Docusign Inc. vs The Income Tax Officer, Ward Int. Tax 1(2)(2), Civic Centre New Delhi

$~85
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
% Date of decision: 24 February, 2026
+ W.P.(C) 1334/2026 CM APPL. 6504-6505/2026
DOCUSIGN INC. .....Petitioner
Through: Mr. Ajay Vohra, Sr. Adv. with Dr.
Shashwat Bajpai & Mr. Mayank
Chaturvedi, Adv.
versus
THE INCOME TAX OFFICER, WARD INT. TAX 1(2)(2), CIVIC
CENTRE NEW DELHI .....Respondent
Through: Mr. Puneet Rai, SSC
CORAM:
HON'BLE MR. JUSTICE DINESH MEHTA
HON'BLE MR. JUSTICE VINOD KUMAR
J U D G M E N T
DINESH MEHTA, J. ( Oral )
1. By way of present writ petition, the petitioner has challenged the
order dated 11.08.2025 (mentioned as 15.04.2025), passed by the Office of
Circle Int Tax 1(2)(2) ( hereinafter referred to as the ‘Competent Authority’ )
so also the certificate dated 11.08.2025, whereby the competent authority
has issued a tax withholding certificate at the rate of 4% under Section 197
of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’) .
2. As per the petitioner, it is a non-resident company and a tax resident
of the United States of America (for short ‘USA’), with its principal place of
business at San Francisco, California, USA. It is a software company that
provides solutions for managing electronic agreements, including e-
Signature Not Verified
Digitally Signed
By:NAVEEN KUMAR
Signing Date:27.02.2026
15:08:16
W.P.(C) 1334/2026 Page 1 of 4

signature services, contract lifecycle management, document generation, and
web forms. Such services are provided in India through the global
distribution arrangements and direct sales arrangements.
3. Mr. Ajay Vohra, learned Senior Counsel for the petitioner submitted
that in spite of the fact that the nature of transactions carried out by the
petitioner with its Indian counterpart is clear and though there is neither any
involvement of royalty or copyright nor any reason to apprehend Fees for
Included Services as per the India-USA Double Taxation Avoidance
Agreement ( hereinafter referred to as ‘India-USA Treaty’ ), yet for no rhyme
or reason the Competent Authority has issued a tax withholding certificate at
the rate of 4%, without recording any reason for the same.
4. Learned Senior Counsel relied upon the judgment of Hon’ble the
Supreme Court rendered in the case of Engineering Analysis Centre of
Excellence Ltd. v. CIT reported in (2022) 3 SCC 321 and submitted that
the judgment of Hon’ble the Supreme Court is clear on the aforesaid issue
and regardless of the fact that the petitioner in its application had relied upon
the said judgment, the Competent Authority has not discussed the same and
has proceeded to issue a certificate at 4%.
5. Learned Senior Counsel argued that in any case, the petitioner can be
subjected to assessment proceedings and it is required to satisfy the
Assessing Officer about the nature of transaction during assessment
proceedings, hence the certificate issued at 4% rate is not justified.
6. Mr. Puneet Rai, learned Senior Standing Counsel for the respondent-
Department on the other hand argued that none of the Authorities has so far
examined the nature of transactions carried out by the petitioner and unless
the transactions carried out by the petitioner are examined in requisite detail,
Signature Not Verified
Digitally Signed
By:NAVEEN KUMAR
Signing Date:27.02.2026
15:08:16
W.P.(C) 1334/2026 Page 2 of 4

it cannot be said with certitude that the same are not taxable under the Act of
1961 read with the India-US treaty.
7. He submitted that in any case, tax withholding certificate and
certificate of deduction of tax at lower rate is not final and once the
assessment of the petitioner is made, it shall be entitled for the refund of the
tax amount, in case it is found that no tax is payable.
8. Heard learned counsel for the parties.
9. On going through the impugned order, we find that the Competent
Authority has not given any sustainable reason. He was required to dilate
upon the nature of transaction and record his prima-facie opinion and also
deal with petitioner’s contention and the judgments relied upon.
10. Since almost 85% of the period is already over and the payments
made to the petitioner have been subjected to 4% tax, though the
transactions prima-facie looks to be not exigible to tax, we are of the view
that it would be just and proper if a certificate of deduction at 2% is issued
to the petitioner so that the concern of the Revenue that the petitioner can be
subjected to scrutiny assessment can be addressed and some respite can be
given to the petitioner as a substantial amount is otherwise being withheld
by the respondents.
11. The petition is, therefore, partly allowed.
12. The respondent is directed to issue a tax withholding certificate
requiring deduction of tax at 2%. The same be issued within a period of 10
days from today.
13. We hereby make it clear that our order shall apply only for the
certificate to be issued pursuant to the petitioner’s application for AY 2026-
27 (i.e. FY 2025-26).
Signature Not Verified
Digitally Signed
By:NAVEEN KUMAR
Signing Date:27.02.2026
15:08:16
W.P.(C) 1334/2026 Page 3 of 4

14. For subsequent year(s) the Competent Authority shall be required to
consider the petitioner’s application and expeditiously issue tax withholding
certificate in accordance with law.
15. With aforesaid directions, the petition along with pending application
stands disposed of.
DINESH MEHTA
(JUDGE)
VINOD KUMAR
(JUDGE)
FEBRUARY 24, 2026/ sr
Signature Not Verified
Digitally Signed
By:NAVEEN KUMAR
Signing Date:27.02.2026
15:08:16
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