DCIT (IT) 3- 1 -1 MUMBAI, MUMBAI vs. JEFFERIES INTERNATIONAL LIMITED , MUMBAI

ITITA 226/MUM/2026Status: DisposedITAT Mumbai04 May 2026AY 2022-2313 pages
AI SummaryDismissed

What were the facts?

The Revenue has appealed against the order of the CIT(A) for Assessment Year 2022-23, concerning an assessment order passed under Section 143(3) read with Section 144C(3) of the Income-tax Act, 1961. The assessee, Jefferies International Ltd., a UK tax resident, declared a total income of Rs. 96,74,930/-. The Assessing Officer (AO) treated two receipts from its Indian affiliate, Jefferies India Private Limited (JIPL), as Fees for Technical Services (FTS) under Section 9(1)(vii) and Article 13 of the India-UK DTAA. These receipts were: (i) Administrative Support Charges of Rs. 6,09,68,985/- and (ii) Reimbursement of Expenses of Rs. 26,02,524/-. The AO determined the total income at Rs. 7,32,46,440/-. The CIT(A) had ruled in favour of the assessee on both counts.

What did the Tribunal hold?

The Tribunal held that the administrative support charges of Rs. 6,09,68,985/- do not constitute taxable Fees for Technical Services (FTS). The CIT(A) had correctly observed that the services rendered were routine administrative and support functions of a non-technical nature and did not satisfy the 'make available' condition under Article 13 of the India-UK DTAA. The Tribunal respectfully followed its co-ordinate bench's decision in the assessee's own case, which had categorically held that such administrative services were not FTS. Regarding the reimbursement of expenses of Rs. 26,02,524/-, the Tribunal held that these were reimbursements of costs incurred for services utilized by JIPL, provided without any mark-up. Following the Supreme Court's decision in DIT v. AP Moller Maersk, the Tribunal held that reimbursement of expenses at cost, without any profit element, is not taxable as FTS. The Tribunal upheld the CIT(A)'s decision on both grounds, dismissing the Revenue's appeal. The Cross Objection filed by the assessee regarding the assessment order being time-barred was dismissed as infructuous due to a retrospective amendment to Section 144C of the Act, clarifying that its provisions prevail over Section 153.

What were the issues?

1. Whether on the facts, in circumstances of the case and in law, the Ld.CIT(A) was correct in holding that the administrative support charges of Rs. 6,09,68,985/- received from JIPL constitute taxable FTS under Section 9(1)(vii) and Article 13 of the India-UK DTAA, especially when relying on previous tribunal decisions not accepted by the Department? 2. Whether on the facts, in circumstances of the case and in law, the Ld.CIT(A) failed to appreciate that expenses reimbursed of INR 26,02,524/- constitute expenses incidental to the rendering of services by the assessee to its subsidiary JIPL in India and constitute taxable income/FTS? Assessee's Contentions: - The administrative support services were routine, non-technical, and did not involve making available any technical knowledge, skill, or experience as required by Article 13(4)(c) of the India-UK DTAA. Reliance was placed on the ITAT's own case for AY 2012-13 and consolidated orders for AYs 2018-19 to 2021-22. The AO's reliance on the AAR decision in Perfetti Van Melle Holding B.V. was misplaced as it was reversed by the Delhi High Court. - Reimbursement of expenses at cost without any mark-up is not taxable as FTS, as there is no element of income. Reliance was placed on the Supreme Court decision in DIT v. AP Moller Maersk. Revenue's Contentions: - The administrative support charges constitute taxable FTS under Section 9(1)(vii) and Article 13 of the India-UK DTAA. - The reimbursed expenses constitute taxable income/FTS.

Which sections of the Income-tax Act were involved?

Section 9(1)(vii),Section 143(3),Section 144C(3),Section 92CC,Section 153,Section 92CA

AI-generated summary — verify with the full judgment below

IN THE INCOME-TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER IT(IT)A No.226/MUM/2026 (A.Y. 2022-23) Deputy Commissioner of v/s. Jefferies International Ltd. Income Tax (IT) – 3(1)(1) बनाम Ernst and Young LLP, 14 th Room No. 603, 6 th Floor, Floor, the Ruby, 29 Senapati Kautilya Bhavan, Bandra Kurla Bapat Marg, Dadar West, Complex, Bandra (East), Mumbai – 400 028, Mumbai – 400 051, Maharashtra Maharashtra स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No: AABCJ7041C Appellant/अपीलार्थी .. Respondent/प्रतिवादी प्रत्याक्षेपसं./C.O. No.104/MUM/2026 (Arising out of IT(IT)A No. 226/MUM/2026) (A.Y. 2022-23) Jefferies International Ltd. v/s. Deputy Commissioner of Ernst and Young LLP, 14 th बनाम Income Tax (IT) – 3(1)(1) Floor, the Ruby, 29 Senapati Room No. 603, 6 th Floor, Bapat Marg, Dadar West, Kautilya Bhavan, Bandra Kurla Mumbai – 400 028, Complex, Bandra (East), Maharashtra Mumbai – 400 051, Maharashtra स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No: AABCJ7041C Appellant/अपीलाथी .. Respondent/प्रतिवादी

Assessee by Shri Nishant Thakkar & Hiten Thakkar, ARs Revenue by Shri Krishna Kumar, Sr.DR

Date of Hearing 23.04.2026 Da

The order continues below.

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