Cost-to-cost reimbursements of foreign entity cannot be subjected to withholding tax as FTS/royalty: SC:

Supreme Court upholds NIL TDS on reimbursements lacking “make available” of technical services.

Supreme Court dismisses Revenue SLP, affirms High Court ruling

Meetu Kumari

May 5, 2026

Last update on May 5, 2026

Cost-to-cost reimbursements of foreign entity cannot be subjected to withholding tax as FTS/royalty: SC AECOM Technical Services Inc. Is a company based in the United States. This company got money from its partners in India. The money was for things like shared services. Help with running the business. AECOM Technical Services Inc. Asked for a certificate so they do not have to pay tax on this money. They said the money was just to pay back expenses and did not include any profit. The person in charge of checking taxes said no to this request. They thought the money was actually for help or for using something that belonged to someone else. AECOM Technical Services Inc. Did not agree with this decision. They went to the High Court. Said they did not provide any new technology to companies in India. So they thought the money should not be taxed in India. Central Issue: Whether cost-to-cost reimbursements received by a foreign entity can be subjected to withholding tax as FTS/royalty under the India–USA DTAA, particularly when the “make available” condition is not satisfied. ? SC Decided: The Supreme Court ruled in favour of the company. They told the government to give a certificate that says the company does not have to pay any tax. The court said the work done did not need to be taxed under India's rules with other countries. This was because no technical knowledge was shared. The court also said tax officials must follow Supreme Court decisions. They cannot ignore them even if someone wants a review. The government appealed to the Supreme Court of India but was unsuccessful. The Supreme Court forgave the government for delaying the appeal. However, they still rejected the appeal, agreeing with the High Court that the company should not pay withholding tax now. The court said the government can still check if the company should pay taxes later. The High Court and Supreme Court made decisions on withholding tax for the company and the government's revenue. The courts said the company should get a withholding tax certificate. To Read Full Judgment, Download PDF Given Below.

About Author

Meetu Kumari

Content Manager

Meetu Kumari is an Experienced Advocate and Content Writer with 4+ years of demonstrated history of working in the law practice industry. Skilled in Developing Content, Researching, and Drafting. Strong professional with a Bachelor of Science (B.Sc.) focused on Law from Gujarat National Law University.