ITAT Delhi Judgments — September 2025

The Tribunal held that the assessee did not have a fixed place PE, service PE, or dependent agent PE in India. Consequently, the business income is not chargeable to tax in India. The payment of link charges/IPLC was also held not to be taxable as royalty.

The Tribunal partly allowed the appeal. The addition of INR 50 Lakhs for bogus sales was upheld. However, additions for cash found during the search (INR 7,82,050/-), unexplained income from cash at residence (INR 1,38,000/-), excess stock of gold jewellery (partly allowed), excess stock of silver ornaments (INR 82,000/-), and lottery income (INR 18,16,000/-) were either deleted or partly allowed.

The Tribunal held that the assessee did not have a fixed place PE, service PE, or dependent agent PE in India, based on the Supreme Court's decision in E-Funds IT Solution Inc. Consequently, the business income was not chargeable to tax in India. The issue of taxability of link charges/IPLC as royalty was also decided against the Revenue, holding that they did not qualify as royalty under the DTAA.

The Tribunal held that the receipts were for the grant of a non-exclusive, non-transferable license to use copyrighted software, which is not in the nature of royalty or fee for technical services. The Tribunal followed its own previous decision for the Assessment Year 2021-22, allowing the assessee's appeal.

The Tribunal found that neither the assessee's claim nor the department's estimation was fully acceptable. The assessee had not sufficiently proven their claim, and the department lacked comparable data. Therefore, the Tribunal directed a revised estimation of net profit at 4% of the turnover.