EXPEDITORS INTERNATIONAL OF WASHINGTON, INC,WASHINGTON vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(2)(2), INTERNATIONAL TAXATION, NEW DELHI

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ITITA 6/DEL/2026Status: DisposedITAT Delhi09 March 2026AY 2023-2413 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed grounds 5 and 6 of the assessee's appeal, deleting the additions of Rs. 35,13,15,231/- on account of Global Account Management charges and Rs. 2,17,82,837/- on account of lease line charges. The Tribunal respectfully followed the decision of the Hon'ble jurisdictional High Court in the assessee's own case for earlier years, noting that the facts were unchanged. The High Court, in its order dated 13.02.2025, had dismissed the Revenue's appeals on similar issues (Questions B and C concerning GAM charges and lease line charges, respectively), referring to its earlier decisions in CIT vs. Woodward Governor India Pvt. Ltd. and Skycell Communications Ltd. and Anr. vs. DCIT and Ors., and stating that no substantial question of law arose. The Tribunal did not explicitly decide Ground No. 4 concerning freight/logistic support services in the provided excerpt, but the overall appeal was allowed. The Stay application was dismissed as infructuous.

What were the facts?

The assessee, Expeditors International of Washington, Inc., filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging the final assessment order passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961, for Assessment Year 2023-24. This order was passed pursuant to directions from the Dispute Resolution Panel (DRP). The assessee, headquartered in Seattle, Washington, provides global freight logistics services from outside India, with its Indian operations handled by its subsidiary, Expeditors International (India) Private Limited. The Assessing Officer (AO) proposed additions for sale of logistics services, global account management charges, and lease line charges. The DRP directed the AO to verify if the Hon'ble Delhi High Court's decision in the assessee's own case for earlier years had been accepted by the Revenue. The AO, noting the Revenue was in the process of filing an appeal, upheld the additions to keep the issue alive.

What were the issues?

1. Whether the fee for freight/logistic support services amounting to Rs. 22,89,88,29,142/- received by the Appellant for services rendered outside India is in the nature of Fee for Technical Services (FTS)/Fee for Included Services (FIS) under Section 9(1)(vii) of the Act and Article 12 of the India-US Double Taxation Avoidance Agreement (DTAA)? 2. Whether reimbursement of Global Account Management (GAM) charges amounting to INR 35,13,15,231/- received by the Appellant from Expeditors International (India) Private Limited is in the nature of FTS/FIS under Section 9(1)(vii) of the Act and Article 12 of the India-USA DTAA? 3. Whether reimbursement of lease line charges amounting to INR 2,17,82,837/- received by the Appellant from EI India is in the nature of royalty under Explanation 2 of Section 9(1)(vi) of the Act and Article 12 of the India-USA DTAA? Assessee's Contentions: The assessee argued that the issues are covered by the decisions of co-ordinate benches and the Revenue's appeals against these orders have been dismissed by the Hon'ble High Court. Specifically, for grounds 4, 5, and 6, the assessee contended that these issues were no longer res integra, having been decided in its favour for earlier Assessment Years and confirmed by the Hon'ble Delhi High Court's judgments dated 13.02.2025, 06.10.2025, and 24.11.2025, where the Revenue's appeals were dismissed. Revenue's Contentions: The Revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 254,Section 9(1)(vii),Section 9(1)(vi),Section 234B,Section 270A

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY & SMT. RENU JAUHRI

For Appellant: Adv. Sh. Shashvat Dhamija, Adv
For Respondent: Shri M.S. Nethrapal, CIT(DR)
Hearing: 09.03.2026Pronounced: 09.03.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, D: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SMT. RENU JAUHRI, ACCOUNTANT MEMBER IT(IT)A No.6/Del/2026 [Assessment Year: 2023-24] Expeditors International of Assistant Commissioner of Washington, INC Income Tax, 1200 Third Avenue, Seatlle Vs Circle Int. Tax 1(2)(2), Washington, USA International Taxation PAN-AACE4315R Assessee Revenue/Respondent AND SA No. 49/Del/2026 [Assessment Year: 2023-24] Expeditors International of Assistant Commissioner of Washington, INC Income Tax, 1200 Third Avenue, Seatlle Vs Circle Int. Tax 1(2)(2), Washington, USA International Taxation PAN- AACE4315R Assessee Revenue/Respondent

