BAIN & COMPANY, INC.,GURGAON vs. DCIT, INT. TAXATION, GURGAON

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D” NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER IT(IT)A No.82/Del/2025 Assessment Year: 2023-24 BAIN & COMPANY, INC. Vs. DEPUTY/ASSISTANT 131, Dartmouth Street, COMMISSIONER OF INCOME TAX- Boston, Massachusetts, USA, INTERNATIONAL TAX, C/o Bain & Company India Private HSIIDC Building, Vanijya Nikunj, Limited, 20th Floor, Building No.10, Udhyog Vihar, Phase-V, Tower C, DLF Cyber City, Phase II, Gurugram, Haryana 122001. Gurgaon, Haryana, 122002. INDIA. PAN No. AAECB9564H Appellant Respondent Assessee by Shri Himanshu Sinha, Adv, Shri Jainender Singh Kataria, Adv, Shri Prashant Meharchandani, Adv Revenue by Shri M.S. Nethrapal, CIT DR Date of hearing: 07.05.2026 Pronouncement on 07.05.2026 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. This appeal arises from order dated 29.10.2025, passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. DCIT/ACIT, International Tax, Gurgaon.

1.1 The assessee is a foreign company and is a tax resident of the USA. It is engaged in the business of providing consultancy services to Multi- National Companies broadly in the areas of strategy, performance, improvement, organization enhancement, mergers and acquisitions, and private equity. The assessee also provides support services to its 1

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. subsidiaries for which it is compensated on an arm’s length basis. The main issues in this appeal pertained to two additions made as under: -

i. Addition under consultancy service fee amounting to Rs.54,03,06,100/-; ii. Addition on account of support service fee amounting to Rs.77,56,66,346/-.

It is seen that the Ld. AO followed the DRP’s direction in adding Rs.54,03,06,100/- on the ground that such consultancy and professional support services are ancillary or subsidiary to enjoyment of rights/information received under the royalty agreement. The addition of Rs.77,56,66,346/- has been made on account of support service fee received by the assessee, as covered under Fee for Included Services (FIS) under the US-India Double Taxation Avoidance Agreement (hereafter as “DTAA”).

1.2 Being aggrieved with this action of Ld. AO the assessee has approached the ITAT with the following grounds: -

“1. That the Ld. Assessing Officer (AO) erred on facts and in law in assessing the income of the Appellant at INR 181,58,98,161/- vide final assessment order dated 29 October 2025 (Assessment Order") as against the returned income of INR 49,99,25,715/- declared by the Appellant. 2. That in facts and circumstances of the case and in law, the impugned assessment order passed by the Ld. AO is bad in law and liable to be quashed as the Appellant was not provided an opportunity of being heard, as per provisions of Section 127 of the Act, before jurisdiction of this case was transferred from the Assistant Commissioner of Income Tax/ Deputy Commissioner of Income Tax (International Taxation), Circle - 1(1)(1), Delhi, to the office of the Ld. AO. GROUNDS PERTAINING TO MANAGEMENT CONSULTING SERVICES

