ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(2)(1), CIT(IT)-1, NEW DELHI, NEW DELHI vs. CARGILL INCORPORATED, USA

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ITITA 62/DEL/2025Status: DisposedITAT Delhi24 July 2026AY 2018-1912 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Corporate IT recharges received by the assessee from its Indian group entities are in the nature of reimbursements and are not taxable as Royalty or Fees for Included Services (FIS). The Tribunal noted that this is a legacy issue, consistently decided by the Tribunal in favour of the assessee for preceding assessment years (AY 2002-03 to 2014-15 and AY 2017-18). The Revenue had not filed appeals against some of these orders, thereby accepting the earlier view. Furthermore, the Revenue's appeal for AY 2014-15 was dismissed by the Hon'ble Delhi High Court, upholding the Tribunal's decision. The Tribunal found no change in facts or new material placed by the Revenue to warrant a different view for the current assessment years. Following the consistent view of the Tribunal and the principle of consistency laid down by the Hon'ble Apex Court in Radha Soami Satsang vs. Commissioner of Income Tax, the Tribunal upheld the orders of the CIT(A). No issue was expressly left undecided.

What were the facts?

The Revenue has filed four appeals against the orders of the CIT(A) for Assessment Years (AY) 2018-19 and 2020-21 to 2022-23. The assessee, Cargill Incorporated, a US-based company, received Corporate IT recharges and reimbursements from its Indian group entities. The Assessing Officer (AO) treated these receipts as taxable in India as Royalty or Fees for Technical Services (FTS) under Section 9(1)(vi)/(vii) of the Income Tax Act, 1961, and Article 12 of the India-USA DTAA, making additions to the assessee's income. The CIT(A) deleted these additions, relying on previous orders in the assessee's own case. The Revenue's appeals challenge these deletions.

What were the issues?

The primary issue before the Tribunal is whether the Corporate IT recharges and other reimbursements received by the assessee from its Indian group entities are taxable in India as Royalty or Fees for Technical Services (FTS) under Section 9(1)(vi)/(vii) of the Income Tax Act, 1961, and Article 12 of the India-USA DTAA. Assessee's Contentions: 1. The Corporate IT recharges are in the nature of reimbursements of actual expenses without any profit element. 2. The issue has been consistently decided in favour of the assessee by the Tribunal and the Hon'ble Delhi High Court in preceding assessment years, including AY 2002-03 to 2014-15 and AY 2017-18. 3. The Hon'ble Delhi High Court, in ITA 125/2023 for AY 2014-15, dismissed the Revenue's appeal, confirming the Tribunal's findings. Revenue's Contentions: 1. The CIT(A) erred in deleting the additions as the receipts were taxable as Royalty/FTS under Section 9(1)(vi)/(vii) and Article 12 of the India-USA DTAA. 2. The receipts constituted royalty as the assessee provided centralized IT infrastructure and system access, amounting to the use of scientific equipment and automated processes as per Explanation 2 to Section 9(1)(vi) and Article 12(3) of the DTAA. 3. The receipts were taxable as Fees for Included Services (FIS) under Article 12(4) of the DTAA, as Indian entities derived technical and operational benefits from the global IT network and specialized services provided by the assessee. 4. The CIT(A) erred in relying on the principle of consistency, as each assessment year is independent and the Department has not accepted earlier orders on merit.

Which sections of the Income-tax Act were involved?

Section 9(1)(vi),Section 9(1)(vii),Section 143(3),Section 144C(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “D” BENCH: NEW DELHI

Before: SHRI VIKAS AWASTHY & SHRI MANISH AGARWAL

For Appellant: Shri Nikhil Agarwal, Adv
For Respondent: Shri M.S. Nethrapal, CIT DR, Shri Nikhil Agarwal, Adv
Hearing: 19.05.2025Pronounced: 24.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “D” BENCH: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER IT (IT) A Nos.62 to 65/Del/2025 [Assessment Year : 2018-19 & 2020-21 to 2022-23] ACIT vs Cargill Incorporated Circle-1(2)(1) 15407, McGinty Road, West CIT(IT)-1, New Delhi MS26, Minnetonka, Hennepin, Minnesota, United States of America, ZIP Code-55391, USA PAN-AACCC4786G APPELLANT RESPONDENT Revenue by Shri M.S. Nethrapal, CIT DR Assessee by Shri Nikhil Agarwal, Adv. Date of Hearing 19.05.2025 Date of Pronouncement 24.07.2026 ORDER PER MANISH AGARWAL, AM : The captioned four appeals are filed by the revenue against the different orders, all dated 16.10.2025 by Ld. Commissioner of Income Tax (A), Delhi-42 [“Ld.CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the different assessment orders dated 10.06.2021, 30.05.2021, 24.02.2023 & 27.05.2024 passed u/s 143(3) r.w.s 144C(3) of the Act pertaining to Assessment Years 2018-19, 2020-21 to 2022-23 respectively.