Assessee by Sh. Rohan Khare, Adv. Sh. Shashvat Dhamija, Adv. Department/ Revenue by Shri M.S. Nethrapal, CIT(DR) Date of Hearing 09.03.2026 Date of Pronouncement 09.03.2026

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. ORDER PER RENU JAUHRI:

The above captioned appeal as well as the Stay application has been filed by the assessee vide IT(IT)A No. 6/Del/2026, the appeal has been filed against the final assessment order passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 26.12.2025 pursuant to the directions of the Hon’ble Dispute Resolution Panel (DRP) vide order dated 27.11.2025u/s 144C(5) of the Act for Assessment Years (AY.) 2023-24 whereas the Stay Petition has been filed u/s 254 of the Act.

2.

In IT (IT)A No. 6/Del/2026, following grounds have been raised: “1. That on the facts and in the circumstances of the case and in law, the order dated 26 December, 2025 passed by the Learned Assessing Officer ("Ld. AO") under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 ("the Act") pursuant to the directions issued by the Learned Dispute Resolution Panel ("Ld. DRP") is erroneous and bad in law as well as in facts. 2. That on the facts and in law, the Ld. AO has erred in ignoring the binding precedent by the Hon'ble Delhi High Court in Appellant's own case vide judgment dated 13.02.2025 for AYs 2010-11, 2011-12, 2012- 13 to AY 2015-16, 2017-18, 2018-19 and 2020-21 wherein the Hon'ble Delhi High Court, vide its order dated 13 February, 2025, has already held in favour of the Appellant. 3. That on the facts and in the circumstances of the case and in law, the AO has erred in not following the directions of the DRP wherein it has directed to follow the judgment of the Hon'ble Delhi High Court in Appellant's own case, on the ground that the department is in process 2

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. of filing an appeal against such judgment when the limitation to file an SLP before the Supreme Court i.e. 90 days from judgment dated 13.02.2025 has long passed. 4. That the Ld. AO and the Ld. DRP on the facts and in laws are erred in holding that fee for freight/logistic support services amounting to Rs. 22,89,88,29,142/- received by the Appellant, for services rendered outside India, is in the name of fee for Technical Services/ Fee for Included Services (“FTS”/ “FIS”) as per the provisions of section 9(1)(vii) of the Act and Article 12 of the India-US Double Taxation Avoidance Agreement (“India-USA DTAA”). 5. That the Ld. AO and the Ld. DRP, on the facts and in law, have erred in holding that reimbursement of Global Account Management ("GAM") charges amounting to INR 35,13,15,231 received by the Appellant from Expeditors International (India) Private Limited ("El India") is in nature of FTS / FIS under section 9(1)(vii) of the Act and Article 12 of the India-USA DTAA. 6. That the Ld. AO and the Ld. DRP, on the facts and in law, have erred in holding that the reimbursement of lease line charges amounting to INR 2,17,82,837 received by the Appellant from El India is in nature of royalty under explanation 2 of section 9(1)(vi) of the Act and Article 12 of the India-USA DTAA. 7. That without prejudice to any other ground of appeal, the Ld. AO on the facts and in law, has erred in levying interest under section 2348 of the Act. 8. That on the facts and in law, the Ld. AO has erred in initiating penalty proceedings under section 270A of the Act mechanically by alleging that the Appellant has under-reported its income for the captioned year without recording any adequate satisfaction for such initiation.” 3. At the outset, Ld. AR has submitted that the issues involved in the present appeal are squarely covered by the decision of the co-ordinate benches and the

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. revenue’s appeal against these orders have also been dismissed by the Hon’ble High Court.

3.1 Brief facts are that the assessee filed its return for A.Y. 2023-24 on 23.11.2023, declaring income of Rs. 3,22,38,35,694/-. The assessee company has its headquarters in Seattle, Washington and is engaged in providing global freight logistics services worldwide. The services include beside air and ocean freight, distribution management, vendor consolidation, cargo insurance, purchase order management and customized logistics information. These operations are rendered by the assessee from outside India. In India, these services are offered by its wholly owned subsidiary i.e. M/s Expeditors International (India) Pvt. Ltd. (for short, EI). The assessee company has no operations in India.

