ACIT INTERNATIONAL TAXATION 3 2 1 MUMBAI, INCOME TAX DEPARTMENT MUMBAI vs. MCKINSEY AND COMPANY LME LIMITED, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL "I" BENCH, MUMBAI SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.1818/MUM/2024 (Assessment Year: 2018-2019) Assistant Commissioner of Income Tax -(IT) 3(2)(1), Mumbai Room No.1613, 16th Floor, Air India Building, Nariman Point, Mumbai – 400021. Maharashtra …………. Appellant Vs M/s. Mckinsey & Company Lme Limited C/o. M/s. Ernst & Young LLP, CAs, 14th Floor, The Ruby, Senapati Bapat Marg, Dadar, Mumbai – 400028. …………. Respondent [PAN:AAKCM0197M] Appearance For the Appellant/Department : Shri Krishna Kumar For the Respondent/Assessee : Shri Porus Kaka & Shri Divesh Chawla Date Conclusion of hearing : 05.03.2026 Pronouncement of order : 20.05.2026 O R D E R Per Rahul Chaudhary, Judicial Member: 1. The present appeal has been preferred by the Revenue against the Order, dated 24/01/2024, passed by the Commissioner of Income Tax (Appeals) – 57, Mumbai [hereinafter referred to as the ‘CIT(A)’], whereby the Learned CIT(A) had partly allowed the appeal of the Assessee against the Assessment Order, dated 11/05/2021, passed under Section 143(3) read with Section 144C(3) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], for the Assessment Year 2018-2019.

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 borrowed services fees received by the assessee do not constitute Fee for Technical Services in its hand and the same falls within the ambit of „Business Profit‟ under Article 7 of the India-United Kingdom Double Taxation Avoidance Agreement and other relevant DTAAs? ii. Whether on the facts and circumstances of the case and in law Ld. CIT(A) erred in holding the income as Business Profit without PE, whereas the nature of income is of „Fee for Technical Services‟? iii. Whether on the fact and circumstances of the case and in law the Ld. CIT(A) erred in holding that the assessee had no permanent establishment in India whereas upon the perusal of Article-5 of the Indo UK Double Taxation Avoidance, it fits into the definition of PE as follows read with the fact that M/s. McKinsey Inc. is 100% holding company of the assessee company.” Since the grounds are connected, the same are taken up together for adjudication hereinafter.

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 ordinarily rendered services to McKinsey Indian Entities in connection with provisions of data (eg. population, GDP, inflation, production capacities, regulations, policy framework etc.) providing qualitative data such as prevailing practices in various areas. The Assessee also provided advisory support to McKinsey Indian entities (also referred to as ‘borrowed services’).

In response to query raised by the Assessing Officer in this regard, the Assessee explained that for the Assessment Year 2018-2019, the Assessee has declared INR.11,61,497/- as reimbursement from McKinsey India and had claimed the same to be exempt in the revised return of income being in the nature of reimbursement of expenses without any profit element. The Assessee also submitted that INR.4,00,95,963/- received for provision of ‘borrowed services’/‘advisory support’ from McKinsey India and McKinsey & Company India LLP were claimed to be exempt under the provisions of the Tax Treaty. It was contended that while providing the ‘borrowed services’/’advisory support’,

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 the Assessee did not make available any technical knowledge, skill etc. to the service recipients. Accordingly, the receipts did not qualify as ‘Fees for Technical Services’ under Article 13 of the Tax Treaty and therefore, the same were not liable to tax in India. It was further contended the services were performed during the ordinary course of business, and therefore, the receipts qualified as business receipt. In the absence of a Permanent Establishment (PE) of the Assessee in India in terms of Article 5 of the Tax Treaty, the receipts were not be taxable in India as per the provisions of Article 7 of the Tax Treaty. In support the Assessee filed details along with tabular summary of the services rendered and the nature thereof giving reasoning for non-taxation of such service/receipts in India. The Assessee also submitted tabular summary outlining the scope of all projects/client assignments of McKinsey India on which the Assessee provided assistance to McKinsey India to substantiate that services rendered by the assessee to McKinsey India cannot be considered to be ‘Fees for Technical Services’ under Article 13 of the Tax Treaty.

