Delhi High Court: AO Must Form Prima Facie Opinion Regarding Taxability in India Before Rejecting Assessee's Application for TDS Under Section 197 of IT Act

The Delhi High Court in the case SFDC Ireland Limited v. Commissioner of Income Tax & Another observed and has made it clear that before rejecting an application of assessee under Section 197 of the Income Tax Act 1961 for nil TDS or deduction of tax at a lower rate, the assessing officer must form a prima facie opinion regarding the assessee's taxability in India.

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The section 197 of the Income Tax Act 1961 enables an assessee to make an application for a certificate requiring the deduction of tax at a lower rate or no deduction at all if the Assessing Officer is satisfied that the total income of the recipient justifies such nil deduction or deduction at a lower rate.

The Division bench comprising of Justice Vibhu Bakhru and Justice Tushar Rao Gedela was hearing the present matter.