3.2 The case was selected for scrutiny and vide draft order dated 25.02.2025, Ld. AO proposed to make the following additions: (i) Sale of logistics services 22,89,88,29,142 (ii) Global Accounts Management Classes 35,13,15,231 (iii) Lease line Charges 2,17,82,837 4. Aggrieved, the assessee filed objections before the Ld. DRP. Directions were issued by the Ld. DRP vide order dated 27.11.2025, holding that all the three issues are legacy issues and these have been decided by the Hon’ble Delhi High Court in assessee’s favour and therefore, directions were given to the Ld. AO to verify if the decision had been accepted and no further appeal filed by the Department. If yes, 4

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. the AO was directed to keep the issues alive. Accordingly, Ld. AO passed the final assessment order dated 26.12.2025 and noted the following observations: “14. The DRP in its directions has directed the AO to verify if the decisions of the Hon’ble Delhi High Court in ITA Nos. 475/2009, 751/2010, 1088/2011 and 202/2022 (13.02.2025) have been accepted by the Revenue. If not i.e., if the decision has been challenged before the higher Appellate forum, in order to keep the issue alive, the Panel upholds the conclusion of the AO, following its decision in the earlier AY i.e. 2020-21. In this regard, it is stated that since the Department is in the process of filing the appeal before the higher appellate forum, thus as of now the issue is alive and the decision dated 13.02.2025 on merits has not been accepted by the Revenue. Thus, as per DRP directions, the addition of the AO is upheld pending the finality of the issue. 15. In view of the above discussion and directions u/s 144C(5) of the Act issued by the Hon’ble DRP, since the matter is still alive before higher Appellate forum, the total amount of Rs. 26,49,57,62,604/- is calculated as the total income of assessee. (Addition of Rs. 84,40,13,477/-) Particulars Amount (in Rs.) Returned income Rs.322,38,35,394/-  Royalty income of INR 2,31,45,36,006 (Taxable @10% plus applicable surcharge and education cess under the provisions of the Act)  Dividend income of INR 89,96,83,456 (Taxable @15% under India USA DTAA)  Fees for technical services of INR 96,15,932 (Taxable @ 10% plus applicable surcharge and education cess under the provisions of the Act) Add: Sale of Logistic Services & Global Account 2325,01,44,373/- Manager Expenses receivedassessed as Fees for Technical Services under the Act as well as India DTAA (Taxable @ 10% plus applicable surcharge and Education cess under the provisions of the Act) Add: Receipts on account of lease line charges, 2,17,82,837/- assessed as Royalty under the Act as well as India DTAA (Taxable @ 10% - plus applicable surcharge and education cess under the provisions of the Act) Total Rs 26,49,57,62,604/- 5

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. 5. Aggrieved, the assessee is in appeal before us. Ground No.4: Addition on account of Freight/Logistic Support Services [Rs.22,89,88,29,142/-]

6.

Brief facts are that the AO held that nature of services were "technical" in nature and hence, taxable as Fee for Technical Services ("FTS")/ Fee for included Services ("FIS") under Article 12(5) of the Double Taxation Avoidance Agreement ("DTAA") read with Section 9(1)(vii) of the Income Tax Act, 1961 ("Act"). Additionally, the AO also held that the nature of services provided by the assessee were managerial/consultancy services and hence taxable as FTS. Furthermore, the AO held that the considerations were not in the nature of reimbursement whilst observing that once the consideration is in the nature of income, the question of considering the amount as reimbursement does not arise. The ld. DRP relying on its directions rendered for A.Y. 2020-21, upheld the action of the AO.

7.

Before us, Ld. AR has submitted that the issue in question is no longer res- integra and has been decided in favour of the assessee for A.Ys. 2010-11 to 2015- 16, 2017-18 to 2022-23. The aforesaid orders passed by the Tribunal now stand confirmed by the judgements dated 13.02.2025, 06.10.2025 and 24.11.2025 rendered in assessee's own case by the Hon’ble jurisdictional High Court, whereby, the appeals preferred by the Revenue against the abovementioned orders of the Tribunal have been dismissed by the Hon'ble High Court.

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. 8. On the other hand, Ld. DR has relied on the orders of the lower authorities.

9.

