Section 248 — Appeal by Person Denying Liability to Deduct Tax

CHAPTER XX — APPEALS AND REVISION | A.—Appeals to the Joint Commissioner (Appeals) and Commissioner (Appeals)

Section 248 — Appeal by a Person Denying Liability to Deduct Tax in Certain Cases

Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise

Status: Live. Recast by the Finance Act, 2007 w.e.f. 1-6-2007 to apply where, under an agreement, tax on income (other than interest) is to be borne by the payer and has been paid to the credit of the Central Government.

Finance Act, 2026: No amendment. The Finance Act, 2026 does not touch section 248.

Nature / mechanism: A narrow appeal: a payer who has borne and paid the tax under a 'net-of-tax' arrangement may appeal for a declaration that no tax was deductible (or a lesser sum was deductible) on that sum.

Litigation profile: Sparse direct authority — candour rule. The governing principles flow from section 195 (chargeability as the trigger of the deduction obligation) and the grossing-up rule in section 195A.

A. COMMENTARY

The pre-condition: tax must first be borne and paid

Before 1-6-2007 a payer could appeal denying liability to deduct without first paying. The Finance Act, 2007 inverted the sequence: section 248 now requires that, under the agreement, the tax is to be borne by the payer and has actually been paid to the Government's credit; only then may the payer appeal claiming that no tax (or less) was deductible. The remedy is a declaration, the practical object being a refund of tax wrongly borne.

Relationship with sections 195 and 195A

The deduction obligation arises only if the sum is chargeable to tax in India; section 195A grosses up where tax is borne by the payer. Section 248 is the appellate vehicle to test the very chargeability after the tax has been paid. Where the payer wants an advance determination instead, the route is section 195(2)/197, not section 248.

Interaction with section 249(2)(a)

Limitation for a section 248 appeal runs from the date of payment of the tax (section 249(2)(a)), reflecting that payment is the condition precedent to the appeal.

B. STATUTORY TEXT (verbatim)

Reproduced verbatim from the Income-tax Act, 1961 (as amended up to the Finance Act, 2025); the Finance Act, 2026 makes no change to this section. Inline numerals in square brackets are the bare Act's amendment-footnote markers.

Appeal by a person denying liability to deduct tax in certain cases.

248. Where under an agreement or other arrangement, the tax deductible on any income, other than interest, under section 195 is to be borne by the person by whom the income is payable, and such person having paid such tax to the credit of the Central Government, claims that no tax was required to be deducted on such income, he may appeal to the Commissioner (Appeals) for a declaration that no tax was deductible on such income:

Provided that no appeal shall be filed where tax is paid to the credit of the Central Government on or after the 1st day of April, 2022.

C. AUTHORITIES

Candour rule: there is little reported merits litigation squarely on the recast section 248. The cognate Supreme Court authority on section 195 supplies the controlling principle that chargeability is the foundation of any deduction liability the payer may dispute.

Cluster 1 — Chargeability as the foundation (cognate, section 195)

GE India Technology Centre (P) Ltd. v. CIT, (2010) 327 ITR 456 (SC)

Holding The obligation to deduct under section 195 arises only if the payment to the non-resident is a sum chargeable to tax in India; 'chargeability' is the sine qua non of the deduction liability.

Relevance Defines what the section 248 appellant must establish to obtain a declaration that no tax was deductible — that the sum was not chargeable.

Transmission Corporation of A.P. Ltd. v. CIT, (1999) 239 ITR 587 (SC)

Holding Where a payment to a non-resident is a composite sum a part of which is chargeable, tax is deductible on the gross sum unless the payer obtains a determination of the appropriate proportion under section 195(2).

Relevance Frames the quantum dimension that a section 248 declaration may resolve after the tax has been borne and paid.