The officer says I am in default under s.201 for not deducting under s.195 on payments abroad, although I have a Form 15CB from my chartered accountant for every remittance. Is that enough?
On these facts, yes. The Gujarat High Court declined to admit the Revenue's appeal, holding that once the assessee had filed its TDS returns and submitted Form 15CB — the accountant's certificate on liability to deduct under Chapter XVII-B prescribed by Rule 37BB — for each remittance, and the Assessing Officer had not disputed those, the assessee could not be treated as an assessee in default under s.201. The Court also held that commission paid to travel agents and on hotel bookings made through websites and subsidiaries was not a sum covered by s.195.
Decided by the High Court (Bhargav D. Karia J and Pranav Trivedi J) on 2026-06-23, reported as R/Tax Appeal No. 438 of 2026 (High Court of Gujarat at Ahmedabad); appeal from the Tribunal's order dated 8 October 2025 in ITAT/882/AHD/2025. It bears on section 195, section 201, section 201(1A), section 40(a)(i), section 143(3), section 260A, section Rule 37BB of the Income Tax Act 1961, in TDS Defaults, Evidence & Burden of Proof and Appeals matters.
This is the first authority in this library on Rule 37BB and Form 15CB, and it puts them to their real use: as contemporaneous evidence of the deductor's chargeability analysis, which shifts the ground under a s.201 order that does no more than assert non-compliance. Two limits are worth noticing. The Court's reasoning rests on findings of fact recorded by the Tribunal, so the value of a Form 15CB depends on the officer not disputing it; and the Court also leaned on the absence of any adverse reporting in clause 24(b) of Form 3CD, so the tax audit report is part of the same evidentiary package. Nothing here says a Form 15CB by itself makes an otherwise chargeable sum non-chargeable.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee, a hotel company, filed a return for assessment year 2017-18 declaring a loss. In the assessment under s.143(3) dated 27 December 2019 the Assessing Officer disallowed Rs.7,05,738, being thirty per cent of commission expenses, under s.40(a)(i) read with s.195, on the footing that commission had been paid to non-residents without deduction. The Assessing Officer then treated the assessee as an assessee in default and passed an order under s.201(1) and s.201(1A). The Commissioner (Appeals) dismissed the appeal, the assessee having filed only written submissions. Before the Tribunal the assessee produced item-wise details of the commission, acknowledgments of its TDS returns and copies of Form 27Q, and said that tax had been deducted wherever applicable in accordance with the Act and with the double taxation avoidance agreements of the payees' countries of residence, that a Form 15CB had been obtained from a chartered accountant for each transaction involving payment to a non-resident, and that the tax auditor had reported no non-compliance in clause 24(b) of Form 3CD. The Tribunal allowed the assessee's appeal by order dated 8 October 2025. The Revenue appealed under s.260A, contending that the Tribunal had ignored the Assessing Officer's detailed findings.
The appeal was disposed of as devoid of merit; no question of law, much less a substantial question of law, was found to arise. The Court held that on the Tribunal's findings of fact the assessee had submitted a Form 15CB for each transaction involving payment to a non-resident and had deposited tax at source, that there was no default, and that once the assessee has discharged its obligation by filing the TDS return and submitting the Form 15CB required by Rule 37BB, which the Assessing Officer did not dispute, the assessee cannot be treated as an assessee in default under s.201. The Court also held that the commission the Assessing Officer had taken into account — commission for booking hotel rooms through websites and payments to travel agents and to a subsidiary providing travel agent services — is not covered by s.195 (paragraphs 8 and 9).