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. 3. That the Ld. AO/ Dispute Resolution Panel ('DRP') erred on facts and in law in holding that the fee for management consulting services amounting to INR 54,03,06,100/-received by the Appellant from Bain & Company India Private Limited, its wholly owned subsidiary (hereinafter referred to as 'Bain India'), pursuant to Consulting Service Agreement ('CSA') is liable to tax in India as 'Fees for Included Services' ('FIS") under Article 12(4)(a) of the India-USA Double Taxation Avoidance Agreement ('DTAA") without appreciating that management consultancy services are not anciliary or subsidiary to the enjoyment of rights/information received by Bain India under the royalty agreement. 4. That the Ld. AO/DRP erred on facts and in law in holding that the management consultancy services provided by the Appellant to Bain India under CSA are FIS under Article 12(4)(b) of the DTAA failing to appreciate that these services are not technical in nature as contemplated under the DTAA and do not 'make available any technical knowledge, know-how, skill, etc. to Bain India. That on the facts and circumstances of the case and in law, the 5. Ld. AO/DRP has erred in not following the decision of the Hon'ble Income- tax Appellate Tribunal ('ITAT') in the Appellant's own case for AY 2020-21 and AY 2021-22, dated 22 August 2025 [ITA No. 1677/Del/2023 (AY 2020- 21) and ITA No. 3056/Del/2023 (AY 2021-22)), AY 2019-20 dated 12 October 2023 [ITA No. 1620/Del/2022]. AY 2018-19 dated 29 August 2023[ITA No. 567/Del/2022), wherein it was held that the fee for management consulting services does fall within the ambit of FIS. GROUNDS PERTAINING TO SUPPORT SERVICES 6. That the Ld. AO/DRP erred on facts and circumstances of the case and in law in holding that the payment received for provision of support services under the Support Service Agreement (SSA) amounting to Rs. 77,56,66,346/- is FIS under Article 12(4)(a) of the DTAA without appreciating that these are not ancillary or subsidiary to the enjoyment of rights/information received by Bain India under the royalty agreement. 7. That the Ld. AO/DRP erred in characterizing the payment received for providing support services as FIS contrary to the finding given by Ld. CIT(A) in Bain India's case for AY 2009-10 that the professional support services provided by the Appellant are not in nature of FIS, which has attained finality in the absence of any appeal filed by the Revenue. 8 That the Ld. AO/ DRP erred on facts and in law in concluding that the support services provided by the Appellant to Bain India under the SSA are consultancy in nature. 9. That the Ld. AO/DRP erred on facts and in law in holding that the support services provided by the Appellant to Bain India under the SSA are FIS under Article 12(4)(b) of the DTAA failing to appreciate that these services are not technical in nature do not 'make available' any technical knowledge, know-how, skill, etc. to Bain India as contemplated under the DTAA.

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. 10. That on the facts and circumstances of the case and in law, the Ld. AO/DRP has erred in not following the decision of the Hon'ble ITAT in the Appellant's own case for AY 2020-21 and AY 2021-22, dated 22 August 2025 [ITA No. 1677/Del/2023 (AY 2020-21) and ITA No. 3056/Del/2023 (AY 2021- 22)], AY 2019-20 dated 12 October 2023 [ITA No. 1620/Del/2022], wherein it was held that the payment received for providing support services does not fall within the ambit of FIS. MISCELLANEOUS GROUNDS 11. That the Ld. AO/DRP erred on facts and in law in holding that since the Appellant has accepted similar additions in the past while opting to settle the past years' appeals under Direct Tax Vivad Se Vishwas Scheme, this amounts to tacit acceptance of the position taken by Ld. AO on part of the Appellant. 12. That the Ld. AO erred on facts and in law in initiating penalty proceedings under Section 270A of the Act. The Appellant craves leave to add, alter, amend, and/or modify any of the above grounds of appeal at or before the time of hearing of the appeal.” 1.3 It may be mentioned that ground no.2 is not pressed by the assessee and is thus, dismissed on that account. Grounds 1 & 12 being general or consequential are not proposed to be specifically adjudicated.

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. received during the present year were under the same consulting service agreement dated 01.04.2010 as it existed in all the years from 2018-19 to 2022-23. Thereafter, the Ld. AR pointed out the relevant portions from the ITAT’s orders from 2018-19 to 2022-23 and specifically brought to our attention the relevant paragraph from the order for AY 2022-23 (where one of us was a party). The Ld. AR stated that this would be the situation regarding grounds 3 to 5 as per Form 36.

2.1 Regarding the fee for support services added at Rs.77,56,66,346/-, the Ld. AR stated that grounds 6 to 10 pertained to this issue. The Ld. AR argued that this amount cannot be characterized as FIS under Article 12(4)(a) or Article 12(4)(b) of the DTAA. The Ld. AR pointed out relevant paragraphs from ITAT’s order on this issue for AY 2019-20, AY 2020-21, AY 2021-22 and AY 2022-23. It was stated that the facts regarding this issue are identical as were prevailing for AYs 2019-20 to 2022-23. Here also the Ld. AR pointed out that the provision of support services during the year under consideration was the same support service agreement dated 01.04.2010 which existed for AY 2019-20 to AY 2022-23. The Ld. AR requested for relief on this account following the earlier years’ orders.

