DTAA: Merely Imparting Training Does Not Necessarily Satisfy Make Available, ITAT

The present writ petition (ITA 92/2025 and CM APPL. 22267/2025 & ITA 93/2025 and CM APPL. 22294/2025) titled Tungsten Automation England Limited (Formerly Known as Tungsten Network Limited) Vs Deputy Commissioner of Income Tax, has been served before the Delhi High Court.

Background of Case

The Tungsten Automation England Limited (appellant), which is a company based in the United Kingdom (UK), has filed the current writ petition in the Delhi HC under Section 260A of the Income Tax Act, 1961. The appellant here is challenging a common order dated December 18, 2024, passed by the Income Tax Appellate Tribunal (ITAT) in two cases related to Assessment Years (AYs) 2016-17 and 2017-18. Before coming to the High Court, the company had already gone through assessment and appellate procedures with the Income Tax Department, including the Assessing Officer (AO), Dispute Resolution Panel (DRP), and the ITAT.

Initially, the Assessing Officer (AO) had passed separate final assessment orders on March 12, 2024, for both the assessment years, under Section 147 and Section 144 of the Income Tax Act. These assessments were done based on the directions issued earlier by the Dispute Resolution Panel (DRP) under Section 144C(5), through its orders dated February 22, 2024.

The company (appellant) did not file its income tax returns in India for AY 2016-17 and AY 2017-18. The reason it gave was that it did not have any taxable income in India. However, the Indian tax authorities discovered that the company had received money from an Indian company named Genpact India Pvt. Ltd. (GIPL): Rs. 2.94 crore in assessment year 2016-17 and Rs. 3.32 crore in assessment year 2017-18.

This made AO believe that the company might have income that escaped assessment. Hence, AO began reassessment proceedings and issued notices against the appellant under Section 148A of the Act on June 30, 2021, for both years.

After the Supreme Court’s decision in the Ashish Aggarwal case, these notices were treated as being issued under Section 148A(b), and the company was permitted to respond. Based on this, the AO passed orders under Section 148A(d) on 26th July 2022, saying that this was a suitable case for reassessment, and issued fresh notices under Section 148 on July 28, 2022.

Even after receiving these notices, the company still did not file its ITRs. Then further notices were sent to the company; this time it responded, saying that it had received approximately Rs. 1.46 crore during the financial year 2015-16 and another Rs. 1.46 crore in the same period; however, some of this amount related to the earlier year assessment year 2015-16.

The company also said that it had raised invoices of 180,877 British Pounds, which converts to about Rs. 1.46 crore, and for the next year, it had raised invoices of 271,314 GBP (worth about Rs. 2.47 crore using average exchange rates). It confirmed that it received Rs. 3.32 crore in FY 2016-17, but part of it was an advance for services in the future (FY 2017-18).

The company also gave the tax department a copy of its Tax Residency Certificate (TRC) to show that it was a tax resident of the UK and copies of invoices and agreements. It explained that the services were provided under old agreements signed between an entity called OB10 Limited (which it had later acquired) and Genpact International Inc. (GIL). GIPL, from whom it received the money, is a related company of GIL. The company argued that the income it earned was “business income,” which is not taxable in India because it did not have a permanent establishment (PE) in India, as per the India-UK Double Taxation Avoidance Agreement (DTAA).

However, the Assessing Officer disagreed. He said that the payments the company received from GIPL were not regular business income but instead “Fees for Technical Services (FTS),” and such income is taxable in India, even if the company doesn’t have a PE here, under Article 13 of the India-UK DTAA.

Based on this view, the AO issued draft assessment orders under Section 144C(1) on 31st May 2023 for both AYs. He calculated that the company’s income for AY 2016-17 should be Rs. 2.94 crore, and for AY 2017-18, it should be Rs. 3.32 crore, which matches the total money received from GIPL in those years.

The company then filed objections against these draft orders before the Dispute Resolution Panel (DRP). But the DRP, through its orders dated February 22, 2024, agreed with the AO and said that the income should be treated as taxable FTS under both Indian law and the DTAA. So, following the DRP’s directions, the AO passed the final assessment orders on March 12, 2024.

ITAT’s Decision:

Tungsten then appealed to the Income Tax Appellate Tribunal (ITAT) against these assessment orders; however, the ITAT dismissed the appeals on December 18, 2024. After losing at the Tribunal level, the company has now filed these present appeals in the High Court under Section 260A, challenging the ITAT’s decision.

Questions of Law:

The High Court accepted these appeals on April 17, 2025, and decided to look into the following legal questions for consideration:

Questions of law framed in ITA No. 93/2025

“A. Whether the Appellant was taxable in respect of receipts of INR 2,93,92,810/- under the provisions of the Act or the India-UK DTAA?

B. Whether the Tribunal erred in law in re-characterising business receipts by the Appellant as FTS under Explanation 2 to section 9(1)(vii) of the Act and Article 13(4)(c) of the India–UK DTAA?”

Question of law framed in ITA No. 92/2025

“A. Whether the Appellant was taxable in respect of receipts of INR 3,31,98,980/- under the provisions of the Act or the India-UK DTAA?

B. Whether the Tribunal erred in law in re-characterising business receipts by the Appellant as FTS under Explanation 2 to section 9(1)(vii) of the Act and Article 13(4)(c) of the India–UK DTAA?”

Current Status: High Court Appeal under Section 260A

After losing in the ITAT, the company has now approached the Delhi High Court under Section 260A of the Income Tax Act. The High Court accepted the appeal on April 17, 2025, and framed specific legal questions to be answered in the case.

What Legal Questions Will the High Court Decide?

The court will mainly decide on:

• Whether Tungsten is taxable for the money it received under Indian law or the DTAA?
• Did the ITAT make a mistake by calling normal business income as Fees for Technical Services (FTS)?
• Is the service provided by Tungsten actually “technical” in nature and “made available” to Genpact?

This “make available” part is important. Under Article 13 of the India-UK DTAA, only those technical services are taxable in India that “make available technical knowledge, skill, experience, or processes” to the Indian company. Just giving a service or training is not enough; the Indian company should be able to apply that knowledge later on its own. The company is arguing that it just offered regular training or services, not something that “made available” technical knowledge.