The Court set out s.201(1) with its first proviso and observed that a person is deemed to be an assessee in default only where he is required to deduct and does not deduct or pay (paragraphs 5 and 6). It then examined what the Assessing Officer had in fact taxed and found it to be commission on hotel bookings made through websites and payments to travel agents, which in its view fall outside the sums to which s.195 applies (paragraph 8). Turning to the evidence, it treated the Tribunal's findings as findings of fact: the Form 15CB obtained for each remittance is the certificate of a chartered accountant on the liability to deduct under Chapter XVII-B prescribed by Rule 37BB of the Income-tax Rules 1962, it was submitted, and it was not disputed by the Assessing Officer; there was also no adverse reporting by the tax auditor in column 24(b) of Form 3CD. On that material the Tribunal was right to conclude there was no default, and no substantial question of law arose (paragraphs 9 and 10).
The Tribunal, therefore, has rightly considered that once the assessee has discharged its obligation to deduct tax by filing the TDS return and Form 15CB
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Handle my notice → Ask a CA on WhatsAppOn these facts, yes. The Gujarat High Court declined to admit the Revenue's appeal, holding that once the assessee had filed its TDS returns and submitted Form 15CB — the accountant's certificate on liability to deduct under Chapter XVII-B prescribed by Rule 37BB — for each remittance, and the Assessing Officer had not disputed those, the assessee could not be treated as an assessee in default under s.201. The Court also held that commission paid to travel agents and on hotel bookings made through websites and subsidiaries was not a sum covered by s.195. This was decided by the High Court (Bhargav D. Karia J and Pranav Trivedi J) and bears on section 195, section 201, section 201(1A), section 40(a)(i), section 143(3), section 260A, section Rule 37BB of the Income Tax Act 1961. It is reported as R/Tax Appeal No. 438 of 2026 (High Court of Gujarat at Ahmedabad); appeal from the Tribunal's order dated 8 October 2025 in ITAT/882/AHD/2025. This is the first authority in this library on Rule 37BB and Form 15CB, and it puts them to their real use: as contemporaneous evidence of the deductor's chargeability analysis, which shifts the ground under a s.201 order that does no more than assert non-compliance. Two limits are worth noticing. The Court's reasoning rests on findings of fact recorded by the Tribunal, so the value of a Form 15CB depends on the officer not disputing it; and the Court also leaned on the absence of any adverse reporting in clause 24(b) of Form 3CD, so the tax audit report is part of the same evidentiary package. Nothing here says a Form 15CB by itself makes an otherwise chargeable sum non-chargeable. If it applies to you, the first step is this: Obtain and retain a Form 15CB for every remittance to a non-resident, transaction by transaction, and file the Form 15CA — the Court treated the per-transaction certificate, not a global one, as the answer to the s.201 notice.
The assessee, a hotel company, filed a return for assessment year 2017-18 declaring a loss. In the assessment under s.143(3) dated 27 December 2019 the Assessing Officer disallowed Rs.7,05,738, being thirty per cent of commission expenses, under s.40(a)(i) read with s.195, on the footing that commission had been paid to non-residents without deduction. The Assessing Officer then treated the assessee as an assessee in default and passed an order under s.201(1) and s.201(1A). The Commissioner (Appeals) dismissed the appeal, the assessee having filed only written submissions. Before the Tribunal the assessee produced item-wise details of the commission, acknowledgments of its TDS returns and copies of Form 27Q, and said that tax had been deducted wherever applicable in accordance with the Act and with the double taxation avoidance agreements of the payees' countries of residence, that a Form 15CB had been obtained from a chartered accountant for each transaction involving payment to a non-resident, and that the tax auditor had reported no non-compliance in clause 24(b) of Form 3CD. The Tribunal allowed the assessee's appeal by order dated 8 October 2025. The Revenue appealed under s.260A, contending that the Tribunal had ignored the Assessing Officer's detailed findings. The matter was decided on 2026-06-23 by the High Court (Bhargav D. Karia J and Pranav Trivedi J). On those facts the High Court held as follows. The appeal was disposed of as devoid of merit; no question of law, much less a substantial question of law, was found to arise. The Court held that on the Tribunal's findings of fact the assessee had submitted a Form 15CB for each transaction involving payment to a non-resident and had deposited tax at source, that there was no default, and that once the assessee has discharged its obligation by filing the TDS return and submitting the Form 15CB required by Rule 37BB, which the Assessing Officer did not dispute, the assessee cannot be treated as an assessee in default under s.201. The Court also held that the commission the Assessing Officer had taken into account — commission for booking hotel rooms through websites and payments to travel agents and to a subsidiary providing travel agent services — is not covered by s.195 (paragraphs 8 and 9).