2.2 Regarding a specific plea raised vide ground no.11, challenging the presumption that the assessee has tacitly accepted under Direct Tax Vivad se Vishwas Scheme (VSVS) in relation to the consulting service agreement and reimbursement of expenses incurred for third party

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. service provider, the Ld. AR averred that even this issue has been settled in favour of the assessee in the ITAT’s order for AY 2019-20 and 2022-23. The Ld. AR pointed out the relevant portions from these ITAT’s orders.

“4. We have carefully considered the rival submissions and have gone through the documents before us. It is seen that the grounds 3 to 5 pertaining to consultancy services have been decided in favour of the assessee in its own case for AY 2018-19 as under: “16. So firstly it has to be seen whether the services rendered are of the nature of technical or consultancy. To understand the true import of the expression of technical or consultancy, it is necessary to refer to the Memorandum of Understanding to the Tax Treaty. As per the Memorandum of Understanding, Article 12 includes only certain technical and consultancy services. Technical services would mean, services requiring expertise in a technology. Whereas, consultancy services would mean advisory services. The categories of technical and consultancy services are to some extent overlapping, because, a consultancy service could also be technical services. However, the category of consultancy services also includes an advisory service, whether or not expertise in technology is required to perform it. The nature of services provided under the agreement, such as, client engagement, market research, strategic research and planning etc., in our view, certainly, do not fall under the category of technical services.

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. 17. Further, even assuming that they fall under the category of consultancy services, however, the most crucial condition to be satisfied to qualify as FIS under Article 12(4)(b) is the make available condition. In the facts of - the present appeal, the departmental authorities have not brought any material on record to demonstrate that while rendering services, the assessee had made available technical knowledge, expertise, skill, knowhow etc. to Bain India to apply such technology, knowhow etc. independently without the aid and assistance of the assessee. The fact that Bain India is still dependent on the assessee for such services is established from the fact that since the year 2010, the assessee had been providing such services to Bain India on year to year basis. Had assessee made available the technical knowledge, knowhow skill etc. to Bain India, there would not have been any occasion for the assessee to provide such services on year to year basis as the making available or transfer of such technical knowledge, knowhow, skill etc. would have enabled Bain India to apply them on its own without requiring the assessee to continue with providing them. 18. It is further relevant to observe, as per Example 7 of the Memorandum of Understanding to India-USA DTAA, a receipt cannot be treated as FTS merely because the service provider while providing consultancy services has used substantial technical skill and expertise. Because, while providing such services, the American Company is not making available to the Indian Company, any technical expertise, knowledge or skill etc. but is merely transferring commercial information to the Indian Company by utilizing technical skill. Thus, keeping in perspective the aforesaid factors as well as the ratio laid down in the judiciary precedents cited before us, we have no hesitation in holding that the receipts in dispute are not in the nature of FIS under Article 12(4)(b) of India-USA DTAA. We order accordingly.” This finding has been followed right up to the decisions rendered in AY 2021-22 (supra). Respectfully following the decisions rendered in earlier years by the ITAT it is held that no addition can be made of Rs.86,80,47,511/-.” 4.1 Regarding ground nos. 6 to 10 pertaining to support services, we find that the issue is covered in favour of the assessee through ITAT orders for the AYs 2019-20, 2020-21, 2021-22 & 2022-23. Here also for the sake of convenience the finding given for AY 2022-23 by the ITAT is extracted for the reference: -

“4.1 Regarding the ground nos. 6 to 10 pertaining to addition of Rs.47,98,96,089/-, being receipts on account of support services also 7

