VEDANTA NETHERLANDS INVESTMENTS B V vs. DEPUTY COMMISSIONER OF INCOME TAX & ANR.

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W.P.(C)/10907/2022HC DelhiDLHC01027209202209 December 2025Bench: HON'BLE MS. JUSTICE PRATHIBA M. SINGH,HON'BLE MR. JUSTICE SHAIL JAIN3 pages
AI SummaryWithdrawn

What did the High Court hold?

The Delhi High Court, in W.P.(C) 10907/2022, held that the present petition had become infructuous due to subsequent events. The Income Tax Department had made a reference to the GAAR Panel, which issued directions on March 31, 2025. Following these directions, assessments were framed on May 8, 2025, and a penalty was imposed on the petitioner. These subsequent developments, which are the subject matter of W.P.(C) 12256/2025, rendered the challenge in the first writ petition moot. Therefore, W.P.(C) 10907/2022 was disposed of as infructuous. The Court explicitly stated that all arguments and contentions on merit were left open. The operative direction was to dispose of the petition as infructuous.

What were the facts?

The petitioner, Vedanta Netherlands Investments BV, a non-resident company from the Netherlands, sought a certificate for lower withholding tax at 5% on estimated dividend income of approximately Rs 343 crores from M/s. Vedanta Limited, citing the India-Netherlands Double Tax Avoidance Agreement (DTAA). The Income Tax Department rejected this application, issuing a certificate on June 16, 2022, directing withholding tax at 20%. This order and certificate were challenged by the petitioner in W.P.(C) 10907/2022. Subsequently, the Income Tax Department referred the matter to the GAAR Panel, which issued directions on March 31, 2025. Assessments were framed on May 8, 2025, and a penalty was imposed. These subsequent events form the basis of W.P.(C) 12256/2025.

What were the issues?

1. Whether the impugned order dated June 17, 2022, and the certificate dated June 16, 2022, passed by the Income Tax Department, directing withholding tax at 20% on estimated dividend income, are liable to be quashed? (Question of law and fact, concerning Section 197 of the Income Tax Act, 1961 and the India-Netherlands DTAA). 2. Whether the Petitioner is entitled to a certificate for a lower withholding tax rate of 5% on the estimated dividend income for the financial year 2022-23? (Question of law and fact, concerning Section 197 of the Income Tax Act, 1961 and the India-Netherlands DTAA). Assessee's Contentions: The petitioner argued that as a non-resident company and tax resident of the Netherlands with a valid tax residency certificate, and having no place of business or permanent establishment in India, it is entitled to the lower withholding tax rate as per the DTAA. Revenue's Contentions: The revenue, through its impugned order, rejected the application for a lower withholding tax rate and directed withholding at 20%. The judgment does not explicitly record the revenue's specific arguments against the petitioner's claims in the initial writ petition, but the subsequent GAAR Panel directions and assessment orders indicate a dispute regarding the tax treatment.

Which sections of the Income-tax Act were involved?

Section 197

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

W.P.(C) 10907/2022
W.P.(C) 12256/2025

Read from the judgment's own cause title. This page is filed under one of them.

$~21 & 38 * IN THE HIGH COURT OF DELHI AT NEW DELHI +

W.P.(C) 10907/2022

VEDANTA NETHERLANDS INVESTMENTS B V .....Petitioner

Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Himanshu Aggarwal, Adv.

versus

DEPUTY COMMISSIONER OF INCOME TAX & ANR. .....Respondents

Through: Mr. Gibran Naushad, SSC.

AND +

W.P.(C) 12256/2025 & CM APPL. 49952/2025

VEDANTA NETHERLANDS INVESTMENTS BV .....Petitioner

Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Himanshu Aggarwal, Adv.

versus

DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1) &

ANR.

.....Respondents

Through: Mr. Anant Mann, Adv.

CORAM:

JUSTICE PRATHIBA M. SINGH

JUSTICE SHAIL JAIN

O R D E R

09.12.2025 1. This hearing has been done through hybrid mode. W.P.(C) 10907/2022 2. The challenge in this petition was for, inter alia, quashing of the impugned order dated 17th June, 2022 and the certificate dated 16th June, 2022 passed by the Income Tax Department. The further prayer is for issuance of the certificate with a lower withholding tax at the rate of 5% on the estimated dividend income from M/s. Vedanta Limited. 3. The Petitioner had sought the said certificate on the ground that it is a non-resident company incorporated in the Netherlands and is a tax resident of This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 12/12/2025 at 13:45:45 the Netherlands holding a valid tax residency certificate. It claims to have no place of business or office in India, or any permanent establishment in India. 4. The brief background of the case is that in terms of the India- Netherlands Double Tax Avoidance Agreement (hereinafter “DTAA”) the Petitioner had made investment into M/s. Vedanta Limited, an Indian company, through which it was estimated that the Petitioner could receive some dividend income to the tune of approximately Rs 343 crores. On the said basis the Petitioner had projected the computation of income tax to include the said dividend income. The documents etc., were all filed and queries which were also sought by the Income Tax Department were duly replied. 5. However, the impugned order dated 17th June, 2022 was passed rejecting the Petitioner’s application for issuance of the certificate of 5% rate of withholding tax on the estimated dividend income. On the contrary, a certificate dated 16th June, 2022 directing M/s. Vedanta Limited to deduct tax at 20% was issued. 6. It was this order and certificate that was under challenge. The prayer in this writ petition is as under: “(A) a writ in the nature of certiorari, mandamus or any other appropriate writ for quashing of the impugned order dated 17.06.2022 and certificate dated 16.06.2022 passed / issued by Respondent No.1 under section 197(1) of the Income Tax Act, 1961 (‘the Act’) and;

(B) a writ in the nature of certiorari, mandamus or any other appropriate writ or an order directing Respondent No.1 to issue certificate with the lower withholding rate of 5% in favour of the Petitioner for financial year 2022- 23;”

7.

In this petition, on 31st October, 2022 notice was issued in this matter, and thereafter the matter had remained pending. In the meantime, the Income This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 12/12/2025 at 13:45:45 Tax Department had made a reference to the Approving Panel under the General Anti-Avoidance Rules (hereinafter “GAAR Panel”) which gave its directions on 31st March, 2025 after which assessments were framed on 8th May, 2025. After framing of the assessment, a penalty has also been imposed on the Petitioner. 8. The direction of the GAAR Panel and the subsequent assessment and penalty are the subject matter of W.P.(C)12256/2025. In view of the subsequent events which have taken place, the present petition would be infructuous as the challenge has already been mounted to the main assessment order and the penalty in the second writ petition. 9. Accordingly, the present writ petition is disposed of as infructuous. 10. All arguments and contentions on merit are left open. W.P.(C) 12256/2025 & CM APPL. 49952/2025 11. Let a counter affidavit be filed by the Income Tax Department within a period of four weeks as requested. 12. Let rejoinder be filed within 4 weeks, thereafter. 13. Let the scanned record of W.P.(C)10907/2022 be tagged with the present petition and shall be sent along with W.P.(C) 12256/2025 on the next date. 14. Interim order granted on 25th August 2025 shall continue till the next date of hearing. 15. List on 5th May, 2026.

PRATHIBA M. SINGH, J.

SHAIL JAIN, J. DECEMBER 9, 2025/Rahul/msh This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 12/12/2025 at 13:45:45

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