that most of the alleged demands were disputed, pending rectification or appeal, and had already been substantially reduced to ₹14.08 crore.

Also refunds of over ₹84 crore were due to the company, placing the Revenue in a net payable position.

In support of their submissions, they relied on precedents such as Radhasoami Satsang v. CIT (1992), Lufthansa Cargo AG v. DCIT, etc . they also pointed out that the action of the respondents strikes at the core constitutional principles of certainty, consistency and non-arbitrariness in tax administration.

On the other hand, the respondent argued that MakeMyTrip’s application for a NIL/lower TDS certificate was rightly rejected because of substantial outstanding tax demands against its PAN and TANs, many of which were collectable and not stayed. The Revenue also pointed out that survey operations and subsequent orders under Sections 201(1)/(1A) had raised demands of nearly ₹20.5 crore, later reduced to ₹9.11 crore, but still enforceable.

They stated that Section 197 certificates are interim and provisional, not binding for subsequent years, and past issuance of lower‑rate certificates does not create a vested right. They also relied on CBDT instructions cautioning against indiscriminate issuance of certificates and cited precedents to argue that judicial review in such matters is narrow, res judicata does not apply, and the petition should be dismissed with costs.

After hearing both sides, the high court first rejected the Revenue’s objection on territorial jurisdiction, noting that although the impugned certificate was issued from Gurugram, past certificates and related orders had consistently come from the Delhi TDS Circle, and the certificate itself was addressed to the petitioner’s Delhi office.

The bench of Justice V.Kameswar Rao and Justice Vinod Kumar found that MakeMyTrip had consistently been granted lower‑rate certificates in earlier years (0.30% most recently) and that the rejection order was a non‑speaking order which failed to apply Rule 28AA’s parameters.

It noted that the alleged demand of ₹23.80 crore had already been reduced to ₹14.08 crore by rectification orders, and that the Revenue had not explained the basis of certain amounts. Since the rejection ignored pending refunds, past certificates, and the statutory formula, the Court held it to be arbitrary.

The court quashed the impugned order dated 17.07.2025, and the matter was remanded to the Assessing Officer to reconsider and issue a reasoned, speaking order under Section 197 within two weeks.

Accordingly, the writ petition was allowed on these terms.

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