However, the Assessing Officer was not convinced with the explanation and supporting documents/details furnished by the Assessee. The Assessing Officer rejected the same and concluded that the receipt of reimbursement of expenses and receipt for ‘borrowed services’/‘advisory support’ provided by the Assessee to McKinsey India and McKinsey & Company India LLP was in the nature of ‘Fees for Technical Services’ liable to tax in Indi a in terms of Article 13 of the Tax Treaty. Thus, in the Draft Assessment Order passed under Section 143(3) r.w.s. 144C(1) of the Act passed on 06/04/2021, the Assessing Officer proposed addition of INR.4,12,43,537/-.

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 the Assessee did not wish to file objections to Dispute Resolution Panel. Accordingly, the Assessing Officer passed Final Assessment Order under Section 143(3) r.w.s. 144C(3) of the Act and assessed income of the Assessee as under: SNo. Particulars Amount (in INR.) Returned Income Nil Add Borrowed service charges/income 4,00,95,963 Reimbursement of expenses 11,47,574 Total 4,12,43,537 8. Being aggrieved, the Assessee preferred appeal before the CIT(A) raising following grounds:

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 the borrowed service fees should not be taxable in india in the hands of the Appellant. The Appellant prays that the principles underlying the said order ought to have been applied.

“13. The ground of appeal nos. 1 to 4 are related to addition in respect of fees for technical services related to receipts for borrowed services.

13.1 The facts and findings of AO in the assessment order and submission made by the appellant are similar to those in A.Y.2017-18. The issue has been discussed in detail in para 5.3.1 of this appellate order, wherein this ground of appeal has been Allowed. In view of the detailed discussion made in para 5.3.1 while deciding the appeal for the AY 2017-18, the ground of appeal nos. 1 to 4 are Allowed.

ITA No. 1818/Mum/2024 Assessment Year 2018-2019

Accordingly, the ground of appeal nos. 1 to 4 are Allowed.

14.1 The facts and findings of AO in the assessment order and submission made by the appellant are similar to those in A.Y 2017-18. The issue has been discussed is details in para 6.3 of this appellate order, wherein this ground of appeal has been Allowed. In view of the detailed discussion made in para 6.3 while deciding the appeal for AY.2017-18, the fifth ground of appeal is Allowed.

Accordingly, the fifth ground of appeal is Allowed.”

“5.1 During the assessment proceedings, the AO observed that the assessee was a part of McKinsey group of entities and it was engaged in the business of rendering strategic consultancy services to the clients, which inter alia included analysis of performance, development, strengths and weaknesses of the clients, improving profitability and productivity of the clients and similar other parameters. For performing those functions, the assessee made use of certain data, information and other support. It was stated by the assessee that the services were performed outside India and were rendered in the ordinary course of the business, therefore, it was business receipt. Further, the assessee had no permanent establishment (PE) India, therefore, incidence of tax did not arise in India. Thus, the assessee had filed Return of income claiming benefit of DTAA between India and United Kingdom. The AO asked the assessee to explain as to why loaned service income amounting to Rs.1,83,15,483/- should not be treated as Fees for Technical Services. In response to the query

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 raised by the AO, the AR of the assessee submitted tabular summary related to services rendered by the assessee to McKinsey India during the year alongwith the reason for non-taxation of borrowed (loaned) services. The assessee also submitted the tabular summary outlining the scope of all projects/client assignments of McKinsey India on which the assessee has provided assistance to McKinsey India were India to substantiate the services rendered by the services to McKinsey not "Fees for Included Services" under Article 13 of DTAA between India and United Kingdom. However, the AO was not convinced with the reply of the assessee. The AO was of the view that as per Article 12 of India-UK Treaty, fees for included services meant payment of any kind to any person in consideration for rendering of any technical or consultancy service. The term technical and consultancy was not defined in IT Act, 1961, therefore, the general meaning of those terms should be taken into consideration. The AO relied upon the decision of Supreme Court in the case of GVK Industries (371 ITR 453(SC) and CIT vs Bharti Cellular Ltd & Others. The AO noted that to provide management, financial, technical and consultancy services to the clients in India, the assessee took support of Mckinsey group of companies having global presence. For this purpose, agreements were signed by Mckinsey group companies. The consultancy services were provided through consultants who were directly involved in the provision of client services and support staff who provided support in the course of provision of client services. The companies agreed to account for the fees through a single intercompany account with Mckinsey and Company, Inc. USA, which would act as clearing house and manage the administrative activities as far as the agreement. Further, Mckinsey India, assessee company would raise the service request and it was sent to the group company which had capacities to render such services. After receipt of services from that group company, the assessee company would make payment based on hourly diem rate multiplied by hours charged for the person to the service borrowers client engagement code. The payment was made through Mckinsey USA which acted as a clearing house. Thus, the services provided by the assessee to Mckinsey India was not general in nature and exclusive to the Mckinsey group companies. These services were provided by strategically expertise professionals, which was backed by centralized administrative setup which rendered regional specific