2.

As the issues involved in all appeals are identical thus, all appeals are decided by a common order for sake of convenience.

IT(IT) A No.62 to 65/Del/2025

3.

Briefly stated facts are that assessee is a company incorporated in the USA and is a tax resident of USA engaged in the business of international marketer, processor, and distributor of agricultural, food, and industrial products. It provides distinctive customer solutions in supply chain management, food applications, and health and nutrition. The return of income was filed on 30.11.2018 declaring total income of Rs. 29,44,73,880/-. The AO observed that assessee had received total income of Rs. 50,08,93,342/- from its Indian group entities as Corporate IT recharges and other reimbursements and since they were not offered to tax, additions made for the same, based on the observations made and conclusion drawn in preceding assessment years and charged tax thereon @ 10% (plus applicable surcharge & cess) in terms of the final order passed u/s 143(3) r.w.s. 144C(3) of the Act dt. 10.06.2021. Likewise for other assessment years under identical circumstances and by making similar observations following additions were made in the final orders passed u/s 143(3) r.w.s. 144C(3) of the Act:

Asstt. Year Order dt. Addition (in INR) 2020-21 30.05.2022 55,94,51,702.00 2021-22 24.02.2023 67,85,94,953.00 2022-23 27.05.2024 54,46,70,744.00

IT(IT) A No.62 to 65/Del/2025

4.

Aggrieved by the order of the AO, assessee preferred appeal before the ld. CIT(A) who by following the orders of the Tribunal and Hon’ble Jurisdictional High Court in the case of assessee itself, has deleted the additions made.

5.

Against the said order of ld. CIT(A) for all the four assessment years, revenue has preferred appeal before the Tribunal in the captioned appeals by taking following grounds of appeal for all the years: IT(IT)A 62/Del/2025 [Assessment Year 2018-19] 1. “The learned CIT(A) has erred in deleting the addition of Rs.48,49,40,875/- made by the Assessing Officer on account of Corporate IT Recharges received by the assessee from its Indian group companies, without appreciating that such receipts were taxable in India as Royalty / Fees for Technical Services under section 9(1)(vi)/(vii) of the Income Tax Act, 1961 and Article 12 of the India-USA DTAA. 2. The learned CIT(A) has erred in holding that the receipts towards Corporate IT Recharges were mere reimbursements of actual expenses without any profit element, without appreciating that the assessee had provided centralized IT infrastructure and system access to its Indian group entities, which amounts to use of scientific equipment and automated processes, thereby constituting royalty as per Explanation 2 to section 9(1)(vi) of the Act and Article 12(3) of the DTAA. 3. The learned CIT(A) has erred in not appreciating that the assessee, being the ultimate holding company, maintained a global IT network and provided specialized IT-related services to its Indian affiliates, resulting in Indian entities deriving technical and operational benefits, which is taxable as Fees for Included Services (FIS) under Article 12(4) of the India-USA DTAA. 4. The learned CIT(A) has erred in relying upon the principle of consistency and earlier appellate decisions in assessee's own case, without appreciating that each assessment year is separate and independent, and the Department has not accepted the earlier orders on merit; further, appeals are pending before higher forums for other years.

IT(IT) A No.62 to 65/Del/2025

5.

The learned CIT(A) has erred in law and on facts in holding that the payments received by the assessee were not taxable in India despite clear findings of the Assessing Officer that the assessee allowed the use of IT systems, infrastructure, and software to Indian affiliates, which falls within the ambit of "royalty" both under domestic law and the DTAA. 6. The learned CIT(A) has erred in deleting the addition of Rs.1,59,52,467/- made by the Assessing Officer on account of "Recharges and other reimbursements", ignoring the fact that these receipts were also inextricably linked to IT-related services and constituted Royalty / FIS under the Act and the DTAA.”

