Delhi High Court Quashes Rejection of Nil TDS Certificate for MakeMyTrip

The Delhi High Court has set aside the Income Tax Department’s rejection of a request by MakeMyTrip for a Nil or lower tax deduction certificate under the Income Tax Act, holding that the department failed to provide adequate reasons and ignored the statutory criteria under the rules governing such certificates. The bench of Justice V. Kameswar Rao and Justice Vinod Kumar ruled that the order rejecting the company’s application under Section 197 of the Income Tax Act was unsustainable as it merely referred to outstanding tax demands without examining the relevant factors prescribed under Rule 28AA of the Income Tax Rules. The bench observed that orders relating to lower or nil tax deduction certificates must be reasoned and must reflect consideration of the statutory parameters, including estimated tax liability and past financial position. The case arose after MakeMyTrip challenged an order dated July 17, 2025 issued by the Deputy Commissioner of Income Tax (TDS), Gurugram. The order rejected the company’s application seeking a Nil Withholding Certificate under Section 197 for the financial year 2025–26 or, alternatively, a lower deduction certificate at 0.30%, similar to those granted in previous years. MakeMyTrip, an online travel services provider operating the portal www.makemytrip.com, contended that it had substantial brought-forward losses and unabsorbed depreciation, which would result in nil taxable income for FY 2025-26. The company argued that in identical financial circumstances it had been granted lower withholding certificates in the past. Records before the court showed that the tax department had issued lower withholding certificates to the company for several years, including: 0.30% for AY 2025-26, 2024-25, and 2023-24; 0.10% for AY 2022-23; and higher but reduced rates in earlier years However, in the current year the application was rejected on the ground that there were outstanding tax demands exceeding ₹23.80 crore against the company’s Tax Deduction and Collection Account Number (TAN). MakeMyTrip argued that the rejection was arbitrary because the department had issued lower deduction certificates in previous years despite similar financial circumstances. The alleged outstanding demand was disputed and under appeal. Large tax refunds amounting to about ₹84 crore were due to the company from the department. The impugned order consisted of a one-line rejection without proper reasoning. The company also contended that the department failed to follow Rule 28AA, which requires the assessing officer to consider estimated tax liability, past assessments, existing demands and other financial factors before deciding the rate of TDS. The Income Tax Department defended the rejection, arguing that substantial outstanding demands existed and were recoverable. Some of the demands had not been stayed by appellate authorities. Under Rule 28AA, the presence of large tax liabilities and TDS defaults could justify denial of a lower or nil deduction certificate. The department also questioned the maintainability of the petition before the Delhi High Court, arguing that the order was passed by the TDS authority in Gurugram and therefore the matter fell within the jurisdiction of the Punjab and Haryana High Court. The High Court rejected the jurisdictional objection, noting that the petitioner’s tax assessments were handled by authorities in Delhi. Earlier Section 197 certificates had been issued by the TDS Circle in Delhi. Several related tax proceedings involving the company were also handled within the court’s jurisdiction. The court found the impugned order deficient because it failed to provide reasons or demonstrate application of mind to the statutory factors under Rule 28AA. The Bench also noted that the demand relied upon by the department had subsequently been reduced from ₹23.80 crore to about ₹14.08 crore through rectification orders, a factor that had not been considered while rejecting the application. The court emphasized that the authority cannot arbitrarily reject applications under Section 197 and must evaluate them based on the prescribed statutory framework. Referring to earlier precedents, the Bench stated that failure to consider relevant financial data and past certificates renders such orders arbitrary and liable to be set aside. Setting aside the rejection order, the court held that the Income Tax Department must reconsider the company’s application in accordance with the statutory provisions and relevant financial factors. Case Details Case Title: Make Mytrip (India) Private Limited Versus ACIT Citation: JURISHOUR-446-HC-2026(DEL) Case No.: W.P.(C) 11956/2025 & CM APPL. 65195/2025 Date: 16.03.2026 Counsel For Petitioner: Salil Kapoor, Ms. Soumya Singh Counsel For Respondent: Siddhartha Sinha, SSC Click Here To Read Order Read More: Conviction for Kidnapping to Murder Can’t Be Ordered Without Charge: Supreme Court

Delhi High Court Quashes Rejection of Nil TDS Certificate for MakeMyTrip

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