Payments for IT, Non-IT Support Services Not Taxable as FTS under India-UK DTAA: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that payments received by a UK-based group entity for IT support services and non-IT support services from its Indian associate enterprise (AE) cannot be taxed in India as “Fee for Technical Services” (FTS) under Article 13 of the India-UK Double Taxation Avoidance Agreement (DTAA). The bench of Vikas Awasthy (Judicial Member) and Brajesh Kumar Singh (Accountant Member) has observed that the services were routine group-level support functions and were rendered on a recurring basis. No evidence showed that the Indian entity acquired the ability to independently perform IT or managerial functions without continued assistance. The agreement between the entities was perpetual, indicating dependence on continued support. The appellant/assessee is a company incorporated and registered in England and Wales. The registered address of the Company is 6, East Parade, Leeds, LS1 2AD, United Kingdom. It is a part of the CPP Group. The Company is 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. In terms of its activities in India during the captioned year, the Company rendered certain services to its associate enterprise ('AE'), CPP Assistance Services Private Limited ('CPP India'). ITAT Rejects Tax Department’s Stand on ‘Make Available’ The Assessing Officer (AO) had treated INR 20.81 crore received for IT support services and INR 89.41 lakh for non-IT support services as FTS, alleging that these services “made available” technical knowledge, enabling the Indian entity to perform such activities independently. The Bench emphasized that if the Indian entity had indeed become independently capable of performing the services, it would not require ongoing support from the UK company. This, the Tribunal said, directly contradicted the AO’s assumption that technical knowledge had been “made available.” Reference to Earlier ITAT Rulings in CPP India’s Case The ITAT relied heavily on its own earlier decisions in the Indian AE’s cases for AYs 2017-18, 2018-19, and 2020-21, where identical payments to the same UK entity were held not to be taxable as FTS. In those rulings, the Tribunal had held that IT support was centrally delivered global support. The Indian company did not acquire any specialized technical capability. The “make available” test—a mandatory condition under Article 13 of the India-UK DTAA—was not fulfilled. The Bench reiterated that the nature of services in the present appeal remained the same. IT Development Services Treated Separately During AY 2022-23, the assessee had also provided IT development services worth INR 5.32 crore, which it had already offered to tax. The Revenue attempted to use this new project to argue that the Indian entity had gained independent IT capability. However, both the DRP and the ITAT rejected this argument, noting clear distinctions: IT development services were performed by a different team, There was no overlap with routine IT support activities, Development of a new platform for regulatory compliance did not mean that general IT support know-how was transferred. Non-IT Support Services Also Ruled Non-Taxable The Tribunal observed that the AO failed to provide any concrete material showing that managerial, HR, legal, compliance, or finance support services involved transfer of technical knowledge. The DRP had previously found the AO’s conclusions to be speculative and unsupported by documentation. The ITAT agreed, holding that such services do not fall within the FTS definition either under domestic law or the DTAA. The Tribunal allowed the appeal partly, deleting tax additions on INR 20.81 crore (IT support services), and INR 89.41 lakh (non-IT support services). Case Details Case Title: CPPGROUP Services Limited Versus ACIT Case No.: ITA No.980/DEL/2025 Date: 04.11.2025 Counsel For Appellant: Ajay Vohra, Sr. Adv. Counsel For Respondent: M.S. Nethrapal Click Here To Read Order Read More: Union Budget 2026-27: Know Top ICAI Pre-Budget Suggestions

Payments for IT, Non-IT Support Services Not Taxable as FTS under India-UK DTAA: ITAT

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