THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAX)-1 NEW DELHI vs. ERNST AND YOUNG U.S. LLP

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ITA - 760 / 2025HC Delhi18 December 20252 pages
For Petitioner: PUNEET RAI
AI SummaryRemanded

What did the High Court hold?

The High Court framed substantial questions of law regarding whether cost-to-cost reimbursements for employee secondment constitute FTS under the Income Tax Act and the India-USA DTAA. The court also questioned the applicability of specific DTAA articles to the amounts received by the assessee.

What were the facts?

The appeal challenges an ITAT order that allowed the assessee's appeals. The ITAT had previously held that certain reimbursements were not to be treated as Fees for Technical Services (FTS). The High Court admitted the appeal for consideration of substantial questions of law.

What were the issues?

Whether reimbursements for employee secondment are FTS under domestic law and the India-USA DTAA, and which DTAA articles apply to the amounts received.

Which sections of the Income-tax Act were involved?

Section 9(1)(vii)

AI-generated summary — verify with the full judgment below

$~115 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 760/2025 THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAX)-1 NEW DELHI .....Appellant Through: Mr. Puneet Rai, SSC, Mr. Ashvini Kumar, Mr. Rishabh Nangia and Mr. Gibran, JSCs. versus ERNST AND YOUNG U.S. LLP .....Respondent Through: Mr. S. Ganesh, Sr. Adv. with Ms. Ananya Kapoor, Adv. CORAM: HON'BLE MR. JUSTICE V. KAMESWAR RAO HON'BLE MR. JUSTICE VINOD KUMAR O R D E R % 18.12.2025 CM APPL. 80138/2025 (Exemption) 1. Allowed, subject to all just exceptions. 2. The application stands disposed of. ITA 760/2025 3. This appeal lays a challenge to an order dated 31.07.2025 passed by learned Income Tax Appellate Tribunal (“ITAT”). In the earlier appeals filed by the respondent the ITAT has allowed the appeals in favour of the respondent/assessee. 4. It is agreed by the counsel for the parties that on identical questions/issues, four appeals have been reserved for orders. If that be so, we admit this appeal as well. 5. The following substantial questions of law are framed for This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 11:05:27

consideration in this appeal: (A) Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is erred in holding that sum of Rs.13,94,26,424/- as cost to cost reimbursement on account of secondment of employees should not be treated as FTS as per the provisions of section 9(l)(vii) of the Income Tax Act, 1961 as well as under Article 12 of the India-USA Double Taxation Avoidance Agreement (DTAA)? (B) Whether in the facts of this case, the amount of Rs.97,78,94,279/- received by the assessee shall fall within the provisions of the Article 12(4) (b) or 12(5)(e) read Article 15 of the India-USA DTAA? 6. Liberty is granted to the counsel for the parties to file their written submissions in this appeal within a period of two days from today. 7. Additionally, liberty is granted to the counsel to the parties to file consolidated written submissions in ITA Nos. 715/2025, 753/2025 and 760/2025 by 24.12.2025. 8. Reserved for judgment. V. KAMESWAR RAO, J VINOD KUMAR, J DECEMBER 18, 2025/sr This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 11:05:27

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