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Case Analysis Refinitiv US LLC vs The Income Tax Officer & Anr 2026 DHC 1506 DB

Synopsis

This judgment, delivered by a Division Bench of the Delhi High Court, disposes of a writ petition filed by a non-resident US company challenging an order under Section 197 of the Income Tax Act, 1961. The petitioner sought a certificate for nil deduction of tax at source on payments received from its Indian distributor for two categories of services: "Matching solutions" and "Support services." The Revenue Authority had granted a certificate at a 15% withholding rate. The High Court, relying on its recent decision in a similar case, held that the petitioner was entitled to a nil rate certificate for the "Matching solutions" service, as the taxability of such income was covered by favorable Tribunal decisions. For the "Support services," the court, noting the relatively small amount involved and the advanced stage of the financial year, upheld the 15% rate for the current year but left the issue open for future assessment, providing detailed procedural directions for the Revenue to follow in subsequent years.

1. Heading for the Judgment

In the High Court of Delhi at New Delhi

W.P.(C) 17674/2025 & CM APPL. 73006/2025

REFINITIV US LLC ....Petitioner
versus
The Income Tax Officer Circle Int. Tax 1(3)(1) New Delhi ....Respondent

Coram: Hon'ble Mr. Justice Dinesh Mehta

Hon'ble Mr. Justice Vinod Kumar

Date of Decision: 17th FEBRUARY, 2026

2. Legal Framework

This judgment operates within the following legal framework:

The Constitution of India:
Article 226: The jurisdiction invoked by the petitioner, empowering the High Court to issue writs for the enforcement of rights and to correct errors of law by statutory authorities.
The Income Tax Act, 1961 (the Act):
Section 197: This is the core provision in dispute. It allows a taxpayer to apply to the Assessing Officer for a certificate for deduction of tax at a lower rate (or nil rate) if the Assessing Officer is satisfied that the total income of the recipient justifies such lower deduction. The provision is designed to prevent excessive deduction of tax at source.
Relevant Charging Sections (by implication): The dispute over taxability implicitly involves sections that define what income is chargeable to tax in India for a non-resident, such as those dealing with "business income" and "fees for technical services" (FTS), and provisions of the Double Taxation Avoidance Agreement (DTAA) between India and the USA.
Principles of Tax Jurisprudence:
Binding Nature of Tribunal Decisions: The court acknowledged that where the taxability of a particular type of income has been consistently decided by the Income Tax Appellate Tribunal (ITAT) in favor of the assessee, the Revenue should generally follow that view, especially when granting a lower withholding tax certificate under Section 197.
Prospective Application of Directions: The court's directions for future years are prospective and contingent on the petitioner's continued compliance with disclosure requirements.

Related Precedents Cited and Relied Upon:

Financial And Risk Organisation Limited v. The Income Tax Officer Int. Tax 1(3)(1) New Delhi, W.P.(C) 17641/2025 (decided on 10.02.2026): (Delhi High Court, coordinate bench) - This was the crucial precedent. In a case involving an almost identical agreement for "Matching solutions," the court had directed the issuance of a nil withholding tax certificate, as the issue was covered by ITAT decisions in favor of the assessee. The present court applied this ratio to the first agreement of the petitioner.

3. Basic Relevant Facts of the Case

The Petitioner: Refinitiv US LLC is a non-resident company incorporated in the USA. It provides financial data products, including foreign exchange matching solutions and support services.
Business in India: The petitioner has a distribution and outsourcing agreement with its Indian group entity, Refinitiv India Transaction Services Private Limited (RITSPL), on a principal-to-principal basis. RITSPL pays consideration to the petitioner for the products and services.
Two Categories of Income:
Agreement 1 (Matching Solutions): For providing global market electronic solutions for trading foreign exchange. The amount involved for the year was Rs. 65,97,09,956/- .
Agreement 2 (Support Services): For maintenance and enhancement of the solutions. The amount involved was a comparatively smaller Rs. 67,40,636/- .
Impugned Order: The petitioner applied under Section 197 for a certificate for nil deduction of tax at source. The Income Tax Officer passed an order dated 22.07.2025 and issued a certificate dated 11.07.2025, directing withholding tax at the rate of 15% on both categories of income.
Petitioner's Contention: The petitioner argued that both categories of income were not taxable in India and therefore warranted a nil withholding certificate. For the Matching solutions, they relied on a recent Delhi High Court decision in a similar case.
Revenue's Contention: The Revenue conceded the point on Matching solutions based on the precedent but argued that the Support services were taxable.

4. Issues in the Judgment

The court addressed the following primary issues:

Taxability of "Matching Solutions": Whether, in light of a recent coordinate bench decision in a similar case, the petitioner was entitled to a nil withholding tax certificate for the income from its Matching solutions agreement.
Taxability of "Support Services": Whether the income from the Support services agreement was taxable in India, and if so, whether the 15% withholding rate was justified.
Disposal of the Writ Petition: How to appropriately dispose of the petition given that the financial year was nearly over and the amount for Support services was relatively small, while the legal issue might require more detailed consideration.

5. Ratio Decidendi (The Reasoning of the Court)

The court's reasoning was pragmatic and sought to balance the rights of the taxpayer with the need for finality in tax administration for the current year.

Matching Solutions (Following Precedent): The court noted that the issue regarding the taxability of income from Matching solutions was no longer res integra. It was covered by the judgment in Financial And Risk Organisation Limited. As the Revenue's counsel could not dispute this, the court held that the petitioner was entitled to a nil rate certificate for this part of its income. The impugned order was set aside to this extent.
Support Services (A Pragmatic Approach): The court acknowledged that both parties had "their own points to canvass" regarding the taxability of the Support services. This indicated a genuine, arguable controversy.
De Minimis and Timing: The court noted two practical considerations:
The amount involved for the entire year was only Rs. 67 lakhs, which was not "substantial."
The financial year was already "almost ten and a half months" over. Reopening the issue for such a small amount for the remainder of the year would be inefficient.
Decision for the Current Year: Based on these practical considerations, the court did not disturb the 15% withholding rate for the Support services for the financial year 2025-26.
Leaving the Issue Open: Crucially, the court clarified that it had not pronounced upon the merits of the dispute regarding Support services. The issue was left open to be decided in an appropriate case or at an appropriate stage. This preserved the petitioner's right to challenge the taxability in future years.
Prospective Directions for the Future: The court issued detailed directions to ensure that for future years, the process would be smoother for the Matching solutions, while preserving the Revenue's right to examine the Support services and the petitioner's overall taxability (e.g., if it acquires a Permanent Establishment in India).

6. New Legal Framework Established

This judgment does not establish a new legal principle. Its significance lies in its role as a practical illustration of how courts can dispose of tax writ petitions involving mixed issues and time constraints. Its key contributions are:

Efficient Case Management in Tax Litigation: The judgment provides a template for handling Section 197 petitions where the taxpayer has multiple streams of income. It shows how a court can:
Grant immediate relief for undisputed/covered issues.
Defer complex, arguable issues involving smaller amounts to a later, more appropriate forum, rather than delaying the entire petition.
Provide clear, prospective directions to govern future applications, preventing repetitive litigation on the same core issues.
Protecting Revenue's Right to Re-examine: The directions ensure that while the petitioner gets the benefit of a nil rate for the covered service (Matching solutions) for future years, the Revenue is not permanently estopped from examining new facts. The condition requiring full disclosure and empowering the authority to issue a notice if a Permanent Establishment is found creates a balanced mechanism.

7. Examination and Analysis by the Court

The court's analysis was concise and focused on practical resolution.

Categorization of Issues: The court first separated the petitioner's claims into two distinct categories based on the two agreements.
Application of Precedent: For the first category (Matching solutions), the court applied the ratio of the coordinate bench decision in Financial And Risk Organisation Limited. This was a straightforward application of the principle of judicial consistency.
Pragmatic Balancing: For the second category (Support services), the court did not delve into a detailed legal analysis of taxability under the IT Act or DTAA. Instead, it performed a balancing exercise, weighing the relatively small tax amount and the advanced stage of the financial year against the complexity of the legal dispute. This pragmatic approach is a hallmark of efficient judicial review.
Preservation of Rights: The court was careful to note that its decision on Support services was solely for the current year and did not decide the legal issue. This preserved the petitioner's right to agitate the matter in future assessments and the Revenue's right to defend its position.
Prospective Guidance: By issuing detailed directions for future applications, the court provided clarity and aimed to prevent the recurrence of the same dispute year after year, reducing future litigation.

8. Critical Analysis and Final Outcome

Critical Analysis:

This judgment is a model of judicial efficiency and pragmatic decision-making in tax litigation.

Strengths: The primary strength is its practical wisdom. By bifurcating the issues, the court provided immediate and appropriate relief for the covered issue (Matching solutions) while efficiently disposing of the disputed issue (Support services) for the current year without a protracted legal battle over a small amount. The directions for the future are balanced and fair, providing a clear roadmap for both the taxpayer and the Revenue. The court's refusal to decide the complex taxability of Support services on a de minimis amount for a near-expired year is a prudent use of judicial resources.
Correctness: The decision is legally sound. The court correctly applied a binding precedent for the Matching solutions. The decision on Support services is not a legal determination of taxability but a practical disposal based on the specific facts (small amount, advanced stage of the year). The court explicitly preserved all legal rights, so no legal principle was compromised.
Potential Impact: This judgment will be a useful precedent for other taxpayers filing Section 197 petitions with multiple income streams. It encourages them to clearly separate their claims. It also signals to the Revenue that while they can defend their position on arguable issues, they may be directed to issue nil certificates on issues that are already covered by judicial precedents.

Final Outcome:

The writ petition was partly allowed. The court issued the following directions:

For Matching Solutions: The impugned order and certificate were set aside. The competent authority was directed to issue a certificate at NIL rate for the amount of Rs. 65,97,09,956/- within 15 days.
For Support Services: The certificate at 15% for the amount of Rs. 67,40,636/- was upheld for the financial year 2025-26. The court did not decide the merits of this issue.
Future Directions:
For Matching solutions in subsequent years, the authority was directed to issue a nil rate certificate within 30 days of application.
For Support services (or any other services), the authority was free to decide as per law.
The nil rate direction for future years was made conditional on the authority not finding a Permanent Establishment, after issuing due notice to the petitioner.
The petitioner was required to fully and truly disclose all facts in its applications.