The Court set out s.201(1) with its first proviso and observed that a person is deemed to be an assessee in default only where he is required to deduct and does not deduct or pay (paragraphs 5 and 6). It then examined what the Assessing Officer had in fact taxed and found it to be commission on hotel bookings made through websites and payments to travel agents, which in its view fall outside the sums to which s.195 applies (paragraph 8). Turning to the evidence, it treated the Tribunal's findings as findings of fact: the Form 15CB obtained for each remittance is the certificate of a chartered accountant on the liability to deduct under Chapter XVII-B prescribed by Rule 37BB of the Income-tax Rules 1962, it was submitted, and it was not disputed by the Assessing Officer; there was also no adverse reporting by the tax auditor in column 24(b) of Form 3CD. On that material the Tribunal was right to conclude there was no default, and no substantial question of law arose (paragraphs 9 and 10). In the words reproduced by the source cited on this page: "The Tribunal, therefore, has rightly considered that once the assessee has discharged its obligation to deduct tax by filing the TDS return and Form 15CB"
It was decided by the High Court on 2026-06-23 and is reported as R/Tax Appeal No. 438 of 2026 (High Court of Gujarat at Ahmedabad); appeal from the Tribunal's order dated 8 October 2025 in ITAT/882/AHD/2025. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 195, section 201, section 201(1A), section 40(a)(i), section 143(3), section 260A, section Rule 37BB, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was disposed of as devoid of merit; no question of law, much less a substantial question of law, was found to arise. The Court held that on the Tribunal's findings of fact the assessee had submitted a Form 15CB for each transaction involving payment to a non-resident and had deposited tax at source, that there was no default, and that once the assessee has discharged its obligation by filing the TDS return and submitting the Form 15CB required by Rule 37BB, which the Assessing Officer did not dispute, the assessee cannot be treated as an assessee in default under s.201. The Court also held that the commission the Assessing Officer had taken into account — commission for booking hotel rooms through websites and payments to travel agents and to a subsidiary providing travel agent services — is not covered by s.195 (paragraphs 8 and 9). It arises in TDS Defaults, Evidence & Burden of Proof and Appeals matters, on section 195, section 201, section 201(1A), section 40(a)(i), section 143(3), section 260A, section Rule 37BB of the Income Tax Act 1961, and was decided by Bhargav D. Karia J and Pranav Trivedi J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put the DTAA analysis into the certificate and into the file at the time of remittance, since the Tribunal's finding here was that deduction was made in accordance with the Act and with the treaty of the payee's country of residence. Check what your tax auditor has reported in clause 24(b) of Form 3CD before you reply to a s.201 notice; a clean clause 24(b) was part of what the Court relied on. Where the payment is commission for hotel bookings through a website or to a travel agent, take the point that the sum is not chargeable under s.195 at all, and read this alongside GE India Technology Centre on the words 'sum chargeable under the provisions of the Act'. Do not overstate this decision in a case where the officer has actually examined and disputed the certificates; the Court proceeded on findings of fact that the certificates were not in dispute.
