DIGITAL RISK MORTGAGE SERVICES LLC,PUNE vs. ITO, (IT) WARD 4, PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.884 & 885/PUN/2026 िनधा�रण वष� / Assessment Years : 2019-20 & 2020-21 Digital Risk Mortgage Vs. ITO (IT), Ward-4, Pune. Services LLC, Cyber City Tower IV, Magarpatta, Pune- 411013. PAN : AAFCD5562Q Appellant Respondent Assessee by : Shri Darpan Kirpalani (Virtual) : Shri Sandip Pawar (Virtual) Revenue by Date of hearing : 24.06.2026 Date of pronouncement : 21.07.2026 आदेश / ORDER PER VINAY BHAMORE, JM: These appeals filed by the assessee are directed against the separate orders dated 19.12.2025 passed by Ld. CIT(A), Pune-13 [‘Ld. CIT(A)’] for the assessment years 2019-20 and 2020-21 respectively.

2 ITA Nos.884 & 885/PUN/2026 2. Since the facts are identical involving common issues in both the above captioned appeals of the assessee, we proceed to dispose of the same by this common order. 3. First, we shall take up the appeal of the assessee in ITA No.884/PUN/2026 for A.Y. 2019-20 for adjudication as the lead case. ITA No.884/PUN/2026, A.Y. 2019-20 : 4. The appellant has raised the following grounds of appeal :- “1. That on the facts and in circumstances of the case, Ld. Commissioner of Income Tax (Appeals) ["CIT(A)") erred both in law and on the facts of the case in upholding the assessment order passed by the Assessing Officer ("AO") u/s 201 of the Act which is arbitrary, unjustified and contrary to the facts and circumstances of the case. 2. That on the facts and in circumstances of the case, action of Ld. CIT(A) stands in complete violation of the procedure laid down u/s 250(6) of the Income Tax Act, 1961. 3. That on the facts and in circumstances of the case, the action of Ld. CIT(A) is in complete violation of principles of natural justice by not considering the adjournment request dated 9th December 2025 filed by the Appellant, thereby depriving the Appellant of a fair opportunity to present its case. 4. That on the facts and in circumstances of the case, Ld. CIT(A) erred in not applying his mind to the facts of the case and has disposed of the appeal in limine without drawing any conclusions or making any findings based on the facts and law applicable to the case. The impugned ex-parte order lacks proper reasoning and does not reflect an independent assessment of the issues involved.

3 ITA Nos.884 & 885/PUN/2026 5. That in any case and circumstances, the action of Ld. CIT(A) in passing the impugned ex-parte order stands void in law and deserves to be set aside. MERIT GROUNDS: Without prejudice to the above-mentioned grounds, the Appellant submits the following grounds on merits: 6. That on the facts and in circumstances of the case, the Ld. CIT(A) erred in law and on facts in upholding the demand of Rs.12,23,954/- u/s Section 201(1) of the Act by the Ld. AO for non-deduction of tax at source u/s 195 of the Act on the payment of Rs 1,12,08,375/- made to Digital Risk LLC, USA ("DRI."). 7. That in any case and circumstances, Ld. CIT(A) has erred in upholding the interest u/s 201(1A) amounting to Rs. 9,12,791/- in respect of the above remittances made. 8. That on the facts and in circumstances of the case, the Ld. CIT(A) erred in not appreciating that the payments made by the Appellant to DRL did not fall within the purview of section 195 of the Act. 9. That on the facts and in circumstances of the case, the Ld. CIT(A) erred in upholding the decision of the Ld. AO in treating the impugned payments taxable as 'fees for technical services' under section 9(1)(vii) of the Act without appreciating that the services were entirely rendered outside India and were thus covered in the exception provided in clause (b) of section 9(1)(vii) of the Act. 10. That in any case and circumstances, the Ld. CIT(A) erred in upholding the action of the Ld. AO in relying on the explanation below section 9(2) of the Act to hold that the income of DRL was deemed to accrue or arise in India, without plausible justifications and tenable arguments and consequently erred in holding that the Appellant was liable to deduct tax at source on such payments. 11. That in any case and circumstances, the Ld. CIT(A) erred in not appreciating that the income was earned by DRL outside India and as per section 5 of the Act, the source of income was outside India and therefore the deeming fiction in explanation below section 9(2) of the Act was not attracted. 12. That on the facts and in circumstances of the case, the Ld. CIT(A) erred in confirming the action of Ld. AO in treating the impugned payments taxable as 'fees for included services' as per Article 12 of the Double Tax Avoidance Agreement between

4 ITA Nos.884 & 885/PUN/2026 India and USA ("India-USA DTAA") without appreciating that the onsite IT Support work or services provided does not fall into the ambit of the India-US DTAA. 13. That on the facts and in circumstances of the case, the Ld. CIT(A) failed in understanding the business model of the Appellant and further erred in upholding the action of Ld. AO that DRL had 'made available' technical knowledge, etc. to the Appellant without understanding or delving into the statement of Work services under Article 12 of the India-USA DTAA. 14. That in any case and circumstances, that the Ld. CIT(A) erred in upholding the action of the Ld. AO in treating the payment for on-site services liable for withholding tax as per provisions of section 195 of the Act without proving that on-site services charges paid by the company were in fact taxable in India and disregarding the submission made by the appellant and facts furnished to the Assessing Officer. 15. That in any case and circumstances, that the Ld. CIT(A) disregarded the ruling of the Apex Court in Ishikawajima Harima Industries that if specific Article of DTAA doesn't cover the income, then it cannot be taxed under any other generic Article of the said DTAA. Further, the CIT(A) erred in not appreciating that the ruling is not effectively overruled by the retrospective amendment to Sec 9 vide Explanation provided thereunder. 16. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds, at any time before or at the time of hearing of the appeal. Each of the above grounds is independent and without prejudice to the other grounds preferred by the Appellant.” 5. Facts of the case, in brief, are that the assessee is India Branch of Digital Risk Mortgage Services incorporated in USA to render offshore services to its Head Office in USA along with its Group Affiliates relating to end to end fulfillment (processing, underwriting and closure) and, processing of components thereof.

