Appellant: Expeditors International of Washington, USA
Respondent: ACIT, Circle-1(2)(2) International Taxation, New Delhi
For the Appellant: Shri Deepak Chopra, Sh. Hasrpreet Ajmani & Sh. Rohan Khare, Advs
For the Revenue: Mrs. Anupama Anand, CIT DR
Date of Hearing: October 27, 2021
Date of Pronouncement: January 5, 2022
This case pertains to several assessment years including 2012-13, 2013-14, 2014-15, 2015-16, and 2017-18. The appeals were consolidated due to identical grounds involving disputes over characterization of income from logistic support services and other related fees as technical services or royalties under the Income-tax Act, 1961, and the India-USA Double Taxation Avoidance Agreement (DTAA).
The tribunal reviewed the categorization of various fees and reimbursements received by Expeditors International from its Indian counterpart, specifically focusing on whether these payments were in the nature of fees for technical services (FTS) or royalties as defined under Indian Tax Law and the DTAA. The disputes also involved the treatment of Global Account Management charges and lease line charges.
The ITAT upheld the appellant’s arguments in several key aspects, aligning with previous tribunal decisions which did not classify the logistics support services as FTS or royalties. This was significant for determining the tax liabilities of the appellant under Indian taxation laws and the applicable DTAA provisions.
The ITAT’s ruling in favor of the appellant in several appeals underlines the importance of clear contractual and factual determinations in the classification of cross-border payments for tax purposes. This case contributes to the jurisprudence on the taxation of international transactions involving logistic and support services, underlining the specific criteria under which such services do not constitute technical services or royalties.
The tribunal partly allowed the appeals filed by Expeditors International, setting a precedent on the non-technical nature of logistic support services provided outside India, and the non-applicability of royalty or FTS taxation on such services under the specified conditions.
Expeditors International of Washington, USA vs. ACIT, Circle-1(2)(2) Int. Tax., New Delhi (2017-18)
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