Invesco Holding Company (US) Inc. Vs ACIT (ITAT Delhi)
Routine IT Support Not Taxable as FIS Under India–US DTAA- No ‘Make Available’ of Technology – Cost-to-Cost Reimbursements Not Income in India -ITAT Delhi Deletes ₹54.85 Cr Addition; No Profit, No Tax: Cost-to-Cost Reimbursement for IT Services Excluded from Indian Income
ITAT Delhi deleted an addition of ₹54.85 crore made on reimbursements for IT support services received by Invesco Holding Company (US) Inc., holding that such payments were not taxable as Fees for Included Services (FIS) under Article 12 of the India–US DTAA.
Assessee provided routine IT application, infrastructure & security services to its Indian AE on a cost-to-cost basis under a 2019 Master Intercompany Services Agreement. AO taxed the receipts as FIS; the DRP upheld it.
Following its own orders in AYs 2020-21 & 2021-22, the Tribunal held that the services did not “make available” technical knowledge or skills, as required under Article 12(4)(b). Since the Indian AE continued to rely on the assessee year after year, no independent application of technology was possible. Citing Bio-Rad Laboratories Inc. (Delhi ITAT & HC) & Planetcast International Pte. Ltd., the Tribunal also noted that the receipts were pure reimbursements with no profit element & thus not taxable in India. Accordingly, the ITAT deleted the entire addition & dismissed the penalty ground as premature.
