RELIANCE JIO INFOCOMM UK LIMITED,UNITED KINGDOM vs. DEPUTY COMMISSIONER OF INCOME-TAX (INTERNATIONAL TAXATION)-4(1)(1), MUMBAI, MUMBAI

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ITA 2990/MUM/2026Status: DisposedITAT Mumbai29 June 2026AY 2019-207 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the receipts towards telecommunication services are in the nature of business profits and not royalty or fees for technical services, especially in the absence of a Permanent Establishment in India. The Tribunal followed its own previous decisions and other High Court judgments on similar issues.

What were the facts?

The assessee, Reliance Jio Infocomm UK Ltd., did not file a return of income for AY 2019-20. The AO initiated reassessment proceedings based on information that the assessee received significant amounts from Reliance Jio Infocom Ltd. The AO proposed taxing these receipts as royalty/FTS, which was upheld by the DRP.

What were the issues?

Whether telecommunication service receipts constitute royalty or business profits, and whether the assessment was validly reopened and passed within the limitation period.

Which sections of the Income-tax Act were involved?

Section 147,Section 144C,Section 153,Section 9(1)(vi),Section 195

AI-generated summary — verify with the full judgment below

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “I” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.2990/MUM/2026 (AY: 2019-20) Reliance Jio Infocomm UK Ltd. vs. DCIT (International Taxation)-4(1)(1), 8th Floor, 105 Wigmore Street, Room 625, Kautilya Bhavan, BKC, London Wiuiqy, United Kingdom- Mumbai400051. 999999. PAN/GIR No: AAHCR2540L (Appellant) (Respondent) Assessee by Shri Nimesh Vora a/w. Ms. Moksha Mehta Revenue by Shri Sridhar G. Menon (Sr. DR) Date of Hearing 29.06.2026 Date of Pronouncement 16.09.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal emanates from the final assessment orders passed u/s 147 r.w.s 144C(13) of the Income-tax Act, 1961 (in short, ‘Act’) by the DCIT, Int. Tax, Circle 4(1)(1), Mumbai [in short, ‘AO’], dated 21.01.2026 for the assessment year (AY) 2019-20 pursuant to the directions issued by the Dispute Resolution Panel- 2, Mumbai (DRP) vide order u/s 144C(5) dated 26.12.2025.

2.

The grounds of appeal raised by the assessee are as under:

“Reopening of the assessment 1. erred in reopening the assessment in the absence of escapement of income,

Assessment order is barred by limitation 2. erred in passing the final assessment order u/s. 147 r.w.s. 144C(13) for the impugned Assessment Year 2019-20, on 21 January 2026, beyond the time limit as specified u/s. 153 of the Act which expired on 31 March 2025, Taxability of Telecommunication services 3. erred in holding that the receipts towards telecommunication services are in the nature of Royalty/Fees for Technical Services ('FTS') under the provisions of the Act and the India-UK Double Taxation Avoidance Agreement ('DTAA'); 4. failed to appreciate that the receipts towards telecommunication services are in the nature of "Business Profits" and not chargeable to tax in India in the absence of the Company's Permanent Establishment ('PE') in India as per provisions of Article 5 read with Article 7 of the DTAA; Double recovery of taxes from payer as well as recipient 5. failed to appreciate that the payer Reliance Jio Infocomm Limited ('RJIL') is already held as assessee in default for non-deduction of tax at source in respect of payment made to the Company for telecommunication services and again taxing the same income in the hands of the Company results in recovery of tax twice for same transaction.”

3.

Facts of the case, in brief, are that the assessee had not filed return of

income for AY 2019-20. As per the information available with the AO, the assessee

had received Rs.8,71,88,826/- and Rs.28,26,896/- from Reliance Jio Infocom Ltd.

Therefore, notice u/s 148 of the Act was issued on 21.04.2025 after following the

due procedure. In response to the notice u/s 148, the assessee filed return of

income declaring total income at Rs.Nil. After issuance of statutory notices u/s

143(2) and 142(1) of the Act and show cause notice, the AO passed draft order

u/s 144C(1) of the Act proposing variation of Rs.10,29,56,857/- towards

royalty/FTS being remittance from Reliance Jio Infocom Ltd. The assessee filed

objection against the draft order before the Dispute Resolution Panel (DRP-2). The

DRP-2, in its order u/s 144C(5) dated 26.12.2025, issued directions wherein the adverse finding of AO was accepted and objection of the assessee was rejected.