IT(IT)A 63/Del/2025 [Assessment Year 2020-21] 1. “The learned CIT(A) has erred in deleting the addition of Rs. 55,94,51,702/- made by the Assessing Officer on account of Corporate IT Recharges received by the assessee from its Indian group companies, without appreciating that such receipts were taxable in India as Royalty / Fees for Technical Services under section 9(1)(vi)/(vii) of the Income Tax Act, 1961 and Article 12 of the India-USA DTАА. 2. The learned CIT(A) has erred in holding that the receipts towards Corporate IT Recharges were mere reimbursements of actual expenses without any profit element, without appreciating that the assessee had provided centralized IT infrastructure and system access to its Indian group entities, which amounts to use of scientific equipment and automated processes, thereby constituting royalty as per Explanation 2 to section 9(1)(vi) of the Act and Article 12(3) of the DTAA. 3. The learned CIT(A) has erred in not appreciating that the assessee, being the ultimate holding company, maintained a global IT network and provided specialized IT-related services to its Indian affiliates, resulting in Indian entities deriving technical and operational benefits, which is taxable as Fees for Included Services (FIS) under Article 12(4) of the India-USA DTAA. 4. The learned CIT(A) has erred in relying upon the principle of consistency and earlier appellate decisions in assessee's own case, without appreciating that each assessment year is separate and independent, and the Department has not accepted the earlier orders on merit; further, appeals are pending before higher forums for other years. 5. The learned CIT(A) has erred in law and on facts in holding that the payments received by the assessee were not taxable in India despite clear findings of the Assessing Officer that the assessee allowed the

IT(IT) A No.62 to 65/Del/2025

use of IT systems, infrastructure, and software to Indian affiliates, which falls within the ambit of "royalty" both under domestic law and the DTAA.”

IT(IT)A 64/Del/2025 [Assessment Year 2021-22] 1. “The learned CIT(A) has erred in deleting the addition of Rs.67,85,94,953/- made by the Assessing Officer on account of Corporate IT Recharges received by the assessee from its Indian group companies, without appreciating that such receipts were taxable in India as Royalty / Fees for Technical Services under section 9(1)(vi)/(vii) of the Income Tax Act, 1961 and Article 12 of the India-USA DTAA. 2. The learned CIT(A) has erred in holding that the receipts towards Corporate IT Recharges were mere reimbursements of actual expenses without any profit element, without appreciating that the assessee had provided centralized IT infrastructure and system access to its Indian group entities, which amounts to use of scientific equipment and automated processes, thereby constituting royalty as per Explanation 2 to section 9(1)(vi) of the Act and Article 12(3) of the DТАА. 3. The learned CIT(A) has erred in not appreciating that the assessee, being the ultimate holding company, maintained a global IT network and provided specialized IT-related services to its Indian affiliates, resulting in Indian entities deriving technical and operational benefits, which is taxable as Fees for Included Services (FIS) under Article 12(4) of the India-USA DTAA. 4. The learned CIT(A) has erred in relying upon the principle of consistency and earlier appellate decisions in assessee's own case, without appreciating that each assessment year is separate and independent, and the Department has not accepted the earlier orders on merit; further, appeals are pending before higher forums for other years. 5. The learned CIT(A) has erred in law and on facts in holding that the payments received by the assessee were not taxable in India despite clear findings of the Assessing Officer that the assessee allowed the use of IT systems, infrastructure, and software to Indian affiliates, which falls within the ambit of "royalty" both under domestic law and the DTAA.” IT(IT)A 65/Del/2025 [Assessment Year 2022-23] 1. “The learned CIT(A) has erred in deleting the addition of Rs.54,46,70,744/- made by the Assessing Officer on account of

IT(IT) A No.62 to 65/Del/2025

Corporate IT Recharges received by the assessee from its Indian group companies, without appreciating that such receipts were taxable in India as Royalty/ Fees for Technical Services under section 9(1)(vi)/(vii) of the Income Tax Act, 1961 and Article 12 of the India-USA DTAA. 2. The learned CIT(A) has erred in holding that the receipts towards Corporate IT Recharges were mere reimbursements of actual expenses without any profit element, without appreciating that the assessee had provided centralized IT infrastructure and system access to its Indian group entities, which amounts to use of scientific equipment and automated processes, thereby constituting royalty as per Explanation 2 to section 9(1)(vi) of the Act and Article 12(3) of the DTAA. 3. The learned CIT(A) has erred in not appreciating that the assessee, being the ultimate holding company, maintained a global IT network and provided specialized IT-related services to its Indian affiliates, resulting in Indian entities deriving technical and operational benefits, which is taxable as Fees for Included Services (FIS) under Article 12(4) of the India-USA DTAA. 4. The learned CIT(A) has erred in relying upon the principle of consistency and earlier appellate decisions in assessee's own case, without appreciating that each assessment year is separate and independent, and the Department has not accepted the earlier orders on merit; further, appeals are pending before higher forums for other years. 5. The learned CIT(A) has erred in law and on facts in holding that the payments received by the assessee were not taxable in India despite clear findings of the Assessing Officer that the assessee allowed the use of IT systems, infrastructure, and software to Indian affiliates, which falls within the ambit of "royalty" both under domestic law and the DTAA.”

6.

Since the issues involved in the appeals of all the four Assessment Years are common therefore, all the appeals filed by the revenue are decided by a common order.

