Assistance in Implementing Brand Strategy for Use of Network of Members Isn’t Use of Copyright; Not Royalty | ITAT

Case Details: Deputy Commissioner of Income-tax (International Taxation) v. Deloitte Haskins & Sells LLP - [2025] 171 taxmann.com 615 (Mumbai-Trib.)

Judiciary and Counsel Details

• Amit Shukla, Judicial Member & Ms Padmavathy S., Accountant Member
• Niraj Sheth, Ninad Patade & Ms Darshana Shah for the Appellant.
• Krishna Kumar, Sr. DR for the Respondent.

Facts of the Case

The assessee, a limited liability partnership (LLP) firm, rendered professional services to clients, which included large domestic as well as multi-national corporates. The assessee made an application seeking authorization for payments to a company (DGSHL) without withholding any tax.

The Assessing Officer (AO) noted that the assessee had entered into an agreement with DGSHL, the payee, which provided the payer with many services. He held that payments proposed to be made for Global technology/Knowledge management, Global Communication and Global Brand were in the nature of Royalty as per section 9(1)(vi) and Article 13 of the DTAA between India-UK.

Aggrieved by the AO’s order, the assessee preferred an appeal to the CIT(A), wherein relief was granted. The matter then reached the Mumbai Tribunal.

ITAT Held

The Tribunal held that the agreement was entered into to pay services, which included overseeing the development and distribution of common standards, policies, procedures, communication supports, development and distribution of internal and external communication, publication and reports for DTT, genuine legal services, etc.

The Tribunal held that the payments made for global activities given in Global Communication, DGSHL distributes the publications and reports for DTTI and supports global public relations, thought leadership initiatives, events, guidance, common standards, guidelines, organising internal events, etc., so that there is alignment of all the member firms for internal and external communication.

From a bare perusal of the activities described above, it cannot be held that it is for the use of or right to use any copyright of literary, artistic or scientific work or any other terms given in Article 13(3). Thus, these activities cannot be reckoned to provide industrial, commercial, or scientific equipment to the assessee and, therefore, are outside the nature and scope of Royalty as defined in Article 13(3) of the India-UK DTAA.

Therefore, the payments made to DGSHL do not fall within the scope and ambit of royalty under Article 13 of India-UK DTAA.

List of Cases Reviewed

• Deloitte Haskins & Sells LLP v. Deputy Commissioner of Income-tax, (IT) [2022] 141 taxmann.com 205 (Mumbai – Trib.) [Para 7] followed.