MCKINSEY AND COMPANY INC INDIAN OPERATIONS Vs. UNION OF INDIA MINISTRY OF FINANCE GOVERNMENT OF INDIA

JUDGEMENT

(1.) Rule, made returnable forth with. By consent of the learned Counsel, taken up for hearing and final disposal.

(2.) The Petitioner is a non-resident company incorporated under the laws of the United States of America. The Petitioner operates in India with branches at New Delhi and Mumbai. According to the Petitioner it has received all the requisite approvals from the Government of India and the Reserve Bank. The Petitioner is engaged in the business of providing consultancy on strategic planning and related activities. The Petitioner has filed returns in India from Assessment Year 1993-94. On 8 January 2010 the Petitioner made an application under Section 195(3) of the Income Tax Act, 1961 for Assessment Year 2011-12 to the Second Respondent - the Deputy Director of Income Tax, International Taxation - 4(1) - seeking a nil withholding certificate for payments received for services rendered to clients/ customers, group entities and for interest received on deposits made with banks. The Petitioner has received certificates under Section 195(3) for Assessment Year 1998-99 to Assessment Year 2010-11. During the course of the proceedings the Petitioner was called upon to furnish details, by a letter dated 27 January 2010. The Petitioner filed its response on 3 February 2010. On 24 March 2010 the Petitioner was called upon to show cause as to why its application for a nil withholding certificate under Section 195(3) should not be rejected. The Petitioner filed its response on 25 March 2010. By an order dated 29 March 2010, the Second Respondent has rejected the application of the Petitioner for the grant of a nil withholding certificate for Assessment Year 2011-12.

(3.) The impugned order rejecting the application of the Petitioner for the grant of a certificate under Section 195(3) contains in paragraph 3 the following reasons for declining the request: