The Delhi High Court has directed the issuance of nil withholding tax certificate to Lufthansa Cargo.
The bench of Justice Vibhu Bakhru and Justice Tejas Karia has observed that where the petitioner has been granted certificate at nil withholding tax for prior assessment years and there is no issue to the chargeability of the petitioner’s income to tax under the Act, the impugned certificate requiring withholding tax at reduced rate instead of nil rate, cannot be sustained.
The petitioner/assessee, Lufthansa Cargo AG applied for certificate from Income Tax Department for ‘Nil’ withholding tax from the payments made to the petitioner during the financial year 2024-25 and the certificate dated 17.05.2024 was issued for withholding tax at a lower rate of 0.10 per cent. Accordingly, the petitioner impugns the certificate dated 17.05.2024 as well. It claims that its income from operating in aircrafts is not chargeable to tax in India.
The petitioner is engaged in the business of international cargo handling and transportation of cargo through operation of aircrafts in international traffic. According to the petitioner, its primary mode of operation involves working with various agents which are registered with the International Air Transport Association [IATA]. The petitioner claims that these agents generate airway bills for transportation of cargo and procure the petitioner’s services based on the airway bills.
The petitioner claims that it is a tax resident of Germany and its income is not chargeable to tax in India in terms of Article 8 of the India- Germany Double Taxation Avoidance Agreement [the DTAA].
The petitioner had moved an application under Section 195(3) of the Income Tax Act for issuance of nil withholding tax Certificate for the FY 2024-25. The application, in the prescribed form (Form 15D), was filed electronically on 14.02.2024.
The application was rejected by the impugned order. The learned counsel appearing for the Revenue clarifies that the order was passed and explains that the system used by the department had picked up the date on which the application was lodged and reflected the same in the order as the date of order. The order does not mention the date on which it was issued.
The petitioner contended that it had in unambiguous terms stated that its income is generated only from cargo handling and operating aircrafts. Additionally, it was submitted that it had received some interest on refund of income tax for which tax was deposited. The petitioner provided the information as required in the prescribed form. The AO had also issued a letter raising other queries which was also responded to by the petitioner.
The court allowed the petition and directed the issuance of the certificate for nil withholding tax under Section 197 of the Income Tax Act.
The court clarified that issuance of the certificate shall not preclude the AO from examining whether the income/receipts of the petitioner are chargeable to tax in India in assessment proceedings, uninfluenced by the order.
Case Details
Case Title: LUFTHANSA CARGO AG Versus ACIT
Case No.: W.P.(C) 11376/2024 & CM APPL. 47223/2024
Date: 25.03.2025
Counsel For Petitioner: Sr. Advocate Sujit Ghosh, with Ms. Mannat Waraich & Mr. Ajinkya Tiwari
Counsel For Respondent: Puneet Rai, SSC, Mr Ashvini Kumar and Mr Rishabh Nangia, SCs and Mr Nikhil Jain
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