After hearing both the parties, we are of the considered view that the issue is squarely covered in assessee’s favour in earlier years and specifically by the order dated 13.02.2025 of the Hon’ble Jurisdictional High Court wherein it has been held as under:

“4. That only leaves us to examine question 'A' with the appellant contending that the Freight Logistic Support Services provided by the assessee is in the nature of Fee for Technical Services/Fee for Included Services and thus falling within the ambit of Section 9(1)(vii) of the Income Tax Act, 1961¹ read along with Article 12 of the India-USA Double Taxation Avoidance Agreement. 5. The aforesaid question has been duly examined and answered by the Income Tax Appellate Tribunal in ITA 205/2022 as under: - "28. Thus, on going through the provisions of the Act, facts of the case, business operations of the assessee, we hold that the services rendered by the assessee do not fall within the purview of managerial, consultancy or technical services. The payment for freight and logistics cannot be treated as technical services. Similarly, the provisions of Section 9(1)(i) are not attracted in this case as no income has accrued or arisen from the business connection abroad in India. The explanation states that only that part of income from business operations can be said to be accruing or arising in India only if it is relatable to the carrying of operations in India. Thus, the payment received by the assessee neither falls under Section 9(1)(i) or Section 9(1)(vii). Hence, we hereby decline to interfere with the directions of the Dispute Resolution Panel in this case.” ........................... ............................ ............................ 11. As we had explained in International Management Group, FTS is firstly concerned with rendition of specialized knowledge, skill, expertise and know- how. It is principally concerned with a transfer of knowledge, skill and 7

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. expertise. Those three attributes must be those which are possessed by the service provider and are distinctive and special qualities that it possesses. 12. The second facet of FTS is the "make available" condition and which envisions an enablement or transfer of specialized knowledge and skill. As was explained in International Management Group, the mere furnishing of service would not be sufficient to categorise the service as FTS. It would have to be necessarily accompanied by a transfer of expertise and which would consequently enable the recipient of service becoming skilled in its own right and empowered to perform those functions independently.

13.

When tested on those precepts we firstly find that rules and regulations pertaining to clearance of customs frontiers was clearly not specialized skill or knowledge acquired or possessed by the assessee. These rules are in the public domain and have been framed by competent authorities operating in different jurisdictions. A fortiori, imparting instructions in respect of those statutory regulations would also not qualify FTS. Similarly, we fail to appreciate how the creationof a global ethos or a workforce which is expected to follow a common code could be said to constitute FTS. 14. Insofar as the question of the development of software is concerned, we need not render any independent observations except to remind the appellant of the principles which the Supreme Court had come to authoritatively lay down in Engineering Analysis Centre of Excellence (P) Ltd. v. Commissioner of Income Tax'. 15. In view of the aforesaid, we do not find any ground to interfere with the view as expressed by the Tribunal. The appeals fail and shall stand dismissed.” 10. In view of the above, we hold that the issue is squarely covered by the above decision and hence, allow the appeal of the assessee on this ground. Accordingly, addition of Rs.22,89,88,29,142/- is hereby deleted.

11.

Ground Nos. 5 & 6 are similar and are adjudicated together.

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. Ground No. 5: Reimbursement of Global Account Management Charges [Rs.35,13,15,231]:

12.

Brief facts are that the AO held that the assessee was making available technical knowledge, experience, skill, know-how, to the payer and hence, payment received in lieu of the services was taxable as FTS in terms of Explanation 2 to Section 9(1)(vii) of the Act and Article 12(4) of the DTAA. Additionally, the AO also held that the nature of services provided by the assessee were managerial/consultancy services and hence taxable as FTS. Ld. AO also held that the considerations were not in the nature of reimbursement, observing that once the consideration is in the nature of income, the question of considering the amount as reimbursement does not arise. The ld. DRP relying on its directions rendered for AY 2020-21, upheld the action of the AO.

13.

Before us, Ld. AR submitted that the issue in question is no longer res- integra and has been decided in favour of the assessee for AY 2010-11 to 2015-16, 2017-18 to 2022-23. The aforesaid orders passed by the Tribunal now stand confirmed by the judgements dated 13.02.2025, 06.10.2025 and 24.11.2025 rendered in assessee's own case by the Hon’ble jurisdictional High Court, whereby, the appeals preferred by the Revenue against the above mentioned orders of the Tribunal have been dismissed by the Hon'ble High Court.

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. 14. Ld. DR on the other hand, relied on the orders of the lower authorities.

Ground No. 6: Reimbursement of Lease line Charges amounting to Rs. 2,17,82,837/-

15.

