Payments For IT & Non-IT Support Services To UK Group Entity Not Taxable As FTS Under India-UK DTAA: ITAT Delhi
Pranav B Prem
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has held that payments received by a UK-based group company for providing IT and non-IT support services to its Indian associate enterprise (AE) cannot be taxed in India as “Fees for Technical Services” (FTS) under Article 13 of the India-UK Double Taxation Avoidance Agreement (DTAA). The Tribunal ruled that the services neither made available technical knowledge nor imparted any enduring skill enabling the Indian entity to perform those functions independently.
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The Bench comprising Vikas Awasthy (Judicial Member) and Brajesh Kumar Singh (Accountant Member) delivered the ruling while allowing the appeal of CPPGROUP Services Limited, a company incorporated and tax-resident in the United Kingdom. The assessee, part of the global CPP Group, provides a range of centralised services—IT support, HR, business development, marketing, finance, and compliance—to group entities worldwide, including its Indian subsidiary, CPP Assistance Services Private Limited (CPP India).
The dispute arose when the Assessing Officer (AO) treated the consideration of ₹20.81 crore for IT support services and ₹89.41 lakh for non-IT support services as taxable FTS. The AO alleged that the services “made available” technical knowledge, managerial expertise, and operational capability to the Indian company. The AO further claimed that the nature of the services enabled CPP India to utilise the knowledge independently, thus satisfying the “make available” clause under Article 13(4)(c) of the DTAA.
The assessee argued that all services were routine support activities, rendered on a continuous basis, which did not impart any specialised knowledge or lasting technical capability to CPP India. It was pointed out that the agreements were perpetual and the Indian company continued to remain dependent on the UK entity for delivery of the same services every year. The assessee submitted that no technology, processes, or technical designs were transferred to CPP India, and therefore the “make available” test—a mandatory DTAA condition—was not met.
The Tribunal accepted this submission. It emphasised that the AO had failed to demonstrate with evidence that CPP India acquired the ability to perform the IT support, HR, or managerial functions on its own. On the contrary, the nature of services disclosed continuous dependence of the Indian AE on the UK-based expertise. The Tribunal observed that if CPP India had actually become capable of providing such services independently, it would not require repeated support from the appellant year after year.
Significantly, the Tribunal relied on its own earlier rulings in CPP India’s assessment proceedings for AYs 2017-18, 2018-19 and 2020-21. In those decisions, identical payments for identical services made to the same UK entity were held to fall outside the scope of FTS. The Bench noted that the Revenue had failed to establish any change in facts or law that would justify taking a contrary view for the current assessment year.
The Department attempted to argue that since the assessee had undertaken certain IT development services worth ₹5.32 crore—on which it had voluntarily offered tax—CPP India now possessed the capability to perform IT-related functions independently, thereby satisfying the “make available” test. Rejecting this contention, the Tribunal held that IT development services were entirely distinct and executed by a different team. These services related to developing a regulatory compliance platform and had no bearing on routine IT support or group-level managerial services. Thus, the Revenue’s reliance on the development activity was held to be misplaced.
On the non-IT services (such as HR, marketing, legal, and finance), the Tribunal affirmed the findings of the Dispute Resolution Panel (DRP), which earlier observed that the AO had made sweeping assertions without identifying any specific managerial or technical knowledge that was transferred to the Indian entity. The Tribunal held that routine administrative and managerial support do not amount to technical services under either domestic law or Article 13 of the DTAA.
Concluding that the “make available” condition was not satisfied, the Tribunal held that the payments could not be taxed in India. It accordingly deleted the tax additions on ₹20.81 crore received for IT support services and ₹89.41 lakh received for non-IT support services, while noting that the IT development services of ₹5.32 crore had already been offered to tax by the assessee and required no further adjudication. The decision reiterates the settled position that managerial or support services attract taxability as FTS under the India-UK DTAA only when they result in transfer of technical knowledge or skill capable of independent application by the Indian recipient—an essential requirement absent in the present case.
Appearance
Counsel For Appellant: Ajay Vohra, Sr. Adv.
Counsel For Respondent: M.S. Nethrapal
Cause Title: CPPGROUP Services Limited Versus ACIT
Case No: ITA No.980/DEL/2025
Coram: Vikas Awasthy (Judicial Member), Brajesh Kumar Singh (Accountant Member)
