INCOME TAX OFFICER WARD-1(2)(1), INTL. TAXN., DELHI vs. CONCENTRIX DAKSH SERVICES INDIA PRIVATE LIMITED, DELHI

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ITITA 19/DEL/2025Status: DisposedITAT Delhi18 March 2026AY 2023-245 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the appeal of the Revenue. The Tribunal noted that the Revenue's primary contention was that the Hon'ble Supreme Court in the case of Nestlé SA & Others (Civil Appeal No. 1420 of 2023) had reversed the decision of the Hon'ble High Court relied upon by the CIT(A). The Supreme Court had categorically held that the benefit of the Most-Favoured Nation (MFN) clause is not available in the absence of a specific notification, thereby settling that the applicable rate of tax on dividend payments under Article 10 of the India-Netherlands DTAA is 10%. The Tribunal also noted that the assessee had not controverted these facts and had, in compliance with the Supreme Court's judgment, suo motu deposited the differential tax and filed revised TDS returns. Therefore, in view of the settled legal position established by the Hon'ble Supreme Court, the Tribunal found no reason to interfere with the demand raised by CPC-TDS. The Tribunal clarified that the assessee's application for waiver of interest was not impacted by this order.

What were the facts?

The Revenue is in appeal against the order dated 09.08.2023, passed by the CIT(A)/NFAC, Delhi, for Assessment Year 2023-24. The assessee, Concentrix Daksh Services India Pvt. Ltd., is an Indian company. For the quarter ended December 2022, the assessee filed its TDS statement, and CPC-TDS issued an intimation raising a demand of Rs.12,76,23,600/- under Section 200A of the Income Tax Act, 1961, due to short deduction of TDS under Section 195 on dividend payments made to its non-resident shareholder, Concentrix Services (Netherlands) B.V. The assessee had paid a dividend of Rs.2,45,43,00,000/- and deducted TDS at 5% instead of the prescribed 10%. The CIT(A) had allowed relief to the assessee on merits.

What were the issues?

1. Whether the Ld. Commissioner of Income Tax (Appeals) erred in deleting the adjustment made by CPC-TDS under section 200A of the Act, whereby short deduction of tax at source was computed on dividend payments made by the assessee to its non-resident shareholder, M/s. Concentrix Services Netherlands B.V., and whether the applicable rate of tax on dividend payments under Article 10 of the India-Netherlands DTAA is 10% in light of the Hon'ble Supreme Court judgment in Civil Appeal No. 1420 of 2023 (Nestlé SA & Others). Assessee's contention (as per CIT(A)'s order): The assessee contended that it deducted tax at 5% based on the Most-Favoured Nation (MFN) clause in the India-Netherlands DTAA, which allowed for a lower rate of 5% as per DTAAs with Lithuania and Colombia. The assessee relied on a Delhi High Court judgment allowing TDS at 5% and stated that the SLP filed by the Revenue was neither stayed nor reversed. Revenue's contention: The Revenue argued that the Delhi High Court decision relied upon by the CIT(A) was reversed by the Hon'ble Supreme Court in the Nestle SA & Others case, which held that the MFN clause benefit is not available without a specific notification, thus the applicable rate is 10% under Article 10 of the DTAA. The Revenue also pointed out that the assessee subsequently deposited the differential tax and filed revised TDS returns, admitting the correct legal position.

Which sections of the Income-tax Act were involved?

Section 200A,Section 195,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI

Hearing: 18.03.2026Pronounced: 18.03.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘D’, NEW DELHI Before Sh. Vikas Awasthy, Judicial Member & Sh. Renu Jauhri, Accountant Member IT(IT)A No. 19/Del/2025 : Asstt. Year : 2023-24 Income Tax Officer, Vs Concentrix Daksh Services India Pvt. Ltd., Unit 101, 1st Floor, Ward-1(2)(1), Westend Mall, 3rd Level, Main International Taxation, New Delhi-110002 Najafgarh Road, District Centre Janakpuri, New Delhi-110058 (APPELLANT) (RESPONDENT) PAN No. AABCD4187D Assessee by : Sh. Sohum Dua, Adv. Revenue by : Sh. Saroj Kumar Dubey, CIT-DR Date of Hearing: 18.03.2026 Date of Pronouncement: 18.03.2026 ORDER Per Renu Jauhri, Accountant Member: The above captioned appeal is preferred by the Revenue against the order dated 09.08.2023, passed by CIT(A)/NFAC, Delhi, u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2023-24.

2.

