GOLDMAN SACHS AND CO. LLC,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX - 2(3)(2), MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “I” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.6670 /MUM/2024 (AY:2021-22) Goldman Sachs and Co. LLC vs. Assistant Commissioner of Income Tax-2(3)(2) C/O Ernst And Young LLP, 14th Floor, The Ruby, 29 Senapati Bapat Marg, Kautilya Bhavan, C-41 to G-43, G Dadar (West), Mumbai-400028. Block, Bandra Kurla Complex, Bandra East, Mumbai-400051. PAN/GIR No: AAGCG9387H (Appellant) (Respondent) Assessee by Shri Hiten Thakkar Revenue by Shri Arju Garodia (CIT DR) Date of Hearing 01.07.2026 Date of Pronouncement 16.09.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal emanate from the final assessment order passed u/s143(3) r.w.s 144C(13) of the Income-tax Act, 1961 (in short, ‘Act’) by the ITO, Int. Tax, Circle 2(3)(2), Mumbai [in short, ‘AO’] dated 25.10.2024 for the assessment year (AY) 2021-22 pursuant to the directions issued by the Dispute Resolution Panel- 1, Mumbai (DRP) dated 29.09.2024. 2. The grounds of appeal raised by the assessee are as under:

“1. The learned AO has, on the facts and circumstances of the case and in law, erred in making an addition in respect of market data recharges amounting to Rs 33.71.31,820 on the basis that the same qualifies as Royalty as per the provisions of the Act/ Article 12(4) of the India-US Tax Treaty (Treaty) without appreciating the fact that these constitute expenses allocated by the Appellant to its Associated Enterprises (AEs) in India, being reimbursement of expenses incurred on behalf of the AEs in India.

ITA No.6670/MUM/2024 Goldman Sachs and Co. LLC 2. The learned AO has, on the facts and circumstances of the case and in law, erred in concluding that the Appellant has provided technical services to Goldman Sachs Services Private Limited through the seconded employees and therefore the reimbursement of salary cost and other employee related expenses amounting to Rs 20,45,22,486 and Rs 20,52,71,973 respectively received by the Appellant is chargeable to tax in India as Fees for services ('FTS') given that the seconded employees 'make available their expertise and skills to GSSPL 3. The learned AO erred in levying consequential interest u/s234A and 234B of the Act. 4. The learned AO erred in invoking penalty proceedings u/s270A of the Act for under-reporting of income for the captioned AY.”

ground are as under:

grounds raised by the appellant. The ground is legal in nature. The Hon’ble

Supreme court in case of NTPC Ltd. vs. CIT, 229 ITR 383 (SC) has held that the order

of Tribunal u/s 254 is expressed in the widest possible terms. There is no reason

to restrict the power of the Tribunal u/s 254 only to decide the grounds which

arise from the order of the CIT (Appeals). Both the assessee as well as the

Department have a right to file an appeal/cross objection before the Tribunal.

There is no reason why the Tribunal should be prevented from considering a

ITA No.6670/MUM/2024 Goldman Sachs and Co. LLC question of law arising in the assessment proceedings although not raised earlier.

Undoubtedly the Tribunal will have the discretion to allow or not to allow a new

ground to be raised. But where the Tribunal is only required to consider the

question of law arising from the facts which are on record in the assessment

proceedings, there is no reason why such a question should not be allowed to be

raised when it is necessary to consider that question in order to correctly assess

the tax liability of the assessee. In the instant case, the additional ground

emanates from the facts on record and no additional facts are needed to decide

the issue. Hence, following the decision of the Hon’ble Supreme Court in case of

NTPC Ltd. vs. CIT, 229 ITR 383 (SC) and the decision of the Hon’ble Jurisdictional

High Court in case of CIT vs. Pruthvi Brokers and Shareholders PVt. Ltd., 349 ITR

336 (Bom.), the additional ground is admitted and will be decided at the relevant

place in this order.

on 09.03.2022 declaring total income of Rs 24,11,19,960/-. During the year, the

assessee received various amounts from its Indian AEs towards management

services, communication and technology expenses, investment banking services,

recovery of employee-related expenses and other expenses. While certain

receipts were offered to tax in India, the assessee claimed that certain other

receipts were in the nature of reimbursements and, therefore, did not constitute

ITA No.6670/MUM/2024 Goldman Sachs and Co. LLC taxable income in India. During the course of assessment proceedings, the AO

examined, inter alia, the taxability of market data charges of Rs.33,71,31,820/-

and recovery of employee benefit expenses of Rs.40,97,94,459/-. The assessee

contended that the market data charges represented reimbursement of costs

incurred towards market data and communication/technology services procured

from third-party vendors and that the employee-related receipts represented

reimbursement of salary and other employee-related costs on a cost-to-cost

basis, without any mark-up or profit element. The assessee also relied upon

judicial precedents and orders of the Tribunal in earlier years in support of its

claim. The AO, however, rejected the assessee's claim. The market data charges

were held to be consideration for access to proprietary databases and were

consequently treated as royalty taxable under Article 12(4) of the India-USA

DTAA. In respect of the employee-related receipts, the AO held that the seconded

employees continued to have an employment relationship with the assessee and

that their technical, managerial and consultancy skills were made available to the

Indian AEs. The receipts were, accordingly, treated as fees for included services

(FIS) under the India-USA DTAA. Accordingly, the AO made an additions of

Rs.33,71,31,820/- on account of market data charges and Rs.40,97,94,459/- on

account of recovery of employee benefit expenses. The total income was

determined at Rs.98,80,46,240/- against returned income of Rs.24,11,19,960/-.