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 global services. The services rendered by the assessee were used by the recipient in different decision was making, of financial decision making, legal matters, treasury services etc. Thus, the AO the view that the nature of the services would come under the ambit of consultancy services. Relying upon the decision of High Court of Andhra Pradesh in the case of G V K Industries vs. CIT & another (228 ITR 564 (AP), the AO held that the fees received by the assessee on account of "borrowed services" were clearly the fees for consultancy services and it would fall in the definition of fees for included services as per Article 12 of India-UK DTAA. Therefore, the AO treated income from "borrowed services (loaned services)" amounting to Rs.1,83,15,483/- as Fees for Technical Services. The AO further noted that the Income Tax Act do not prescribe rate of tax on royalty or fees for technical services in respect of payment made by one non-resident to another non-resident, therefore, the rate of tax should be determined on a net basis. After considering India-UK DTAA, the AO taxed the income @15% on gross basis. Accordingly, the AO has made addition of Rs.1,83,15,483/- in respect of income from borrowed (loaned) services considering it as fees for included services. xx xx 5.3.1 The order of the ITAT in the case of McKinsey & Co. Inc., US and others for AYs. 2011-12 and 2012-13 has been perused. Other case laws relied upon by the appellant has been perused On going through the ITAT order in the case of group companies for AY. 2011-12, it is seen that the ITAT, Mumbai has held that the taxability of receipts including borrowed service fees/loaned service fees was to be determined as per Mutual Agreement Procedure (MAP) statement, therefore, the aforesaid receipts were business profit covered by Article 7 of the treaty and was not in the nature of royalty or fees for included services. Further, the ITAT has held that the assessee had no PE in India, therefore, those receipts were not chargeable to tax in India. Further, the resolution under MAP, in the case of group companies from AYs. 2002-03 to 2013-14 have also been perused. Thus, the ITAT, Mumbai in the case of group companies for AY. 2011-12 has held that the borrowed service fees is not fees for included services and further in absence of PE in India, the business income from borrowed service fees is not taxable in India. The facts of the case of

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 the appellant for AY.2017-18 are identical to the facts of the case of group companies in AY. 2011-12. Thus, respectfully following the order of the ITAT, Mumbai in the case of the group companies for A.Y 2011-12, the borrowed service fees are not held as fees for included services/fees for technical services. Further, there being no PE in India, the business income from borrowed service fees is also not taxable in India as per Article 13 of the India-UK DTAA Identical issue was involved in the case of the appellant for AYs. 2014-15, 2015-16 and 2016-17. In the appellate order for AYs. 2014-15, 2015-16 and 2016-17 In appellate order nos. ITBA/APL/S/250/2023-24/1053346691(1), ITBA/APL/S/250/2023-24/1053347495(1) and ITBA/APL/S/250/2023-24/1053348487(1), respectively, dated 31.05.2023, the issue has been decided by me in favour of the appellant. Thus, the addition of Rs.1,83,15,483/-made by the AO in respect of borrowed service fees is treated as deleted. Accordingly, grounds of appeal nos. 1 to 4 are Allowed. xx xx 6. The ground of appeal nos. 5 and 6 are regarding taxing reimbursement of expenses amounting to Rs.3,75,507/- as Fees for Technical Services under Article 13 of the India-UK treaty. 6.1. During the assessment proceedings, the AO observed that the assessee has received Rs.3,75,507/-as reimbursement of expenses from Indian group entities. In the original Return of income, the same was offered for taxation whereas in the revised Return of income, the same was claimed as exempt and not taxable. During the assessment proceedings, the assessee did not submit any details with respect to the income from reimbursement of expenses. The AO issued a show-cause as to why the same should not be taxed as income in India. In response to the query raised by the AO, the assessee did not make any submission and also did not produce substantiating evidence to prove that the income from reimbursement of expenses was exempt and not taxable. The AO held that the assessee was in the business of providing strategic consultancy services and earned income during the year by providing services in the nature of consultancy in

