DCIT., CENTRAL CIRCLE-3(2), HYDERABAD V. SATYAM VENTURE ENGINEERING SERVICE PVT LTD, HYDERABAD

ITA 1242/HYD/2025

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The case involves Satyam Venture Engineering Service Private Limited, which made payments to Adecco Banga Recruitment Ltd (ABRL), Thailand, without deducting TDS. The Assessing Officer disallowed these payments under section 40(a)(i) of the IT Act for want of TDS. The assessee contested this, citing the DTAA between India and Thailand, which does not have a specific clause on fee for technical services, and argued that the income was not taxable in India as the recipient did not have a permanent establishment in India. The CIT (A) agreed with the assessee, referencing a previous Tribunal decision in the assessee's favor for A.Y. 2016-17. The Tribunal upheld the CIT (A)'s decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793463 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2022-2023
• Appeal Filed On: 30-07-2025
• Other Referred Cases: Solvay Asia Pacific (P.) Ltd. vs. DCIT, Bangkok Glass Industry Co. Ltd. vs. ACIT, Bharti Airtel Ltd. vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: EV KRISHNA
• Keywords: Business income; Additional evidence; TDS; Double taxation relief; Permanent establishment; Non-deduction of tax
• Section: 40(a)(ia)

Judgement Text

" ITA No 1242 of 2025 Satyam Engineering Service P Ltd Page 1 of 5 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ DB-A ‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Manjunatha, G. Accountant Member आ.अपी.सं /ITA No.1242/Hyd/2025 (िनधाŊरण वषŊ/Assessment Year: 2022-23) Dy. CIT Central Circle 3(2) Hyderabad Vs. Satyam Venture Engineering Service Private Limited Hyderabad PAN: AAFCS3287D (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: CA EV Sri Krishna राज̾ व Ȫारा/Revenue by:: Shri T.V. Vamsidhar, Sr. AR सुनवाई की तारीख/Date of hearing: 24/09/2025 घोषणा की तारीख/Pronouncement: 26/09/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President This appeal by the Revenue is directed against the order dated 14/06/2025 of the learned CIT (A), Hyderabad -11 for the A.Y.2022-23. 2. The Revenue has raised the following grounds of appeal: Printed from counselvise.com ITA No 1242 of 2025 Satyam Engineering Service P Ltd Page 2 of 5 “1. The ld CIT(A) erred on the facts and in the circumstances of the case and in law. 2. Whether on the facts and circumstances of the case and in the law, the CIT(A) is correct in holding that fee for technical services should be treated as business income in the absence of any specific clause DTAA between India and Thailand holding that the payments to the Thailand entity are not liable for deduction tax at source in India? 3. The appellant craves leave to amend, modify or alter any ground or grounds of appeal wherever necessary”. 3. The assessee company is engaged in the business of I.T. enabled services and BPO service providers. During the scrutiny assessment, the Assessing Officer noted that the assessee has made payments to Adecco Banga Recruitment Ltd (ABRL), Thailand to the tune of Rs.52,41,327/- without deducting the TDS. Accordingly, the Assessing Officer disallowed the said amount for want of TDS u/s 40(a)(i) of the I.T Act. The assessee challenged the action of the Assessing Officer before the learned CIT (A) and contended that no TDS is required to be deducted on this payment as the said amount is not taxable in the hand of the recipient as per the provisions of DTAA between India and Thailand. It was also submitted that the DTAA between India and Thailand does not contain any article on fee for technical services and further the recipient also did not have a permanent establishment (PE) in India, therefore, the said income is not chargeable to tax in India. The learned CIT (A) has allowed the claim of the assessee and deleted the disallowance made by the Assessing Officer by following the order of the Tribunal in assessee’s own case for the A.Y 2016-17. Printed from counselvise.com ITA No 1242 of 2025 Satyam Engineering Service P Ltd Page 3 of 5 4. We have heard the learned DR as well as the learned AR and considered the relevant material available on record. At the outset, we note that this Tribunal in assessee’s own case for the A.Y 2016-17 has considered an identical issue vide order dated 31/05/2025 in ITA (TP) No.192/Hyd/2021 in para 23 to 25 as under: “23. Having regard to the facts and circumstances of the case, we are of the considered opinion that by granting an opportunity to the assessee no prejudice is caused to the case of the Revenue and in the interest of justice, the additional evidence is received and the issue is restored to the file of the learned Assessing Officer to examine them and to take a view after affording an opportunity to the assessee. With this view of the matter, we restore the issue covered by Ground No. 15 in respect of the payments made to Techno Support, Japan for examining the material and to take a view according to law, after affording an opportunity to the assessee. 