Subsequently, the AO passed order u/s 147 r.w.s. 144C(13) of the Act on

21.01.2026 by making addition of Rs.10,29,56,857/- to the total income of the

assessee.

4.

Aggrieved by the order of AO u/s 144 r.w.s. 144C(13) of the Act, the

assessee filed appeal before the Tribunal. At the outset, both the parties fairly

admitted that similar issues as those involved in the present appeal have been

consistently considered and decided in favour of assessee by the co-ordinate

Benches in assessee’s own case for various assessment years. The Ld. AR has filed

copies of the Tribunal orders for AYs 2019-20, 2018-19 and 2020-21 in ITA

No.2866/Mum/2022 dated 26.04.2023, ITA Nos.6331 to 6334/Mum/2018 dated

15.11.2019 and ITA No.2991/Mum/2023 dated 17.04.2026 respectively. The Ld.

AR also relied upon the following other decisions in support of the grounds of

appeal: (i)Vodafone Idea Ltd. v. DDIT [2023] 457 ITR 189 (Kar.), (ii) DDIT v.

Vodafone Idea Ltd. [2024] 469 ITR 391 (SC), (iii)DDIT v. Vodafone Idea Ltd. [2025]

306 Taxman 267 (SC), (iv) Telefonica UK Ltd. v. DCIT [2023] 203 ITD 171 (Mumbai

- Trib.), (v) Telefonica Depreciation Espana SA v. ACIT(IT) [2023] 154 taxmann.com

436 (Bangalore - Trib.), (vi) Al Telekom Austria Aktiengesellschaft v. DCIT [2023]

156 taxmann.com 155 (Bangalore-Trib), (vii) DCIT v. Orange (formerly known as

France Telecom) [2024] 158 taxmann.com 186 (Bangalore - Trib), (viii) Bharti Airtel Ltd. v. ITO(TDS) [2016] 178 TTJ 708 (Delhi - Trib.), (ix) Vodafone Idea Ltd v.

DCIT [2025] 177 taxmann.com 440 (Mumbai - Trib.), (x) PCCW Global Ltd. v. ACIT

[2023] IT(IT)A No. 785/Bang/2022 (Bangalore -Trib.), (xi) Oman

Telecommunications Company SAOG v. DCIT [2024] ITA No. 2080/Del/2024 and

(xii) Bharti Airtel Ltd. vs. ACIT [2024] 168 taxmann.com 10 (Delhi - Trib.).

5.

We have heard both sides and perused the materials on record. We have

also carefully gone through the decisions relied upon by the Ld. AR. As stated

earlier, both parties agreed that the issues involved in this appeal are recurring in

nature and were decided by the Tribunal in different assessment years. For ready

reference, the relevant part of the order in ITA No.2866/Mum/2022 dated

26.04.2023 is reproduced below:

“19. We have heard both the parties. It is noted that, the assessee company had entered into a Bandwidth Services Agreement dated 01.09.2017 with M/s. RJIUK which is a company incorporated in the United Kingdom. The said payee is a tax resident of the United Kingdom as is evident from the Tax Residency Certificate. M/s. RJIUK is engaged in business activities relating to International Telecommunication and it provides services such as voice termination, IP transit etc. The Agreement is noted to have been later amended vide Agreement dated 15.01.2019. Upon reading of these agreements, it is noted that M/s. RJIUK has agreed to provide Bandwidth Services to the assessee for connectivity between Palermo, Italy and Frankfurt, Germany. In consideration, the assessee has remitted USD 18,795 to M/s. RJIUK towards the Bandwidth Services. The assessee is noted to have deposited withholding taxes aggregating to INR 1,48,776/- after grossing up as per Section 195A of the Act. Thereafter, the assessee filed an appeal before the Ld. CIT(A) in terms of Section 248 of the Act seeking declaration that it is not required to withhold tax u/s 195 of the Act which was allowed by the Ld. CIT(A). It is noted that identical issue had come up before this Tribunal in assessee’s own case in earlier years, which was held in their favour, as noted (supra). We note that, this Tribunal has decided the issue regarding taxability of payment towards bandwidth services and whether the same constituted ‘royalty’ or not, in the light of Indo-Singapore DTAA in earlier year/s and answered the question in favour of the assessee. Having perused the definition of the ‘royalty’ in Indo-Singapore DTAA and India-UK DTAA (supra), we note that they are in pari materia and therefore the ratio laid down by this Tribunal in assessee’s own case in earlier years (supra) is applicable with equal force in the case before us as well. Accordingly, the contention of the Revenue to that extent is held to be devoid of any merit and is thus rejected.

20.

Thus, the Ld. AR had rightly relied on the findings given by this Tribunal in the assessee’s own case for AY 2018-19 in ITA. Nos.6331 to 6334/Mum/2018 dated 05.11.2019. In the decided case, this Tribunal followed their earlier order in assessee’s own case for AY 2016-17 reported in 108 taxmann.com 325, wherein it was held that the fees paid for bandwidth services did not constitute ‘royalty’ as defined in India-Singapore tax treaty (identical to India-UK DTAA). The relevant findings are noted to be as under: ……. 21. It is noted that this Tribunal had also dealt with the applicability of definition of ‘royalty’ u/s 9(1)(vi) of the Act, as amended by Finance Act 2010, more particularly Explanation 6 to Section 9(1)(vi) in light of Article 3(2) of the tax treaty, which has been relied upon by the Ld. DR before us as well. The Tribunal is noted to have rejected this line of argument of the Revenue by holding as follows: …… 22. Coming to the reliance placed by the Ld. DR on the judgment of Hon’ble Madras High Court in the case of Verizon Communication Singapore Pte Ltd (supra), the Ld. AR has rightly demonstrated that the ratio laid down therein has since been negated by the Hon’ble Delhi High Court in the case of M/s. New Skies, as noted (supra) which has been followed with approval by the Hon’ble jurisdictional Bombay High Court in the case of M/s. Reliance Infocomm Ltd. (supra). Moreover, this aspect is no longer res-integra, in view of the decision of the Hon’ble Supreme Court in the case of M/s. Engineering Analysis Centre of Excellence (P.) Ltd (supra) which has approved the legal principle that any change made to domestic law cannot be read into the International Treaty unless the International Treaty has been amended by bilateral re-negotiation to that extent. Therefore, taking note of these judicial precedents, the reliance placed by the Revenue in the case of Verizon Communication Singapore Pte Ltd (supra) is held to be untenable. 23. For the above reasons and, following the order passed by this Tribunal in assessee’s own case for earlier year/s, we see no reason to interfere with the order of the Ld. CIT(A) holding that, there was no obligation for assessee to deduct tax at source while making payment to M/s RJIUK for Bandwidth Services, in the facts and circumstances discussed (supra).

24.

In the result, the appeal of the Revenue stands dismissed.”

5.1 Further, in case of Reliance Jio Infocomm USA Inc. vs. DCIT in ITA

No.2991/Mum/2023 dated 17.04.2026, the Tribunal after extracting observation

of the Tribunal in ITA No.6331 to 6334/Mum/2018 (supra), decided the issue as

follows:

“6.5. On the contrary, the Ld.DR relying on the orders passed by the authorities below vehemently argued the observations as recorded by the Ld.AO/DRP in their orders. Nothing was brought on record to take different view from the view taken hereinabove in assessee's own case. Respectfully following the aforesaid views and the decision of Hon'ble Karnataka High Court in case of Vodafone Idea Ltd. (supra), we hold that the receipts in the hands of the assessee could be taxed as business profits as per the applicable laws of U.S. and cannot be brought to tax either as FTS or Royalty under the Income Tax Act in India.

Accordingly, Grounds 2-4 raised by the assessee stands allowed.”

5.2 The Ld. CIT-DR has not been able to distinguish the decisions either on

facts or in law. He submitted that the decisions of the Tribunal were not accepted

by the department and the matter is still pending with the Hon’ble Bombay High

Court. After considering submissions of the parties and following the decisions

cited supra, the grounds No.3 and 4 of the assessee are allowed.

6.

Since we have decided the issue on merit in favour of the appellant,

grounds No.1 and 2 on validity of reopening and the order being time barred are

not adjudicated and the same are kept open.

7.

The appellant has not pressed ground No.5, which is dismissed as not

pressed. 6

8.

In the result, the appeal of the assessee is allowed.

Order is pronounced on 16.09.2026.

Sd/- Sd/- (SAKTIJIT DEY) (BIJYANANDA PRUSETH) VICE PRESIDENT ACCOUNTANT MEMBER

*Aniket Chand; Sr. PS MUMBAI Date: 16.09.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File

By Order

Assistant Registrar ITAT, MUMBAI

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