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 technical/management and financial matters that was 'make available' in nature as per India-UK DTAA. In the absence of any evidence to prove the reimbursement of expenses was truly reimbursement in nature, the AO held reimbursement of expenses as fees for technical services. Accordingly, the AO has taxed reimbursement of expenses amounting to Rs.3,75,507/- as fees for technical services. xx xx 6.3. The facts recorded and finding of the AO in the assessment order and submission made by the appellant have been considered. received The an facts of the case of the appellant are that during the year, the appellant had amount of Rs 3,75,507/-as reimbursement of expenses from Indian group entities. The AO has considered the reimbursement of expenses received in the nature of providing consultancy services which 'make available", the technical, managerial and financial services as per India-UK DTAA Thus, considering the reimbursement of expenses as fees for technical services, the AO has made the addition. During the appellate proceedings, the appellant has submitted that the reimbursement of expenses was towards consulting/advisory charges incurred by the appellant on behalf of Mckinsey India group entities. Such expenses were out of pocket expenses and were recovered from Mckinsey Indian group entities without any mark-up. Reimburserment of expenses was in respect of advisory charges related to project code IN1310 for which 20,546 AED equivalent to Rs.3,75,507/- were reimbursed. The appellant referred to provisions of Article 12(4) of India-US Treaty and submitted that the reimbursement of expenses in the nature of advisory charges could not be considered towards any services provided which were managerial, technical or consultancy in nature, By providing advisory charges, the appellant did not make available any technical knowledge, experience, skill, know-how, processes, etc. to Mckinsey Indian group entities. Therefore,such reimbursement of expenses could not qualify as FTS under Article 12(4) of India-US Treaty. The appellant relied upon the decision in the case of CIT vs Siemens Aktiongesellschaft [2009] 310 ITR 320 (Bom). The appellant also referred to the detailed submission made with respect to ground of borrowed service fees. The appellant further submitted that the reimbursement of expenses was towards travelling expenses, telecom charges, etc., which were out of pocket expenses and such expenses were recovered

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 without any mark-up. No element of income was included in receipt of reimbursement of expenses. The appellant referred to provisions of section 2(24) and section (5) of the IT Act. Thus, the reimbursement of expenses did not include any profit and it would not constitute the income of the appellant. The appellant relled upon the decisions in the case of A. P. Moller Maersk A S (392 ITR 186) (SC), CIT vs Siemens Aktiongesellschaft [2009] 310 ITR 320 (Bom), DIT (International Taxation) vs Krupp Udhe Gmbh (Bom HC) (ITA No. 2626 of 2009), CIT vs Industrial Engineering Products Pvt Ltd [202 ITR 1014 (Del HC)] and CIT vs Dunlop Rubber Co Ltd (142 ITR 493 Cal HC)). The appellant further submitted that in subsequent years, in the case of the appellant as well as the group companies, the AO has accepted that reimbursement of expenses was not taxable as FTS. The AO has considered reimbursement of expenses as FTS because the reimbursement of expenses was related to providing services which were technical, managerial and consultancy in nature. By providing such servicestechnical. knowledge, experience, skill, know-how or processes was made available as per Article 12(4). From nature of the services, it is seen that reimbursement of expenses was related to travelling expenses, travelling charges. The reimbursement was made without any mark-up and no element of profit was involved in reimbursement of such expenses. Further, in the case of the appellant for AY. 2021- 22, the AO has not considered the reimbursement of expenses taxable as FTS. Therefore, reimbursement of expenses which is in the nature of travelling expenses and telephone charges did not 'make available technical knowledge, experience, skill, know-how or processes is not taxable as FTS. Accordingly, the ground of appeal nos. 5 and 6 are Allowed.” 11. Being aggrieved by the above relief granted by the Learned CIT(A) by deleting the additions made by the Assessing Officer, the Revenue has preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 2 above.

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 by the Assessee. We have taken into consideration the aforesaid orders, the submissions advanced by the Learned Senior Counsel and the Learned Departmental Representative and have considered the material on record, including the judicial precedents cited during the course of hearing and forming part of the paper-book furnished by the Assessee.

(a) First - The Assessee was a tax resident of the United Kingdom, and therefore, entitled to the beneficial provisions contained in Tax Treaty

(b) Second - The receipts towards reimbursement of expenses and provisions of services did not fall within the narrow definition of ‘Fees for Technical Services’ (for short ‘FTS’) contained in Article 13 of the Tax Treaty since the Assessee did not make available technical knowledge, experience, skill know-how or processes

(c) Third - The Assessee did not have a Permanent Establishment (for short ‘PE’) in India under Article 5 of the Tax Treaty. Consequentially, in the absence of a PE, the receipts (which were in the nature of business income), were not liable to tax in India as per Article 7 of the Tax Treaty.