24. In respect of the payment to Thailand entity, learned DRP recorded that such payments amounted to Fee for Technical Services (FTS), and in the absence of FTS clause in the India - Thailand Double Taxation Avoidance Agreement (DTAA), the same have to be taxed as other income under Article 22 of DTAA, and for non-deduction of tax on such payments, disallowance under section 40(a)(i) of the Act is justified. 25. It is, therefore, clear that there is no dispute that the payments made by the assessee to the Thailand entity are to be classified as FTS, and there is no FTS clause in India- Thailand DTAA. In the circumstances, a ITA-TP No. 192/Hyd/2021 Co-ordinate Bench of the Delhi Tribunal in the case of Solvay Asia Pacific (P.) Ltd., vs. DCIT [2024] 159 taxmann.com 90 (Delhi - Trib.) considered the issue in the light of the decision is of Co-ordinate Benches in the case of Bangkok Glass Industry Co. Ltd., vs. ACIT [2013] 34 taxmann.com 77 and Bharti Airtel Ltd., vs. ITO [2016] 67 taxmann.com 223 (Delhi - Trib) and reached a conclusion that when a non-resident receives certain amounts fall in the category of FTS and there is no FTS clause in India-Thailand DTAA, such receipts have to be treated as business income in the hands of the Thailand entity, but not as miscellaneous Printed from counselvise.com ITA No 1242 of 2025 Satyam Engineering Service P Ltd Page 4 of 5 income under any residual clause. Since the decision is applicable to the facts of the case on hand, we hold that in such situation the provisions of section 40(a)(ia) of the Act cannot be invoked. Learned Assessing Officer is directed to delete the addition to the tune of Rs. 44,19,715/- by invoking the provisions under section 40(a)(i) of the Act. Ground No. 16 of the appeal is accordingly allowed.” 5. By following this decision of the Tribunal, the learned CIT (A) has deleted the addition in para 6.4 of the impugned order as under: “6.4. Hon’ble ITAT held that there is no dispute that the payments made by the appellant to the Thailand entity are to be classified as FTS and there is no FTS clause in India Thailand DTAA. Further, it was held that when a Non Resident receives certain amounts in the category of FTS and as there is no FTS clause in India Thailand DTAA, such receipts have to be treated as Business Income in the hands of the Thailand entity but not as miscellaneous income under any residual clause. Accordingly, it was directed to delete the addition made by the AO by invoking provisions u/s 40(a)(i) of the Act. The decision of Hon’ble Jurisdictional ITAT was delivered in appellant’s own case for A.Y.2016-17. The facts of the impugned A.Y. 2022-23 are similar of that of the A.Y.2016-17. Payments in both the A.Y.s mentioned above were made to ABRL, Thailand. Since on the facts of the case, Hon’ble ITAT has deleted the addition in A.Y.2016-17, the decision is squarely applicable for impugned A.Y.2022-23 also. Accordingly, the addition made to the tune of Rs.52,41,327/- by invoking of provisions of sec. 40(a)(i) are deleted hereby. In view of the above discussion, Grounds of Appeal No. 2& 3 are allowed.” 6. Accordingly, when the issue is covered by the decision of this Tribunal in assessee’s own case, then we do not find any error or illegality in the impugned order of the learned CIT (A) qua this issue. The same is upheld. Printed from counselvise.com ITA No 1242 of 2025 Satyam Engineering Service P Ltd Page 5 of 5 7. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the Open Court on 26th September, 2025. Sd/- Sd/- (MANJUNATHA, G.) ACCOUNTANT MEMBER (VIJAY PAL RAO) VICE-PRESIDENT Hyderabad, dated 26th September, 2025 Vinodan/sps Copy to: S.No Addresses 1 Dy.CIT, Central Circle 3(2) 7th Floor, Aayakar Bhavan, Basheerbagh, Hyderabad 500004 2 M/s. Satyan Venture Engineering Service (P) Ltd, 1-830/306, 3rd Floor, Ashoka My home Chambers, Begumpet Police Lines, SO Secunderabad 500003 3 Pr. CIT – Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Printed from counselvise.com "