INCOME TAX OFFICER , MINTO ROAD vs. HCL TECHNOLOGIES LIMITED, NEHRU PLACE

ITITA 58/DEL/2025Status: DisposedITAT Delhi23 March 2026AY 2019-2010 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue is squarely covered by the decisions of co-ordinate benches for earlier assessment years (2012-13 to 2018-19), which had held that remittances made by the assessee to its foreign subsidiaries were not taxable in India. Consequently, there is no obligation on the assessee to deduct tax at source under Section 195 of the Act. This proposition is settled by the Hon'ble Supreme Court in the case of GE India Technology India Ltd. vs. CIT. The Tribunal noted that the CIT(A) had allowed relief to the assessee by deleting the demand raised by the AO. The Tribunal further observed that in the earlier co-ordinate bench decisions, it was held that payments made by the assessee to foreign AEs for onsite software services could not be construed as FTS, as the services were utilized for business carried on outside India and for earning income from a source outside India, falling under the exception in Section 9(1)(vii)(b). The Tribunal also noted that the taxability under DTAA was rendered academic as the receipts were held not taxable under the Act, and receipts towards Infrastructure Services were also not chargeable to tax in India. Accordingly, the levy of interest under Section 201(1)/201(1A) by the AO was deleted. The appeals of the Revenue were dismissed.

What were the facts?

The Revenue has filed these two appeals against the orders of the CIT(A) for Assessment Years 2019-20 and 2020-21. The Assessing Officer (AO) had passed orders under Section 201(1)/201(1A) of the Income Tax Act, 1961, holding the assessee, HCL Technologies Limited, to be in default for failing to deduct tax at source (TDS) on payments made to its foreign associated enterprises (AEs) for fees for technical services (FTS) and fees for included services (FIS). The total amount for which the assessee was held in default was Rs. 25,93,72,90,371/-. The CIT(A), relying on earlier orders of co-ordinate benches and the Supreme Court decision in GE India Technology India Ltd. vs. CIT, allowed relief to the assessee, leading to the present appeals by the Revenue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that income paid to foreign associated enterprises/group companies of the assessee company is not chargeable to tax in India and that the assessee was not liable to deduct tax at source on such payments? 2. Whether, on the facts and in the circumstances of the case and law, the Ld. CIT(A) erred in holding that amounts paid by the assessee to foreign AEs for onsite services carried out outside India are not taxable in India, and erred in holding that the assessee's case is covered under the exception in Section 9(1)(vii)(b) of the Income Tax Act, thereby not considering the AO's addition under Section 9(1)(vii)? 3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 427,47,04,585/- under Section 201(1) and the consequent levy of interest under Section 201(1A) of the Income Tax Act? Assessee's Contentions: The assessee argued that this is a recurring issue covered by co-ordinate bench decisions in ITA No. 1392/Del/2024 and ITA Nos. 1372 to 1377/Del/2024, which were in its favour. The assessee also stated that corresponding additions made in the hands of overseas companies were deleted. Revenue's Contentions: The Revenue's Learned DR did not controvert the fact that the issue was covered by the decisions of co-ordinate benches in earlier years.

Which sections of the Income-tax Act were involved?

Section 201(1),Section 201(1A),Section 9(1)(vii),Section 9(1)(vii)(b),Section 195,Section 10A,Section 10AA,Section 250

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY, HON’BLE & SMT RENU JAUHRI, HON’BLE

For Appellant: Adv. Ms. Aakriti Bansal, CA
Hearing: 12.03.2026Pronounced: 12.03.2026

PER RENU JAUHRI:

These two appeals filed by the revenue are against orders dated 14.08.2025, passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by Ld. CIT(A). The assessment was framed by the Assessing Officer [for short, AO] u/s 201(1)/201(1A) of the Act vide orders dated 17.03.2023 and 30.11.2023, respectively.

2.

Since identical grounds have been raised in both the appeals, ITA (IT) A. No. 58/Del/2025 is being taken up as the lead case wherein revenue has raised following grounds of appeal:

“1. Whet

The order continues below.

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