Spencer Stuart International B.V. Vs ACIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, decided the appeal filed by Spencer Stuart International B.V. against the final assessment order dated 1 September 2025 passed under Sections 143(3) read with 144C(13) of the Income-tax Act, 1961 for Assessment Year (AY) 2023-24 pursuant to the directions of the Dispute Resolution Panel (DRP). The principal dispute concerned the taxability of executive search fees received by the assessee from Spencer Stuart India Private Limited under the India–Netherlands Double Taxation Avoidance Agreement (DTAA).
The assessee is a non-resident company incorporated and tax resident in the Netherlands. It is engaged in the executive search business and provides executive search and related support services to group companies and third-party franchisees. During AY 2023-24, it rendered executive search services to Spencer Stuart India Private Limited in relation to multi-country assignments and received fees, including expenses, amounting to ₹26,72,12,061. The assessee did not offer this amount to tax in India on the ground that it constituted business income and, in the absence of a permanent establishment (PE) in India, was not taxable. The Assessing Officer disagreed and held that the receipts constituted Fees for Technical Services (FTS) under Article 12(5)(a) and Article 12(5)(b) of the India–Netherlands DTAA. Without prejudice, the Assessing Officer also held that the receipts qualified as royalty under Article 12(4) of the DTAA and brought the amount to tax. The DRP upheld the Assessing Officer’s view by following its directions for AYs 2018-19 and 2019-20.
Before the Tribunal, the assessee submitted that the issue had repeatedly arisen in its own case from AY 2011-12 onwards and that the Tribunal had consistently held that executive search fees were neither FTS nor royalty. It was argued that the issue was therefore covered by earlier Tribunal decisions. The Departmental Representative relied upon the findings of the Assessing Officer and the DRP.
The Tribunal observed that the controversy was recurring in nature and had continued since AY 2011-12. It noted that while the DRP had followed its earlier directions for AYs 2018-19 and 2019-20, the Tribunal had consistently decided the issue in favour of the assessee from AY 2011-12 onwards, holding that the executive search fees were neither FTS nor royalty. The Tribunal referred extensively to its earlier decisions, including the order dated 4 November 2022 for AY 2019-20, which in turn relied upon earlier decisions covering AYs 2011-12, 2014-15, 2015-16, 2016-17 and 2017-18.
In the earlier decisions reproduced in the order, the Tribunal had examined two separate agreements executed between the parties:
