Delhi High Court Sets Aside Rejection Of MakeMyTrip's NIL TDS Certificate, Calls Order Non-Speaking

The Delhi High Court has recently set aside an order of the Income Tax Department rejecting online travel company MakeMyTrip's application for a NIL or lower withholding tax certificate for FY 2025-26 (AY 2026-27) under Section 197 of the Income Tax Act.

A division bench of Justices V. Kameswar Rao and Vinod Kumar observed that the impugned order was a non-speaking one and failed to provide reasons for the rejection. It observed,

“...in the past, withholding certificates were issued at rates between 0.10% to 4% and the rejection of application has the effect of deducting normal rate of tax at source, which is clearly untenable, particularly when no reasons have been given in the impugned order for rejecting the application for NIL withholding certificate”.

The Court further faulted the authority in failing to consider the company's alternative prayer for deduction of tax at the rate as granted by the Revenue in the preceding year, i.e. FY 2024-25, at 0.30%.

MakeMyTrip had approached the High Court challenging an order dated July 17, 2025 passed by the Deputy Commissioner of Income Tax (TDS), Gurugram rejecting its request for a NIL withholding certificate or, alternatively, a certificate allowing deduction of tax at a lower rate of 0.30%.

The company argued that it had substantial brought-forward losses and therefore its taxable income for the relevant financial year would be NIL after set-off. It also pointed out that the department had consistently issued lower withholding certificates in previous years at rates ranging between 0.10% and 4% in similar circumstances.

According to the petitioner, the rejection was based on alleged outstanding tax demand of ₹23.80 crore appearing against the petitioner on the portal. The company contended that most of these demands were either disputed, subject to rectification, or pending in appeal, and therefore could not form the sole basis for denying the certificate.

The Revenue, on the other hand, argued that the petitioner had substantial outstanding tax liabilities and had not obtained any stay against those demands. It contended that the presence of recoverable tax demands materially impacts the issuance of certificates under Section 197.

Rejecting the department's objections, the Court noted that the authority had merely referred to outstanding tax demands while rejecting the application.

It noted that Rule 28AA of the Income Tax Rules which lays down the parameters for determining the appropriate rate of tax deduction at source (TDS), including estimated tax liability and existing demands. However, the impugned order did not reflect any application of these parameters.

The bench further noted that the outstanding demand cited by the department had subsequently been reduced through rectification orders, a fact which had not been considered at the time the impugned decision was taken.

As such, the Court set aside the impugned order and directed reconsideration of the petitioner's application in accordance with law.

For Petitioner: Advocates Salil Kapoor, Soumya Singh, Sumit Lalchandani and Ms Ananya Kapoor,

For Respondents: Siddhartha Sinha, SSC