Brief facts are that the AO whilst relying on the amendment to the Finance Act, 2012 has held that the payments made are in the nature of Royalty and hence, taxable under the Act. Additionally, the AO has relied on the decision of the Hon’ble Madras High Court in the case of Verizon Communications Singapore (P.) Ltd. and held that in terms of the judgement passed by the High Court of Delhi passed in Indian Company’s case by stating that in light of amendments brought by the Finance Act, 2012, the decision rendered by the High Court is unacceptable. The DRP whilst relying on its directions rendered for AY 2020-21 and upheld the action of the AO.

15.1 Ld. AR submitted that the issue in question is no longer res-integra and has been decided in favour of the assessee for A.Ys. 2010-11 to 2015-16, 2017-18 to 2022-23. The aforesaid orders passed by the Tribunal now stands confirmed by the judgements dated 13.02.2025, 06.10.2025 and 24.11.2025 rendered in assessee's own case by the Hon’ble jurisdictional High Court, whereby, the appeals preferred against the abovementioned orders have been dismissed by the Hon'ble High Court.

15.2 On the other hand, ld. DR has relied on the orders of the lower authorities.

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. 16. We have heard the rival submissions and perused the material placed before us. We note that both the issues relating to reimbursement of Global Account Management charges and lease line charges are covered by the decision of Hon’ble jurisdictional High Court in assessee’s own case for earlier year. Hon’ble Jurisdictional High Court vide order dated 13.02.2025 has dismissed the revenue’s appeal with the following observations:

“The following three principal questions were posited by the appellant for our consideration: - "A. Whether Freight Logistic Support services provided by the assessee is in the nature of Fee for Technical Services/Fee for Included Services as per Section 9(1)(vii) of the Income Tax Act, 1961 and Article 12(5) of the India-US Double Taxation Avoidance Treaty? B. Whether reimbursement of Global Account Management charges received by assessee is taxable as FTS/FIS? C. Whether reimbursement of Lease line charges received by assessee is taxable as Royalty under Section 9(1)(vi) of the Act?" 2. Insofar as questions ‘B’ and ‘C’ are concerned, it could not be disputed before us that those also formed the subject matter of ITA 475/2009 and the decision on which came to be followed in ITA 751/2010. While dealing with those questions, the Court while dismissing ITA 475/2009 had observed as follows: - "Learned counsel for the appellant could not dispute that question of law proposed to be raised is covered by the judgment in CIT vs. Woodward Governor India Pvt. Ltd. 312 ITR 254 and judgment of this Court in Skycell Communications Ltd. and Anr. vs. DCIT and Ors. 251 ITR 53 which has been followed in appeal Commissioner of Income Tax vs. Bharti Celluar Ltd. I.T.A. No. 1120/2007. The 11

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. appeal is accordingly dismissed. It could not be disputed that the question covered there is a pure question of fact. No question of law has arisen. Dismissed." 3. The fact that questions ‘B’ and 'C’ stand conclusively settled and answered against the appellant is also evident from a reading of Para 6 of the order passed in ITA 1088/2011: -. "6. Prima facie, we find force in the argument of learned counsel for the assessee. In any case, this is the view already taken by this Court in the case of this very assessee affirming the earlier decision of the Tribunal in ITA Nos.475/2009 and 751/2010 and we see no reason to deviate from the same. Therefore, in our opinion, no substantial question of law arises and the appeal is dismissed." In view of the aforesaid, we do not find any justification to entertain these appeals on questions ‘B’ and ‘C’. 16.1 Respectfully following the decision of the Hon’ble jurisdictional High Court, and noting that there is no change in the facts in the present year, the ground Nos. 5 & 6 of appeal of the assessee are allowed. Accordingly, addition of Rs.35,13,15,231/- on a/c of Global account management charges and Rs.2,17,82,837/- on a/c of lease line charges is hereby deleted.

17.

In the result, appeal of the assessee is allowed.

18.

Since, the appeal of the assessee has been allowed, the Stay application becomes infructuous and hence dismissed.

IT(IT) A No. 6/DEL/2026 & SA 49/DEL/2026 Expeditors International of Washington, Inc. 19. In the result, the appeal of the assessee is allowed and the Stay application of the assessee is dismissed as infructuous. Order pronounced in the open court on 09.03.2026.

Sd/- Sd/- [VIKAS AWASTHY] [RENU JAUHRI] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 08.04.2026. Pooja Mittal/Subodh Kumar, Sr. PS Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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