The Income Tax Appellate Tribunal (ITAT), Delhi Bench, in ITA No. 17/DEL/2021, addressed various contentious issues between Expeditors International (India) Pvt. Ltd. and ACIT, Circle-7(1), New Delhi for the assessment year 2010-11. This case encapsulates intricate legal and financial discussions, predominantly focusing on the disallowance of lease line connectivity charges and the proper application of double taxation avoidance agreements (DTAAs).
The primary contention revolved around the disallowance of Rs. 1,16,28,390/- attributed to lease line connectivity charges, which the company argued should not be classified as royalties. The appellant, Expeditors International, pleaded that these charges were crucial operational expenses and not royalties subject to withholding tax under the Income Tax Act. Furthermore, the ITAT reviewed the application of the India-US DTAA, considering the amendments in domestic law and their implications on international agreements.
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