ITA No.6670/MUM/2024 Goldman Sachs and Co. LLC 6. 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

considered and decided by the co-ordinate Bench in assessee’s own case for

2023-24 in ITA No.9029/Mum/2025 dated 05.06.2026. The Ld. AR also relied

upon the decisions in cases of Addl. DIT(IT) vs. Mark & Spencer Reliance India (P)

Ltd. (2013) 38 taxmann.com 190 (Mum. Trib.) and CIT(IT) vs. Ernst and Young U.S.

LLP in ITA No.423 to 424/2025 dated 18.06.2026.

6.1 In ground No.1, the assessee has challenged addition of Rs.33,71,31,820/-

on account of market data charges, brought to tax as royalty income. The Tribunal

has extracted the decision of the co-ordinate Bench in ITA No.401/Mum/2018

dated 08.05.2023 for AY 2017-18 and has decided the issue as under:

“6. We have considered rival submissions in the context of facts and materials on record and gone through the decisions relied upon. The short issue arising for consideration is whether the receipt from market data charges are taxable in India as royalty income. We find, while deciding identical issue in assessee’s own case in Assessment Years 2013-14, 2014-15, 2015-16 and 2017-18, the coordinate bench in order dated 08/05/2023 passed in ITA No. 401/MUM/2018 and connected appeals, has held as under: ……. ……. 7. The fact that factual position relating to the issue in dispute is identical in the impugned assessment year remains uncontroverted. Even, the Departmental Authorities have accepted that the factual position relating to the issue are identical to the earlier assessment years. Only reason for which the Departmental Authorities have not granted relief to the assessee is the Department has filed further appeals before the Hon’ble High Court against the decision of the Tribunal. In our view, such reasoning of the AO is unacceptable. Since, the observations of the Coordinated Bench in assessee’s case squarely apply to the facts of the present appeal, respectfully following them, we hold that the amount in dispute cannot be 5

ITA No.6670/MUM/2024 Goldman Sachs and Co. LLC taxed as royalty income in terms with Article 12 of India-USA DTAA. Hence, the AO is directed to delete the addition.”

6.2 The facts and the ground of the case are similar to the above decision. The

Ld. DR has not been able to distinguish the decision either on fact or in law.

Hence, following the above decision, ground No.1 is allowed.

and other employee related expenses amounting to Rs.20,45,22,486 and

Rs.20,52,71,973 respectively received by the appellant as fees for technical

services ('FTS') given that the seconded employees make available their expertise

and skills to GSSPL. The Ld. AR submitted that this issue is also covered by the

decision of the Tribunal in assessee’s own case in ITA No.9029/Mum/2025

(supra). The relevant part of the decision is reproduced below for ready

reference:

“9. We have considered rival submissions and perused the materials on record. Undisputedly, the amount in dispute was received by the assessee from its Indian AEs towards recovery of employee-related expenses incurred by the assessee on behalf of the AEs. While examining the issue of non-withholding of tax at source on such reimbursements by the AEs to the assessee, i.e., GS & Co., in the proceedings under Section 201 of the Act, the Assessing Officer held that the payments made by the AEs are in the nature of FIS/FTS, hence, required deduction of tax at appropriate rate. The dispute ultimately reached ITAT in case of M/s GSISPL. While deciding the issue in ITA No. 362 to 369 & 345/Bang/2020, vide order dated 29-04- 2022, the Coordinate Bench held that the payments are not in the nature of FIS/FTS, hence, did not require deduction of tax at source under Section 195 of the Act. The aforesaid decision of the Coordinate Bench has been upheld by Hon'ble Karnataka High Court while dismissing the appeal of the Revenue being ITA No. 128 of 2024. In fact, in respect of another group entity i.e. Goldman Sachs International, the Coordinated Bench, while deciding the appeal, being ITA No. 6033/Mum/2025, has passed an order on 30.03.2026, holding similar nature of receipts not to be FIS/FTS. Pertinently, the Assessing Officer has not disputed the fact that the ITAT

ITA No.6670/MUM/2024 Goldman Sachs and Co. LLC held the receipts in dispute not to be in the nature of FIS/FTS. Only reason for which he has brought the amount to tax is the Department has preferred further appeal before the Hon'ble High Court against the decision of the Tribunal. This, in our view, cannot be a valid reason to not follow the decision of a higher appellate authority. Thus, in absence of any factual difference, respectfully following the decisions of the Coordinated Benches as referred to above, we hold that the amount in dispute cannot be treated as FIS/FTS under the India-US DTAA and the Assessing Officer is directed to delete the addition.”

7.1 The facts and the ground of the case are similar to the above decision. The

Ld. DR has not been able to distinguish the decision either on fact or in law.

Hence, following the above decision the ground No.2 is allowed.

interests are consequential and mandatory in nature. The AO is directed to give

effect to this order and levy interest thereafter as per law.

Act. The ground is premature and does not require adjudication.

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) 7

ITA No.6670/MUM/2024 Goldman Sachs and Co. LLC 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File By Order

Assistant Registrar ITAT, MUMBAI