MIXPANEL INC v. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE INTERNATIONAL TAX 221 NEW DELH

1. FACTS OF THE CASE

US-registered Mixpanel challenged the section 197 certificate dated 17 October 2025 requiring 15% deduction. It sought nil withholding based on favourable ITAT orders dated 25 July 2024, 25 September 2024 and 21 May 2025 for AYs 2018-19, 2021-22 and 2022-23. Revenue said it challenged two years and did not appeal AY 2018-19 because of low tax effect.

Source: Paragraphs 1–3; PDF pp.1–2

2. DISCUSSION BY THE COURT

The Court rejected Revenue’s fear that following the ITAT would compromise its challenges. Jurisdictional assessing authorities must follow subsisting Tribunal orders regardless of appeal. It noted only notice had issued, no stay application had been filed and the ITAT orders remained operative. The taxpayer’s claim of contempt was an argument, not a contempt finding.

Source: Paragraphs 2–6; PDF pp.2–3

3. JUDICIAL DECISION

The 15% certificate was quashed. A fresh 2% certificate was directed within four weeks, with 2% certificates for AY 2026-27 onwards until the ITAT orders were reversed or modified by the High Court, or relevant services changed. Assessment on the filed return and statutory appeal rights were reserved. The matter was listed for 8 April 2026.

Source: Paragraphs 7–12; PDF pp.3–4

4. OUTCOME

Mixpanel received reduced withholding at 2%, not nil withholding or a final assessment of non-taxability. The order expressly preserves later assessment and the taxpayer’s appeal rights.

Source: Paragraphs 8–10; PDF p.3

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

Following a subsisting order does not abandon an appeal

The Court separated compliance with the Tribunal from acceptance of its correctness for all purposes. That distinction answers Revenue’s stated fear of irreversible prejudice. The reasoning rests on operative orders without a stay, not on a proposition that an appeal is impossible or that its eventual outcome is known.

Source: PDF p.2 · PDF p.3

The rate granted is materially different from the rate requested

Mixpanel sought zero tax, but the Court ordered 2%. The source gives no detailed computation explaining that percentage. It is therefore essential to preserve the actual relief rather than restate the taxpayer’s requested nil rate as the holding. The reserved assessment power also prevents treating a withholding certificate as final tax liability.

Source: PDF p.2 · PDF p.3

The forward direction has express limits

The 2% continuation begins with the specified subsequent year 2026-27 and depends on the ITAT orders and unchanged services. It is not perpetual protection irrespective of later events. The four-week issuance direction and 8 April 2026 listing are recorded obligations and scheduling, not proof of compliance or subsequent disposal.

Source: PDF p.3 · PDF p.4