SNC Lavalin Inc. Vs ACIT (ITAT Delhi)
ITAT Delhi held that ₹1.45 crore GIT infrastructure charges received by the Canadian engineering firm for use of third-party software (AutoCAD, Civil 3D, etc.) from its Indian affiliates were not taxable as Fees for Included Services (FIS) or royalty.
Following its own ruling for AY 2021-22, Tribunal found that:
- The payments were mere cost reimbursements for software licences, not consultancy.
- No technical knowledge was made available under Art. 12(4)(b) of the India-Canada DTAA.
- Software used was a copyrighted article, not transfer of rights.
Held: Cross-charges for third-party software use are not FIS or royalty; addition deleted; appeal partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal has been preferred by the assessee against the Final Assessment Order dated 23.01.2025 passed by the Learned Assessing Officer (AO) under Section 143(3) read with Sections 144C(13) of the Income-tax Act, 1961 (“the Act”), pursuant to the directions of the Hon’ble Dispute Resolution Panel (DRP) order dated 31.12.2024 for the Assessment Year 2022-23.
2. At the outset, the Ld. AR submitted that the present case is squarely covered by the order dated 25.06.2024 of the Co-ordinate Bench of the Tribunal for A.Y. 2021-22 in ITA No.- 3691/Del/2023, in assessee’s own case, SNC Lavalin Inc. vs. ACIT (International Taxation), Circle 3(1)(2), New Delhi.