5 ITA Nos.884 & 885/PUN/2026 On the basis of information that the assessee has not deducted TDS on foreign remittances, being payments to its Associated Enterprise (AE), system generated notice u/s 133(6) of the Act was issued to the assessee and thereafter further notices were also issued on the above subject matter and after considering the submissions of the assessee, the Assessing Officer held that the remittances made by the assessee to Digital Risk LLC on account of information technology software services/Information Technology enabled services tantamount to FTS/FIS within the meaning of provision of section 9(1)(vii) & explanation inserted below sub-section 2 of section 9 and Article 12 of the India USA DTAA and therefore, the assessee was required to deduct the tax @10% (applicable surcharge and education cess) in respect to payment of Rs.1,12,08,375/- made to Digital Risk LLC. Further, in view of the provisions of section 201(1A) of the IT Act, the assessee was also held liable to pay simple interest @ 1% for every month or part of a month on the amount of such tax on which such tax was deductible to the date on which such tax is deducted. Accordingly, vide order dated 26.11.2024, the Assessing Officer determined the liability of the assessee u/s 201(1) of the IT Act at Rs.12,23,954/- and liability of

6 ITA Nos.884 & 885/PUN/2026 interest u/s 201(1A) of the Act at Rs.9,12,791/- was also determined. 6. Being aggrieved with the above order dated 26.11.2024, the assessee preferred an appeal before Ld. CIT(A). Since (according to Ld. CIT(A)) the assessee remained absent (on the last date of hearing i.e. on 09.12.2025), Ld. CIT(A) dismissed the appeal filed by the assessee. 7. It is the above order against which the assessee is in appeal before this Tribunal. 8. We have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that it is the contention of the assessee that the ex-parte order passed by Ld. CIT(A) is unjustified & in complete violation of procedure laid down u/s 250(6) of the IT Act. Section 250(6) of the IT Act mandates that Ld. CIT(A) is required to decide each and every ground raised by the assessee and in the instant case in hand, Ld. CITA(A) failed to do so, since the appeal was dismissed by Ld. CIT(A) for want of prosecution. In this regard, it was further submitted by Ld. Counsel of the assessee that the assessee company sought adjournment, however, Ld. CIT(A) without affording further

7 ITA Nos.884 & 885/PUN/2026 date of hearing, decided the appeal ex-parte i.e. in the absence of the assessee, which is in complete violation of principles of natural justice and equity. Therefore, it is the request of Ld. Counsel of the assessee that the matter may kindly be restored back to the file of Ld. CIT(A) so that the assessee can substantiate the grounds of appeal. Ld. DR raised no serious objection to the request of the assessee. 9. Considering the totality of the facts of the case and in the interest of justice and without going into merits of the case, we deem it appropriate to set-aside the ex-parte order passed by Ld. CIT(A) and restore the matter back to the file of Ld. CIT(A) with a direction to decide the appeal afresh and as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT(A) in this regard and to produce relevant documents, submissions and evidences, if any, in support of grounds of appeal without taking any adjournment under any pretext, otherwise Ld. CIT(A) shall be at liberty to pass appropriate orders as per law. Thus, the grounds of appeal raised by the assessee are allowed for statistical purposes.

8 ITA Nos.884 & 885/PUN/2026 10. Since we have already allowed ground nos.2, 3, 4 & 5 by restoring the matter back to the file of Ld. CIT(A) for deciding the appeal afresh, other grounds raised by the assessee becomes infructuous and therefore need not be adjudicated. 11. In the result, the appeal filed by the assessee in ITA No.884/PUN/2026 for A.Y. 2019-20 is allowed for statistical purposes. ITA No.885/PUN/2026, A.Y. 2020-21: 12. Since the facts and issues involved in the appeal of the assessee in ITA No.885/PUN/2026 for A.Y. 2020-21 are identical to the appeal of the assessee in ITA No.884/PUN/2026 for A.Y. 2019-20 therefore, our decision in ITA No.884/PUN/2026 for A.Y. 2019-20 shall apply mutatis mutandis to the appeal of the assessee in ITA No.885/PUN/2026 for A.Y. 2020-21. Accordingly, the appeal of the assessee in ITA No.885/PUN/2026 for A.Y. 2020-21 is also allowed for statistical purposes. 13. In the result, the appeal filed by the assessee in ITA No.885/PUN/2026 for A.Y. 2020-21 is allowed for statistical purposes.

9 ITA Nos.884 & 885/PUN/2026 14. To sum up, both the above captioned appeals filed by the assessee are allowed for statistical purposes, as indicated above. Order pronounced on this 21st day of July, 2026. Sd/- Sd/- (DR. DIPAK P. RIPOTE) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 21st July, 2026. Sujeet/DOC Sujeet Kumar Digitally signed by Sujeet Kumar Sharma Sharma Date: 2026.07.22 14:43:59 आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A), Pune-13. 4. The Pr. CIT/CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “A” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.