7.

Ld. CIT DR for the revenue vehemently supported the findings of the AO and prayed for the restoration of the additions made by

IT(IT) A No.62 to 65/Del/2025

the AO. However, the ld. CIT DR fairly stated that the issue involved in all the four appeals has been considered by the Tribunal in preceding assessment years in assessee’s own case.

8.

Per contra, ld. AR for the assessee appearing on behalf of the assessee submits that at the outset the issue in appeal with regard to taxability of Corporate IT recharges as Royalty has already been considered and decided by the Tribunal in assessee’s own case in preceding assessment years i.e. in AY 2002-02 to 2014-15 and in AY 2017-18. Ld. AR submits that the Tribunal has consistently decided the issue in favour of the assessee holding that Corporate IT recharges are in nature of reimbursement and are not taxable as Royalty or Fee for Included Services (FIS). In AY 2014-15, Revenue carried this issue before the Hon’ble Delhi High Court where in ITA 125/2023, the Hon’ble High Court vide order dated 06.03.2023 dismissed appeal of the Revenue and confirmed the findings of the Tribunal. Against the said order, no further appeal was preferred by the revenue. The ld. AR filed a details chart, explaining the history of the orders of preceding assessment years which is reproduced as under:

IT(IT) A No.62 to 65/Del/2025

IT(IT) A No.62 to 65/Del/2025

IT(IT) A No.62 to 65/Del/2025

9.

On identical set of facts, the Assessing Officer (“AO”) in the impugned assessment years, has made addition holding corporate IT recharge as Royalty. The CIT(A) has deleted the additions made in all the years following earlier orders of the CIT(A) and Tribunal. The ld. Counsel thus, prayed for confirming the order of ld. CIT(A).

10.

Heard both the parties at length and perused the material available on records including the orders of the authorities below. The assessee is a company incorporated in USA and is tax resident of USA. During the year under appeal, assessee has inter alia received Corporate IT recharges for various assessment years from its Indian group entities in respect of IT Services rendered by the assessee in pursuance to the Amended & Restated Agreement Services dated 01.06.2008. The stand of the assessee is that Corporate IT recharges are reimbursements without any mark-up. Whereas, the AO has held said receipts from the Indian entities as Royalty. We find this is a legacy issue. The Assessing Officer has been consistently holding since AY 2002-03 that the payments for Corporate IT recharges are in the nature of Royalty. The Tribunal while deciding appeal of the assessee for AY 2002-03 to AY 2008-09 has held that Corporate IT Recharges are in the nature of reimbursement and is not taxable as Royalty. Purportedly, no appeal was filed by the Revenue against the said order of the Tribunal. In the subsequent assessment years i.e. AY 2009-10 to 2013-14, the AO continued to take similar view holding Corporate IT Recharges are in nature of Royalty and FIS and the ld. CIT(A)

IT(IT) A No.62 to 65/Del/2025

allowed relief to the assessee following the order of Tribunal in the preceding assessment years. The revenue never filed appeal against the order of ld. CIT(A), thus, accepting the earlier view of the Tribunal. In AY 2014-15 ld. CIT(A) taking a consistent view deleted the addition holding that Corporate IT Recharges are in the nature of reimbursement and not taxable as Royalty. The Revenue carried the issue in appeal before the Tribunal in ITA No.6395/Del/2017, the Tribunal vide order dated 16.02.2022 dismissed the appeal of Revenue following the Rule of consistency. The Revenue carried the issue in appeal before the Hon’ble Delhi High Court, the Hon’ble High Court in ITA No.125/2023 dismissed appeal of the Revenue upholding the view of Tribunal.

11.

Again, in these assessment years before us, similar addition has been made by the AO holding Corporate IT recharges as Royalty and FIS. Admittedly, there has been no change in the facts in these assessment years nor any material has been placed on record by the Revenue to controvert the findings of the Tribunal in the preceding assessment years. Under these circumstances, we find no reason to take a different view, hence, following the consistent view taken by the Tribunal in preceding years in assessee’s own case and as per the principle of consistency laid down by the Hon’ble Apex Court in the case of Radha Soami Satsang vs. Commissioner of Income Tax, reported in 1992 AIR 377, we uphold the orders of ld. CIT(A) in all the captioned appeals.

IT(IT) A No.62 to 65/Del/2025

12.

In the result, all captioned appeals of the Revenue in IT(IT)A Nos. 62 to 65/Del/2025 for AY 2018-19, AY 2020-21 to 2022-23 respectively, are dismissed.

Order pronounced in the open Court on 24.07.2026.

Sd/- Sd/- (VIKAS AWASTHY) (MANISH AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Date- 24.07.2026 *Amit Kumar, Sr.P.S*

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