Reliance Jio Infocomm Private Limited Vs DCIT (ITAT Mumbai)
Mumbai ITAT held that receipts from telecommunication services (voice termination, bandwidth, O&M services) earned by foreign group entities of Reliance Jio are not taxable in India as Royalty or Fees for Technical Services (FTS).
The Tribunal observed:
- The AO treated receipts (~₹44.17 crore as noted on page 4) as “process royalty”/FTS u/s 9(1)(vi)/(vii) and under Article 12 of DTAA
- However, identical issue was already decided in assessee’s own case for earlier years
Key findings:
- Services rendered do not “make available” technical knowledge, which is a mandatory condition under DTAA
- Provisions of India–Singapore and India–USA DTAA are pari materia (as discussed on page 5)
- Hence, judicial precedents under one treaty apply to the other
The ITAT held:
- Such receipts qualify as “Business Profits” under Article 7
- In absence of a Permanent Establishment (PE) in India, income is not taxable in India
Additional point:
- Tribunal acknowledged issue of double taxation (taxed in hands of payer for TDS default and again in recipient’s hands), strengthening assessee’s case
On legal grounds:
- Challenge to reassessment limitation was dismissed as infructuous due to Finance Act 2026 amendment (Section 153B)
Accordingly:
- Additions deleted
- Appeals partly allowed in favour of assessee
The ruling reinforces a crucial DTAA principle: “Without ‘make available’ and without PE, cross-border service receipts cannot be taxed as FTS/Royalty in India.”
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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