Searched for later treatment; none was found. That is not the same as a source affirming it. Two searches, nothing found. The citedby search on the doc id is empty. A name search returns five results: this judgment, the Ahmedabad Tribunal order of 8 October 2025 which is the order under appeal, a 2024 Delhi Tribunal order and two 2026 Delhi High Court orders in a different company's matter (Nidra Hospitality Pvt Ltd, as against Nidra Hospitality Gujarat Pvt Ltd). Nothing considers this judgment. No later decision has adopted, doubted or distinguished the holding that once TDS returns were filed and Form 15CB furnished under Rule 37BB there was no s.201 default, and no appeal against it was traced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment runs from paragraph 1 to paragraph 11, with sub-paragraphs 3.1 to 3.8 and 4.1, and ends with the disposal at paragraph 11 and the judges' signatures. Two things in the report do not sit together and are recorded rather than smoothed: the assessment order is dated 27 December 2019 for assessment year 2017-18 but the s.201/201(1A) order is recorded as passed on 30 July 2025, and paragraph 3 records commission expenses of Rs.24,00,460 'out of commission payment of Rs. 23,52,460', which cannot both be right. Neither affects the holding. The Court's reasoning on s.195 in paragraphs 8 and 9 quotes Explanation 1 and Explanation 2 to s.195(1) and then describes Explanation 1 in terms that do not track the text it has just set out; the holding recorded here is confined to what the Court actually decided. On the weight of the decision: the appeal was disposed of as devoid of merit, the Court finding that no question of law arose. That is a refusal to interfere with the Tribunal's findings rather than a considered exposition of s.195 or s.201. An order declining an appeal under s.260A binds the parties and is persuasive elsewhere, but it does not carry the authority of a judgment on a question that was argued and answered, and it should not be cited as though it did. Two consequences follow for the way the case is used. The Form 15CB point rests on findings of fact — that a certificate was filed for every remittance and that the Assessing Officer did not dispute any of them. Where the officer does dispute a certificate, or where certificates are missing for some remittances, the finding the Court declined to disturb simply does not exist and the case gives no answer. And the holding that commission for hotel bookings and payments to travel agents is not a sum covered by s.195 is stated without any analysis of where that income arises, so the point should be argued from the chargeability provisions and from the authority on the words 'sum chargeable under the provisions of this Act', with this case cited as an instance rather than as the reasoning. The s.40(a)(i) disallowance that follows a s.195 default, and the assessment under s.143(3) in which it usually surfaces, are untouched by anything decided here; neither was in issue before the Court, and this entry should not be read as covering them. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was disposed of as devoid of merit; no question of law, much less a substantial question of law, was found to arise. The Court held that on the Tribunal's findings of fact the assessee had submitted a Form 15CB for each transaction involving payment to a non-resident and had deposited tax at source, that there was no default, and that once the assessee has discharged its obligation by filing the TDS return and submitting the Form 15CB required by Rule 37BB, which the Assessing Officer did not dispute, the assessee cannot be treated as an assessee in default under s.201. The Court also held that the commission the Assessing Officer had taken into account — commission for booking hotel rooms through websites and payments to travel agents and to a subsidiary providing travel agent services — is not covered by s.195 (paragraphs 8 and 9).
TaxSphere, “CIT (International Taxation) v Nidra Hospitality Gujarat Pvt Ltd”, https://taxnotice.vittsphere.com/caselaw/case/cit-v-nidra-hospitality-form-15cb-rule-37bb-no-201-default/ (validity last checked 2026-09-08)
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In March 2026 I remitted a fee to a company outside India without deducting anything, because I did not think any part of it was taxable here. The Assessing Officer now says section 195 obliged me to deduct on the whole remittance, or at least to apply to him before paying. Does section 195 say that — and since the new Act has come in, which Act governs my payment at all?
The TDS officer has passed an order under section 201 treating me as an assessee in default and has added interest under section 201(1A). Who exactly is in default, what gets me out of it, which interest rate runs for which period, and how far back can he go?
We are an Indian exporter. We paid demurrage to a foreign shipping company without deducting tax and the Assessing Officer has disallowed the whole payment under section 40(a)(i), saying section 172 is for non-residents and we are a resident. Does the payer have to be a non-resident before section 172 can be invoked?
Must you deduct tax on every payment to a non-resident, just to be safe?