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. the issue is covered in favour of the assessee by ITAT’s orders rendered for AY 2019-20, 2020-21 & AY 2021-22.For the sake of reference the finding given in combined order for AY 2020-21 and 2021-22 (supra) deserves to be extracted: - “20. We have heard the rival submissions and have perused the relevant material on record. We find that the coordinate bench of ITAT in assessee’s own case for AY 2019-20 in ITA 1620/Del/2022 dated 12.10.2023 has held that receipts on account of support services are not FIS as under: "16. On a detailed analysis of the services rendered, it appears" that some of the services rendered may not fall in the category of technical or consultancy services. However, some of the services rendered may fall either under technical or consultancy services. But the most crucial aspect, which requires examination is, whether in course of rendition of such services, the assessee has made available any technical knowledge, know-how, skill etc. to Bain India so as to enable Bain India to employ such technology, know-how, skill etc. without the aid and assistance of the assessee. In this context, it must be borne in mind that the agreement for providing support services was executed between the assessee and Bain India on 1st day of April, 2010. Whereas, the present appeal relates to assessment year 2019-20. Thus, it is patent and obvious that from the year 2010 onwards, the assessee is providing support services to Bain India on regular basis. Had it been a case of transfer of technology from the assessee to Bain India by making available technical knowledge, know-how, skill etc. qua the services performed, it would certainly have enabled Bain India to employ such technical knowledge, know- how, skill etc. in performing such services independently without seeking aid and assistance of the assessee. There would have been no necessity for Bain India to continuously avail such services from the assessee since the year 2010 till the current assessment year. Had it been a case of transfer of technology in such a long duration Bain India certainly would have acquired the technical knowledge, know-how, skill etc. to perform such services on its own, without requiring the assessee to provide them. The very fact that Bain India is still dependent upon the assessee for the support services, establishes the fact that the assessee has not made available technical, know-how, skill etc. relating to such services to Bain India, the service recipient. 17. At this stage, we must also observe that at the time of hearing, learned counsel appearing for the assessee has made a statement at bar that prior to the impugned assessment year, in no other assessment year the Assessing Officer has treated the receipts from support services as FIS and brought it to tax. Thus, on overall consideration of facts and materials on record, we are of the view that the Revenue has not brought on record any materials to establish the

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. fulfillment of make available condition of Article 12(4Xb) of India - USA DTAA. 18. For the sake of completeness, we must observe that in course of hearing, learned Departmental Representative has relied upon a decision of the Coordinate Bench in case of H.J. Heinz Company Vs. ADIT [2019] 108 taxmann.com 473 (Delhi - Trib.). 19. On a careful reading of the said judgment, we find that the decision of the Coordinate Bench is distinguishable on facts as the services rendered in case of that assessee is in relation to manufacture of products. Whereas, in the facts of the present appeal, services rendered are not in relation to any manufacturing activity. In this view of the matter, the receipts cannot be treated as FIS under Article 12(4)(b) of the tax treaty. The Assessing Officer is directed to delete the addition.” Respectfully following the STAT decision as above, we are of the considered view that in the present case, the support services rendered by the Assessee to Bain India do not make available any technical knowledge, experience, skill, know-how etc. as contemplated under the DTAA and that the amount received for provision of support services rendered by the Assessee to Bain India cannot be treated as FIS under Article 12(4)(b) of the DTAA. Accordingly, we direct the AO to delete the addition. Ground 16 to 19 is allowed.” Respectfully following the order of ITAT extracted above and since the facts have not changed for the present year, we hold that the amount of Rs.47,98,96,089/- cannot be added as has been done by the Ld. AO.” Following this clear cut finding, we direct the deletion of the addition of Rs.77,56,66,346/- made by the Ld. AO.

4.2 Regarding the presumption of AO as per the VSVS declaration in earlier years by the assessee (ground no.11), we find that this issue also has been decided in favour of the assessee and for the sake of convenience the relevant paragraph from the order for AY 2022-23 deserves to be extracted as under: -

IT(IT)A No.82/Del/2025 BAIN & COMPANY, INC. “4.3 Regarding the reasoning advanced by the Ld. AO that in the past years consulting services, receipts and reimbursement of expenses incurred for third party service provider were settled under DTVS Scheme, hence, it deserves to be presumed that the assessee tacitly accepted the taxability of the same, we find that for AY 2019- 20 the ITAT has decided the issue in favour of the assessee after following the answer given in the CBDT Circular No.9/2020 dated 22.04.2020 (supra). In light of this circular and the order of the ITAT for AY 2019-20 this ground is also decided in favour of the assessee.” 4.3 As mentioned earlier, grounds 1 & 12 are not specifically adjudicated at this stage.

Order pronounced in the open court on 07.05.2026.

Sd/- Sd/- (VIKAS AWASTHY) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25.06.2026 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI