ACIT, CIRCLE-1(2)(1), INT. TAXATION, NEW DELHI V. CARGILL INCORPORATED, NEW DELHI

ITA 1800/DEL/2021

AI Insights

The case involves the Assistant Commissioner of Income Tax, Circle International Tax 1(2)(1), New Delhi, as the appellant, and Cargill Incorporated, as the respondent. The core issue was the taxability of Corporate IT recharges received by Cargill from its Indian entities, which the Revenue contended should be taxed as Royalty or FIS under the Income Tax Act. The CIT(A) had earlier deleted the addition made by the Assessing Officer, a decision which the Revenue appealed against. The Tribunal, referencing its consistent rulings in previous years and the principles of legal consistency, dismissed the Revenue's appeal, affirming that such recharges are reimbursements and not taxable as Royalty or FIS.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822998 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Appeal Filed On: 01-12-2021
• Other Referred Cases: Radha Soami Satsang vs. Commissioner of Income Tax, 1992 AIR 377
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: EKTA JAIN
• Assessee Lawyers: NIKHIL AGARWAL
• Keywords: Rule of consistency; Double taxation relief

Judgement Text

"आयकर अपीलीय अधिकरण धिल्ली पीठ “डी”, धिल्ली श्री विकास अिस्थी, न्याविक सदस्य एिं श्री एम. बालगणेश, लेखाकार सदस्य क े समक्ष IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI M. BALAGANESH, ACCOUNTANT MEMBER आअसं.1800/धिल्ली/2021(नि.व. 2017-18) ITA No.1800/DEL/2021 (A.Y.2017-18) Assistant Commissioner of Income Tax, Circle International Tax 1(2)(1), Civic Centre, Minto Road, New Delhi 110002 ...... अपीलार्थी/Appellant बिाम Vs. Cargill Incorporated, B-25, First Floor, Nirlac House Qutub Industrial Area, Delhi 110016 ..... प्रनिवादी/Respondent PAN AACCC-4786-G अपीलार्थी द्वारा/ Appellant by : Ms. Ekta Jain, CIT(DR) प्रधिवािीद्वारा/Respondent by : Shri Nikhil Agarwal, Advocate सुिवाई की निथर्थ/ Date of hearing : 02/12/2025 घोषणा की निथर्थ/ Date of pronouncement : 24/12/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals), Delhi-42 [in short ‘the CIT(A)’] dated 21.09.2021, for the Assessment Year 2017-18. 2. The Revenue in appeal has assailed the order of CIT(A) on following grounds:- “1. That in the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in deleting the addition made by the AO. Printed from counselvise.com 2 ITA No. 1800/DEL/2021 (A.Y.2017-18) 2. That in the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in delting the addition made by the AO, relying on the decision of the CIT(A) in earlier years, without considering the facts of the year under consideration. 3. That in the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in holding Corporate IT recharges as mere reimbursements, without considering that these pertain to information concerning industrial, commercial and scientific experience, which were rightly taxed as Royalty. 4. That in the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in holding that Corporate IT recharges cannot be treated as Fee for Included Services (FIS) in the absence of fulfilment of the 'make available' clause without considering that if not held to be Royalty, this is alternatively taxable as FIS, because the services do 'make available' technical knowledge, experience, skill, know-how and processes related to food processing, which is covered in the description of services falling in Article 4(b) of the DTAA, as per the MOU concerning FIS dated 15.5.89, to the Indo-US DTAA. 5. That in the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in holding that as per the MOU concerning FIS dated 15.5.89, what is required to satisfy the 'make available' clause is that the technology can be independently made use of by the Indian entity, whereas the MOU only requires that 'the person acquiring the service is enabled to apply the technology', and the 'make available' clause was satisfied in this case. 6. That in the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in deleting the addition made by the AO relying on the facts that no appeal has been filed against the order of the Ld. CIT(A) in earlier assessment years 2009-10 to 2014-15. However, Revenue has filed appeal against the order of the Ld. CIT(A) for AY 2014-15 (ITA No. 6359/Del/2017) which is pending.” 3. Shri Nikhil Agarwal, appearing on behalf of the assessee submitted at the outset that the only issue in appeal raised by the Revenue is with regard to taxability of Corporate IT recharges as Royalty. The ld. Counsel submits that this issue has already been considered and decided by the Tribunal in assessee’s own case in the preceding assessment years i.e. in AY 2002-02 to 2008-09 and again in AY 2014-15. The Tribunal has consistently decided the issue in favour of the assessee holding that Corporate IT recharges are in nature of reimbursement and are not taxable as Royalty or Fee for Included Services (FIS). No further appeal was filed by the Revenue against the common order of Tribunal for AY 2002-03 to 2008- 09. Thereafter, in assessment years 2009-10 to 2013-14, the CIT(A) granted relief Printed from counselvise.com 3 ITA No. 1800/DEL/2021 (A.Y.2017-18) to the assessee following the decision of Tribunal in assessee’s own case in the preceding assessment years. The department accepted the decision of CIT(A) and no appeal to the Tribunal was filed by the AO in AY 2009-10 to AY 2013-14. In AY 2014-15, the issue of treating corporate IT recharge as ‘Royalty’ was decided by the Tribunal taking a consistent view in favour of the assessee holding that the same are not taxable as Royalty /FIS. The Revenue carried the issue in appeal to the Hon’ble Delhi High Court in ITA 125/2023. The Hon’ble High Court vide order dated 06.03.2023 dismissed appeal of the Revenue. The said order is at page 58 & 59 of the paper book. On identical set of facts, the Assessing Officer (AO) in the impugned assessment year has made addition holding corporate IT recharge as Royalty. The CIT(A) has deleted the addition following earlier orders of the CIT(A) and Tribunal. The ld. Counsel thus prayed for dismissing appeal of the Revenue. 4. Ms. Ekta Jain, representing the department supported findings of the AO and prayed for reversing the impugned order. However, the ld. DR fairly stated that the issue has been considered by the Tribunal in preceding assessment years in assessee’s own case. 5. Both sides heard, orders of the authorities below examined. The assessee is a company incorporated in USA and is tax resident of USA. During the period relevant to assessment year under appeal, the assessee has inter alia received Corporate IT recharges amounting to Rs.34,04,46,472/- from its Indian group entities in respect of IT Services rendered by the assessee in pursuance to the Amended & Restated Agreement Services dated 01.06.2008. The stand of the assessee is that Corporate IT recharges are reimbursements without any mark-up. Whereas, the AO has held said receipts from the Indian entities as Royalty. We find this is a legacy issue. The Assessing Officer has been consistently holding since AY Printed from counselvise.com 4 ITA No. 1800/DEL/2021 (A.Y.2017-18) 2002-03 that the payments for Corporate IT recharges are in the nature of Royalty. The Tribunal while deciding appeal of the assessee for AY 2002-03 to AY 2008-09 has held that Corporate IT Recharges are in the nature of reimbursement and is not taxable as Royalty. Purportedly, no appeal was filed by the Revenue against the said order of the Tribunal, in ITA Nos. 491/Del/2012 for AY 2002-03, 492/Del/2012 for AY 2003-04, 5647/Del/2011 for AY 2005-06, 447/Del/2012 for AY 2006-07, 5503/Del/2010 fo AY 2007-08 & 5648/Del/2011 for AY 2008-09, hence, the issue attained finality. In the subsequent assessment years i.e. AY 2009-10 to 2013-14, the AO continued to take similar view holding Corporate IT Recharges are in nature of Royalty and FIS. The CIT(A) allowed relief to the assessee following the order of Tribunal in the preceding assessment years. The revenue never filed appeal against the order of CIT(A), thus, accepting the earlier view of the Tribunal. In AY 2014-15 the CIT(A) taking a consistent view deleted the addition holding that Corporate IT Recharges are in the nature of reimbursement and not taxable as Royalty. The Revenue carried the issue in appeal before the Tribunal in ITA No.6395/Del2017, the Tribunal vide order dated 16.02.2022 dismissed the appeal of Revenue following the Rule of consistency. The Revenue carried the issue in appeal before the Hon’ble Delhi High Court, the Hon’ble High Court in ITA No.125/2023 dismissed appeal of the Revenue upholding the view of Tribunal. 6. Again, in the impugned assessment year similar addition has been made by the AO holding Corporate IT recharges as Royalty and FIS. There has been no change in the facts in the impugned assessment year. No material has been placed on record by the Revenue to controvert findings of the Tribunal in the preceding assessment years. We see no reason to take a different view, hence, following earlier decision of the Tribunal and the principle of consistency laid down by the Printed from counselvise.com 5 ITA No. 1800/DEL/2021 (A.Y.2017-18) Hon’ble Apex Court in the case of Radha Soami Satsang vs. Commissioner of Income Tax, 1992 AIR 377, we uphold the impugned order. 7. In the result, appeal of the Revenue is dismissed being devoid of any merit. Order pronounced in the open court on Wednesday the 24th day of December, 2025. Sd/- Sd/- (M. BALAGANESH) (VIKAS AWASTHY) लेखाकार सदस्य/ACCOUNTANT MEMBER न्यानयक सदस्य/JUDICIAL MEMBER धिल्ली/Delhi, ददिांक/Dated 24/12/2025 NV/- प्रतिलिपि अग्रेपिि/Copy of the Order forwarded to : 1. अपीलार्थी/The Appellant , 2. प्रनिवादी/ The Respondent. 3. The PCIT 4. ववभागीय प्रनिनिथि, आय.अपी.अथि., वदल्ली /DR, ITAT, धिल्ली 5. गार्ड फाइल/Guard file. ORDER, //True Copy// (Asstt. Registrar) ITAT, DELHI Printed from counselvise.com 6 ITA No. 1800/DEL/2021 (A.Y.2017-18) 1. Date of dictation of Tribunal order 11.12.2025 2. Date on which typed draft order is placed before the dictating Member 11.12.2025 3 Date on which typed draft order is placed before the other Member (in the case of DB) 4. Date on which the approved draft order comes to P.S/Sr.P.S 5. Date on which the fair Order is placed before the dictating Member for sign 6. Date on which the fair Order is placed before the other Member for sign ( in the case of DB) 7. Date on which the Order comes back to P.S./Sr.P.S for uploading on ITAT website 8. Date of uploading, if not, reason for not uploading 9. Date on which the file goes to the Bench Clerk 10. Date on which order goes for xerox 11. Date on which order goes for endorsement 12. Date on which the file goes to the Superintendent/O.S. for checking 13. Date on which the file goes to the Assistant Registrar for signature on the order 14. Date on which the file goes to dispatch section for dispatch the Tribunal Order 15. Date of dispatch of order 16. Date on which file goes to Record Room after dispatch the order Printed from counselvise.com "