HEIDRICK & STRUGGLES AUSTRALIA PTY. LTD.,GURGAON vs. ASSISTANT COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE 2(1)(1), DELHI, DELHI

ITITA 1742/DEL/2025Status: DisposedITAT Delhi18 February 2026AY 2022-2314 pages
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What were the facts?

The appeals concern two entities, Heidrick & Struggles Australia Pty. Ltd. (Australia) and Heidrick & Struggles Inc. (USA), for Assessment Year 2022-23. Both are engaged in executive search and leadership consulting. The assessees are challenging assessment orders passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961, pursuant to directions from the Dispute Resolution Panel (DRP). The primary dispute involves the taxability of fees received for professional services and corporate allocation charges. For Australia, the dispute is INR 2,03,64,264, treated as Royalty/Fees for Included Services (FIS) under the India-Australia DTAA. For USA, the dispute involves INR 3,58,66,719 for professional services and INR 4,73,09,086 for corporate allocation charges, treated as FIS under the India-USA DTAA. The assessees claim these services do not meet the 'make-available' test.

What did the Tribunal hold?

For Heidrick & Struggles Australia Pty. Ltd. (ITA No. 1742/Del/2025), the Tribunal held that the CIT(A) had correctly deleted the addition. The Tribunal found that the foreign service providers were not making available technical skills and knowledge to the Indian entity, thus the fees did not qualify as Fees for Technical Services (FTS) or royalties under the DTAA. Consequently, no income was deemed to accrue or arise in India, and Section 195 of the Act was not applicable. The Tribunal dismissed the Revenue's grounds. For Heidrick & Struggles Inc. (ITA No. 1743/Del/2025), regarding corporate allocation charges, the Tribunal found insufficient factual determination by the AO to conclusively establish satisfaction of the 'make-available' clause under the India-USA DTAA. Citing precedents like AECOM Intercontinental Holdings UK Ltd. vs. ITO, the Tribunal noted the AO's finding was broad but lacked specific evidence on the 'make-available' aspect. Therefore, this issue was remanded to the AO for fresh consideration. The judgment noted that other grounds were consequential or premature and not specifically adjudicated.

What were the issues?

1. Whether fees received for recruitment services by Heidrick & Struggles Australia Pty. Ltd. are taxable as Royalty/FIS under Article 12(3) of the India-Australia DTAA, considering the 'make-available' test and prior ITAT rulings in favour of the assessee's associate enterprise (Assessee's contention: Services are executive search, not royalty or FIS as they don't 'make available' technical knowledge; prior rulings support this. Revenue's contention: Not recorded). 2. Whether fees received for recruitment services by Heidrick & Struggles Inc. are taxable as Royalty/FIS under Article 12(3)/(4) of the India-USA DTAA, considering the 'make-available' test, a portion being reversal of excess fee, and prior ITAT rulings (Assessee's contention: Services are executive search, not royalty or FIS; INR 1,09,48,500 is reversal of excess billing; prior rulings support this. Revenue's contention: Not recorded). 3. Whether revenue from corporate allocation charges received by Heidrick & Struggles Inc. is taxable as FIS under Article 12(4) of the India-USA DTAA, considering the 'make-available' test and that it's a cost-to-cost reimbursement (Assessee's contention: Services do not 'make available' technical knowledge; it's reimbursement without income. Revenue's contention: Services are technical and satisfy 'make-available' clause).

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 234B,Section 270A,Section 90,Section 90A,Section 9(2),Section 195

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

I.T.A No.1742/DEL/2025
I.T.A No.1743/DEL/2025

Read from the judgment's own cause title. This page is filed under one of them.

ITA Nos. 1742 & 1743/Del/2025 HEIDRICK & STRUGGLES AUSTRALIA PTY. LTD. AND HEIDRICK & STRUGGLES INC. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”NEW DELHI

BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER Assessment Year: 2022-23 HEIDRICK & STRUGGLES AUSTRALIA PTY. LTD. Vs. ASSISTANT COMMISSIONER OF C/o Heidrick & Struggles (India) Private INCOME TAX, Limited,10th Floor, Building No.9B, DLF Cyber International Taxation, City,Phase-III, Gurgaon, Haryana, INDIA. Circle 2(1)(1), Civic Centre, PAN No.AADCH9855Q Minto Road, New Delhi. अपीलाथ" Appellant ""यथ"/Respondent & Assessment Year: 2022-23

HEIDRICK & STRUGGLES INC., Vs. ASSISTANT COMMISSIONER OF C/o Heidrick & Struggles (India) Private INCOME TAX, Limited,10th Floor, Building No.9B, DLF Cyber International Taxation, City,Phase-III, Gurgaon, Haryana, INDIA. Circle 2(1)(1), Civic Centre, PAN No.AACCH4893D Minto Road, New Delhi. अपीलाथ" Appellant ""यथ"/Respondent

Assessee by Shri K.M. Gupta, Advocate, Ms. Surti Kamita, Advocate, Shri Jaskaran Singh, CA Revenue by Shri M.S. Nethrapal, CIT DR

Date of hearing: 02.02.2026 Pronouncement on: 18.0

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