The Revenue has raised the following grounds of appeal:

“1. That the Ld Commissioner of Income Tax (Appeals), erred in deleting the adjustment made by the CPC-TDS under section 200A of the Act, whereby short deduction of tax at source was computed on dividend payments made by the assessee to its non-resident shareholder, M/s. Concentrix Services Netherlands B.V. 2. That the order of the Ld. CIT(A) granting relief to the assessee is unsustainable in view of the subsequent judgment of the Hon'ble Supreme Court in Civil Appeal No. 1420 of 2023 (Nestlé SA & Others), wherein it has been categorically held that the benefit of the MFN

2 IT(IT)A No. 19/Del/2025 Concentrix Daksh Services India Pvt. Ltd. clause is not available in the absence of a specific notification, thereby conclusively settling that the applicable rate of tax on dividend payments under Article 10 of the said DTAA is 10%. 3. That the assessee itself, in compliance with the judgment of the Hon’ble Supreme Court, accepted the higher rate of 10% and suo moto deposited the differential tax and filed revised TDS returns, thereby admitting the correct legal position, notwithstanding the relief granted by the Ld. CIT(A). 4. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at or before the hearing of the appeal.” 3. At the outset, ld. AR pointed out that the appeal of the Revenue is time barred as the order of ld. CIT(A) is dated 09.08.2023 though the date of receipt of the same is stated to be 20.08.2025. In this regard, ld. AR has submitted that there were no delay as the order of ld. CIT(A) was received on 21.08.2025 and therefore the appeal has been filed within time. An affidavit of the AO has been submitted in this regard.

4.

Brief facts are that the assessee is an Indian company which is engaged in rendering business process outsourcing (BPO) services to its group companies and Indian customers. Concentrix Services (Netherlands) B.V. incorporated in Netherlands and a tax resident of Netherlands holds 99.99% of the shares of the assessee company. For the quarter ended December 2022, the assessee filed its quarterly TDS statement in Form 27Q on 27.01.2023. An intimation dated 03.02.2023 was issued by CPC-TDS raising demand of Rs.12,76,23,600/-

3 IT(IT)A No. 19/Del/2025 Concentrix Daksh Services India Pvt. Ltd. u/s 200A of the Act on a/c of short deduction of TDS u/s 195 [@5% as against 10% prescribed] on dividend part to Concentrix Netherlands. The assessee had paid the following dividend: Name of PAN of the Country of Amount paid TDS Shareholder Shareholder Residence (in INR) section Concentrix AAFCC5402N Netherlands 2,45,43,00,000 Section Netherlands 195

4.1 Aggrieved the assessee preferred an appeal before ld. CIT(A). It was contended by the assessee that the deducted tax @5% instead of 10% in view of the following facts:

“Article-10(2) of the India-Netherlands Double Taxation Avoidance Agreement (“India- Netherlands DTAA”) allows India to tax dividends paid by a resident of India to a resident of the Netherlands, however, the rate of tax cannot exceed 10%. However, in terms of Clause IV of the protocol appended to the India Netherlands DTAA, if India agrees to a lower rate of taxation of dividends with a member of the OECD, then such reduced rate of taxation is automatically read into the India-Netherlands DTAA. This is referred to as the Most-Favoured Nation (“MFN”) clause. After the signing of the India- Netherlands DTAA, India entered into DTAA’s with Lithuania and Colombia, which are both OECD countries, wherein lower rate of taxation of 5% is prescribed for dividends. As a corollary, the lower rate of 5% is read into the India-Netherlands DTAA and shall apply to the payment of dividend made by the Appellant to Concentrix Netherlands. ............... The Hon’ble High Court allowed the writ petition filed by Concentrix Netherlands and allowed tax deduction at source at the rate of 5% on dividend payments to be made by the Appellant to Concentrix Netherlands and held that the lower withholding tax certificate providing TDS rate of 10% should be quashed. While the Revenue Department has filed a Special Leave Petition (‘SLP’) before the Hon’ble Supreme Court against the aforementioned order of the Hon’ble Delhi High Court, the order of the Hon’ble Court still continues to

4 IT(IT)A No. 19/Del/2025 Concentrix Daksh Services India Pvt. Ltd. apply and has neither been stayed nor reversed by the Hon’ble Supreme Court.”

Ld. CIT(A) allowed relief to the assessee on merits in view of the decision of the Hon’ble Delhi High Court dated 22.02.2021 whereby the writ filed by Concentrix Netherlands was allowed.

4.2 Aggrieved by the ld. CIT(A)’s order, the revenue is in appeal before the Tribunal.

5.

It has been contended on behalf of the Revenue that the decision off the Hon’ble High Court relied upon by the ld. CIT(A) stands reversed by the Hon’ble Apex Court in Civil Appeal No. 1420 of 2023 (Nestle SA & Others) wherein it has been categorically held that the benefit of MFN clause is not available in the absence of a specific notification, hence applicable rate of TDS on dividend payments is 10% under Article 10 of the DTAA. It has further been pointed out that in compliance with the judgment of the Hon’ble Supreme Court, the assessee has suo moto deposited the differential tax and filed revised TDS return, notwithstanding the relief granted by the ld. CIT(A).

5.1 Ld. AR has not controverted the above stated facts. He has submitted that an application for condonation of interest has been filed before the ld. CIT(TDS) which is pending.

5 IT(IT)A No. 19/Del/2025 Concentrix Daksh Services India Pvt. Ltd. 6. After hearing rival submissions and in view of the settled legal position in the light of the decision of Hon’ble Supreme Court on the issue, we hereby allow the appeal of the Revenue. It is clarified that the assessee’s application for waiver of interest is in no way impacted by this order.

7.

In the result, the appeal of the Revenue is hereby allowed. Order Pronounced in the Open Court on 18/03/2026. Sd/- Sd/- (Vikas Awasthy) (Renu Jauhri) Judicial Member Accountant Member Dated: 22/04/2026 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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