International Taxation

CA. Hinesh Doshi

M/s BCD Travel Asia Pacific PTE Limited vs Assistant Commissioner of Income Tax, International Taxation-Circle-1(2)(2), Mumbai [TS-1488-ITAT-2025(Mum)] dated 30th October, 2025

Facts:

  • The assessee, a Singapore resident acts as a Asia-Pacific Regional Headquarter (APAC HQ) of the group and provided a bouquet of regional managerial, administrative, operational, and technical support services to its subsidiaries and affiliates, including BCD Travel India Pvt. Ltd (BCD India), under a Regional Services Agreement (RSA) effective from 01 January 2016.

  • The Assessing Officer like in earlier years noted that under the said RSA, the assessee recovered certain costs from BCD India, calculated on a cost-pooling mechanism with a nominal markup. The officer, however, held that such consideration represented royalty income, being in the nature of payments for imparting or making available information concerning industrial, commercial or scientific experience, and hence, taxable in India under section 9(1)(vi) and Article 12(4) of the DTAA. CIT (A) also agreed with the AO.

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

Issue:

  • Whether Singapore Company receipt from “RSA” will be considered as “Royalty”?

Held:

  • ITAT noted that Assessee merely applied its expertise in performing continuing managerial tasks; Stating that emphasising the benefit or efficiency gained by Indian AE cannot be itself imply ‘imparting of information.’

  • ITAT reiterates OECD distinction between ‘application’ and ‘transfer’ of knowledge where expertise is used by the provider himself to deliver results, accordingly, holds that the payment constitutes business income and not royalty.

  • Relying on OECD commentary as well as coordinate bench ruling in Van Ooard Dredging wherein it was held that ‘royalty’ presupposes alienation of secret or proprietary information and opines that in the present case, assessee merely applied its expertise in performing continuing managerial tasks, thus, the receipts from same cannot be taxable in India.

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

M/s Alstsom Transport SA vs Deputy Commissioner of Income Tax, International Taxation Delhi [TS-1595-ITAT-2025(DEL)] dated 26th November, 2025

Facts:

  • The assessee is a tax resident of France and during the year the assessee entered into Offshore supply of equipment and spare parts & Offshore designing and other services.

  • In so far as the first transaction of Offshore supply of equipment and spare parts no amount was offered to tax in India. As regard the second transaction of Offshore designing and other services the amount was initially offered to tax in India, however, later on by way of additional ground of appeal the assessee claimed that the said transaction is also not taxable in India as the transaction was completed outside India.

  • The AO taxed receipts in respect of both the transactions holding that the assessee has PE in India.

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

Issue:

  • Whether Offshore supply of equipment and spare parts & Offshore designing and other services will be taxable in India?

Held:

  • ITAT observed that title to the equipment and parts supplied outside India were invoiced FOB, and in FOB shipment once passed the ship’s rail at the port of shipment, the risk of shipment passed onto the buyer and the seller’s responsibility ends when the goods are successfully loaded on the ship agreed at the port of origin of consignment i.e. outside India.

  • ITAT observed that prima facie assessee’s scope of work was restricted to offshore supply of equipment and spares, and it was not the consortium leader as is evident from consortium agreements/MOU, and it was the consortium leader’s responsibility to coordinate the execution of contract.

  • Relying on coordinate bench decision in SMS Concast AG, ITAT stated that for transaction of offshore supply of design and other services, once it is held that the Assessee does not have a PE in India then the same is also not liable to tax in India as both transactions of supply of equipment and designs are inextricably linked.

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

M/s Myntra Inc vs Assistant Commissioner of Income Tax, International Tax, Circle-2(2)(1), Delhi [TS-1654-ITAT-2025(DEL)] dated 10th December, 2025

Facts:

  • The assessee is tax resident of USA and during the year, the assessee provided manpower support services to Flipkart. The services are rendered to Flipkart on year on year basis, the assessee is not making available any technical knowledge, experience, skill, knowhow or processes and there is no transfer of any technical plan or technical design to Flipkart.

  • The AO held that the amount received from Flipkart for manpower support services will be considered as taxable as FTS u/s 9(1)(vii) and Article 12(4)(b) of India-US DTAA (DTAA). DRP also confirmed with the addition.

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

Issue:

  • Whether the consideration for manpower support services will be taxable as FTS as per India US DTAA?

Held:

  • ITAT observed that there is no finding by the AO or the DRP that the Assessee is transferring any technology/know how, skill/experience or process or in any manner transfers technical plan or technical design in order for it constitute as FTS.

  • ITAT opined that for satisfaction of clause (b) of Article 12(4) such services should ‘make available’ technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of technical plan or technical design.

  • Relying on Delhi HC decision in International Management Group (UK) Ltd. ITAT stated that “merely for the reason that the Assessee plays some role in collaborating with academic institutions in the US does not per se establish that the Assessee is ‘making available’ any know-how, technical knowledge or skill”.

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