International Taxation

CA. Hinesh Doshi

M/s Fullerton Financials Holding Pte. Ltd. vs. Assistant Commissioner of Income-Tax, International Tax Ward -2(3)(1), [TS-1458-ITAT-2025(Mum)] dated 28th October, 2025

Facts:

  • The assessee is an investment holding company incorporated in Singapore in 2003 which is wholly owned by Temasek Holding Private Limited (“Temasek”) a body corporate constituted under the Singapore Minister for Finance (Corporation) Act 1959, which is wholly owned by the Government of Singapore through the Minister of Finance.

  • The assessee had made investments in Fullerton India Credit Co Ltd (FICCL) in FY 2008-09 and sold its entire stake held in FICCL to Sumitomo Mitsui Financial Group (Japan Company) and earned LTCG of Rs 681 crore declaring total income at Rs NIL by claiming LTCG exemption under Article 13(4) of India Singapore DTAA

  • The AO and DRP invoked Article 24A of India Singapore DTAA to deny benefits under Article 13(4A) and disallowed the LTCG exemption

  • Aggrieved, the assessee filed an appeal with the ITAT.

Issue:

  • Whether LTCG exemption will be allowed to the Assessee under Article 13(4) of India Singapore DTAA?

Held:

  • ITAT noted that Assessee invested in FICCL in FY2009–10, i.e., prior to April 1, 2017 which is pre-amendment investment that qualifies for exemption from capital gains tax in India under Article 13(4) of the DTAA (r.w. 2016 Protocol), provided the PPT is satisfied.

  • ITAT after examining all the facts and supporting evidences furnished by Assessee, ruled that – (i) Assessee is a substantive investment holding entity within the Temasek Group, not a “mere conduit” company, but a substantive, policy-driven investment vehicle of the Singapore sovereign group, (ii) Assessee maintained substance and control in Singapore, with all key strategic decisions and Board meetings held in Singapore, (iii) The ultimate beneficial owner of Assessee’s investments is the Government of Singapore, if at all any entity were to be regarded as earning the income, and sovereign entities are generally not subject to tax in India’s domestic law by virtue of the principle of sovereign immunity, and Investment in FICCL was a long term strategic investment aligned with its regional expansion objectives and the subsequent sale represented a genuine commercial realisation of investment, undertaken as part of an arm’s length transaction and not a tax-motivated arrangement.

  • Thus, ITAT ruled in the favour of the assesse.

M/s Oxbow Energy Solutions BV vs. Deputy Commissioner of Income Tax, International Taxation-Circle-3(2)(2), Mumbai [TS-1465-ITAT-2025(Mum)] dated 4th November, 2025

Facts:

  • The Assessee, a foreign company of Netherland was having a Liaison Office (LO) in India, and carried on limited activities as permitted by the RBI. The Assesse filed Nil income return for AY 2021-22.

  • AO made a 50% profit attribution to the LO on the ground that the Assessee employed highly qualified people in India and the services cannot be held as merely preparatory or auxiliary work and made an addition of Rs. 1.53 Cr.

  • The DRP dismissed the various objections of the assessee but gave partial relief by reducing the attribution percentage to 12.27% whereby the addition was reduced to Rs.37.63 lakhs

  • Aggrieved, the assessee filed an appeal with the ITAT.

Issue:

  • Whether LO activities carried by the assessee will be taxable in India as per India Netherland DTAA?

Held:

  • ITAT noted that the role of the LO is to liaise between the Indian parties and the group companies and that the LO does not carry on any business activity in India.

  • ITAT explained that as per Article 5(1) and 5(4) of the DTAA r.w.s Action 7 of OECD BEPS project that recommended the changes to the PE definition in Article 5 of the OECD MTC, wherein it is clarified that “...it is not possible to avoid PE status by fragmenting a cohesive operating business into several small operations in order to argue that each part merely is engaged in preparatory or auxiliary activities.”

  • ITAT rejected Revenue’s claim as untenable that the activities of the Assessee are not preparatory or auxiliary and observed that - (i) neither the LO nor the subsidiary is concluding any business activity in India using the information collected, (ii) the employees of the LO are not authorised to conclude any business contracts nor have any signing authority.

  • Relying on SC decision in case of UOI vs. U.A.E. Exchange Centre, ITAT held that the activities of LO are within the scope of what is permitted by RBI to a LO in India.

  • Thus, ITAT ruled in the favour of the assessee.

M/s CPPGROUP Services Limited vs. Assistant Commissioner of Income Tax, International Taxation, Circle -1(2)(1), Delhi [TS-1477-ITAT-2025(DEL)] dated 4th November, 2025

Facts:

  • The assessee is a company incorporated and registered in England and Wales engaged in the business of providing a various gamut of services (such as IT services, Human Resources, Business Development, Marketing, etc.) to its group companies.

  • The Company rendered certain services to its associate enterprise (‘AE’)- CPP Assistance Services Private Limited (‘CPP India’) such as IT support services and Non-IT Support services.

  • During assessment, AO held that both IT support services and Non-IT support services amounts to FTS under Article 13 of India-UK DTAA on the premise that assessee’s associate entity was ‘made capable’ of independently performing the functions due to transfer of technical know-how. DRP partly allowed assessee’s objection.

  • Aggrieved, the assessee filed an appeal with the ITAT.

Issue:

  • Whether the IT support services and non-IT support services will be taxable as FTS under Article 13 of India UK DTAA?

Held:

  • ITAT opined that that Revenue failed to provide any evidence showing that Indian entity had become independently capable of providing IT support services after such interactions. On the issue of taxability of non-IT support services, ITAT observed that perusal of agreement shows that the Assessee provided routine managerial and standardization.

  • ITAT also noted that DRP held that no evidence was provided of training, transfer of know-how or creation of capability in Indian entity and produce contrary material to prove that the “make available’ clause was satisfied.

  • ITAT observed that perusal of agreement shows that no transfer of enduring knowledge or skill was made by the Assessee, accordingly, the receipt for IT support services could not be taxed as FTS under Article 13 of India-UK DTAA.

  • Thus, ITAT ruled in the favour of the assessee.