ACIT Vs Forum Homes Private Limited (ITAT Mumbai)
The appeal before the Income Tax Appellate Tribunal Mumbai arose from an order dated 04.09.2025 passed by the Addl./JCIT (A), Prayagraj, for Assessment Year 2016–17.
The central issue was whether payments made by the assessee to two Singapore-based entities for consultancy services, including architectural and structural design, qualified as “Fees for Technical Services” (FTS) under Section 9(1)(vii) of the Income Tax Act, 1961, read with Article 12(4) of the India–Singapore Double Taxation Avoidance Agreement (DTAA). A related issue was whether failure to deduct tax at source under Section 195 would attract disallowance under Section 40(a)(i).
The assessee, engaged in real estate development, undertook a residential project at Bandra Kurla Complex and availed consultancy services from two Singapore entities. Payments totaling ₹1,84,71,497 were made without deducting tax at source. The Assessing Officer held that the payments were in the nature of consultancy services, thus constituting FTS, and disallowed the entire amount under Section 40(a)(i).
The assessee contended that the services did not qualify as FTS under Article 12(4) of the DTAA, as they did not involve making available any technical knowledge, skill, or know-how. It was further argued that the services were project-specific and could not be used independently for future projects.