Out of the above three contentions, the Assessing Officer rejected only the Second contention of the Assessee and concluded that the receipts towards reimbursement of expenses and provisions of services were in the nature of ‘Fees for

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 Technical Services’ as defined Article 13(4) of the Tax Treaty and therefore, liable to tax in India.

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 attracted to the receipts under consideration. By way of Ground No.1 raised in the present appeal the Revenue has challenged the aforesaid action of the Learned CIT(A). Further, in the appellate proceedings before this Tribunal, by way of Ground No. 2 and 3, the Revenue has now contended that receipts be brought to tax as Business Profits under Article 7 as the Assessee has a PE in India. Thus, the Revenue has adopt a contradictory approach in the appellate proceedings by defending the action of the Assessing Officer to treat receipts as FTS in assessment proceedings by way of Ground No. 1 while simultaneously contending that the same receipts be taxed as Business Profits (since FTS is connected to PE of the Assessee in India) during appellate proceedings before this Tribunal. The Revenue has failed to bring on record any cogent material or evidence to substantiate that the Assessee has a PE in India. Revenue’s contention that there existed a PE of the Assessee in India on the basis of holding-subsidiary relationship (as raised in Ground 3 raised in the present appeal) is legally untenable. It is a well-settled principle that under Article 5 of the Tax Treaty the mere existence of a parent-subsidiary relationship or shareholding control does not, per se, create or constitute a Permanent Establishment. In his regard, Article 5(6) of the Tax Treaty provides as under:

“6. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.” 16. The record confirms that the Assessee has consistently denied the existence of a PE before the lower authorities. Given that Article 5(6) explicitly debars a subsidiary from being treated as a PE purely on account of shareholding, and taking note of

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 absence of any evidentiary material demonstrating the existence of a PE of the Assessee in India, we reject the Revenues plea to tax receipts as business profits under Article 7 of the Tax Treaty. Thus, Ground No. 2 and 3 raised by the Revenue are dismissed.

“8.6 Accordingly, this consultancy provided are made available to Mckinsey India, which in turn puts them to use in the form of a strategic insight, domain expertise, data, technology, advice or solution as per the specific requests of the clients. The various clients of Mckinsey India use such services received in

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 the decision making process not only in management but also in financial matters. Therefore, the fees received by M/s McKinsey & Company, Inc. LME on account of “borrowed services” are clearly Fees for consultancy service that is made available to the service borrower and hence Fees for Included Services as per Article 12 of India-UK DTAA.” 20. There is no dispute that the services are made available by the Assessee to AEs. However, the issue that arises for consideration is whether the services provided make available any technical knowledge, experience, skill know-how or processes. The fact the services are utilized by the service recipient is not sufficient to hold that the services made available to the service recipient any technical knowledge, experience, skill know-how or processes. During the assessment proceedings, the Assessee had placed before the Assessing Officer details of the nature of services. The Revenue has failed to bring on record any material on record to show that the services rendered by the Assessee satisfied the of ‘make available’ requirement contained in Article 13(4) of the Tax Treaty. In this regard, we note that the Learned CIT(A) has returned a finding that in case of group companies, identical ‘borrowed services’ were held not to be in the nature of FTS under the applicable tax treaty. We note that the even in the Order, dated 08/10/2024, passed by the Co-ordinate Bench of the Tribunal (which was subsequently recalled), the contention of the Revenue that the receipt were in the nature of FTS was rejected. The Assessee has also placed on record, the decision of Co-ordinate Bench of the Tribunal, dated 15/07/2024, passed in the case of the Assessee for the Assessment Year 2016-2017 [ITA No.2759/Mum/2023 and C.O.No.14/Mum/2024]. By way of aforesaid decision, dated 15/07/2024, the Co-ordinate Bench of the Tribunal dismissed Ground No. 2 raised by the Revenue challenging the order passed by the first appellate authority holding that the fee received for ‘borrowed services’ was not in the nature of Fee for Technical Services as defined in

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 Article 13 of Tax Treaty. The relevant extract of the decision of the Tribunal reads as under: “2. The grievance of the revenue reads as under:- “Ground of appeal No. 1 xx xx

Ground of appeal No. 2 The assessee is providing strategic consultancy services and has earned income during the year by providing services in the nature, consultancy, technical, management and financial matter that are make available in the nature as India UK DTAA. As per the article 13 of the India-UK DTAA the fees received by the assessee on account of borrowed services are fee for consultancy services. Therefore the Ld. CIT(A) erred for providing services in the nature of make available as per India-UK DTAA clause.” 3. At the very outset, the ld. Counsel for the assessee drew out attention to the order of this Tribunal in ITA No. 2535/Mum/2023 for AY 2013-14 order dt. 21/06/2024 and pointed out that the impugned issue has been decided by the Tribunal in earlier years in favour of the assessee and against the revenue. The ld. D/R could not bring any distinguishing decision in favour of the revenue. 4. We have carefully perused the orders of the authorities below and have carefully considered the order of the Co- ordinate Bench in ITA No. 2535/Mum/2023 (supra). We find force in the contention of the ld. Counsel. The Co-ordinate Bench has considered the issue as under:-

“4. Briefly stated the facts of the case are that the assessee is a foreign company, incorporated in Singapore. The assessee has entered into international transactions with its Associated Enterprises (AEs), McKinsey & Co., Inc. (Indian Branch) during the financial year under consideration. Transfer Pricing Study report in Form 3CEB was filed. The assessee is part of McKinsey group of entities, the primary business of which is to render strategic consultancy services to their clients, which inter alia includes the analysis of performance, developments, strengths, and weaknesses of their clients, improving their profitability

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 and productivity, and similar other parameters. All these services have been performed outside India and since they have been rendered in the ordinary course of business, the receipts on account of the same amounting to ₹6,79,39,779 qualified to be a business receipt of the assessee. Since the assessee-company has no PE in India, the incidence of tax does not arise in India. During the course of scrutiny assessment proceedings, the assessee was asked to explain as to why the borrowed services income of ₹6,79,39,779 should not be treated as fees for technical services. In its reply, the assessee filed various documentary evidences to substantiate the services rendered to McKinsey India during the year along with reasons why non-taxation of the borrowed services. The detailed explanation by the assessee did not find any favour with the A.O. for the simple reason that the same was not accepted in assessment orders of earlier years, i.e., A.Ys 2012-2013, 2011-2012 and 2010-2011. Drawing support from the findings given by the A.O. in earlier assessment years, the AO treated the income of ₹6,79,39,779 as fees for technical services and added the same to the total income of the assessee.

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 error in the findings of the CIT(A), but strongly relied upon the assessment order. The Counsel reiterated what has been stated before the CIT(A) and drew our attention to the various decisions of the Tribunal in assessee‟s own case in earlier assessment years.” 4.1. Thereafter, the Co-ordinate Bench following the order in ITA No. 1579/Mum/2014 for AY 2010-2011, dismissed the appeal of the revenue. 5. Since no new facts have been brought to our notice, respectfully following the decision of the Co-ordinate Bench (supra), we decline to interfere. Since the appeal of the revenue has been dismissed, the issues raised in the cross- objection of the assessee becomes academic in nature and needs no adjudication.” 21. In addition to above, the Assessee has also placed on record Mutually Agreed Procedure (MAP) Resolutions passed in the case of ground companies wherein the Competent Authorities reached a consensus that the ‘borrowed services’ were not in the nature of FTS. While the MAP Resolutions are binding on the parties and only for the applicable assessment year, we note that similar MAP Resolutions have been reached for Assessment Years 2002- 2003 to 2016-2017 in respect of different group companies. In addition the Assessee has also placed on record, the decision of Co-ordinate Benches of the Tribunal rendered in the case of group companies which support the stand taken by the Assessee in respect of ‘borrowed services’. As against this the Revenue has failed to bring on record any material to persuade us to depart from the view taken by the Co-ordinate Benches of the Tribunal either on facts or in law.

ITA No. 1818/Mum/2024 Assessment Year 2018-2019

Order pronounced on 20.05.2026.

Sd/- Sd/- (Bijayananda Pruseth) (Rahul Chaudhary) Accountant Member Judicial Member म ुंबई Mumbai; दिन ुंकDated :20.05.2026 Milan, LDC

ITA No. 1818/Mum/2024 Assessment Year 2018-2019 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी/ The Appellant 2. प्रत्यर्थी/ The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त/ Pr.CIT 5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, म ुंबई/ DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file.

आिेश न स र/ BY ORDER, सत्य दपिप्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai