Income Tax Appellate Tribunal - Delhi
Coforge Bps America Inc,United States ... vs Assistant Commissioner Of Income Tax, ... on 9 March, 2026
आयकर अपीलीय अिधकरण
िद ी पीठ "डी", िद ी
ी िवकास अव ी, ाियक सद एवं
ी जेश कुमार िसंह, लेखाकार सद के सम
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "D", DELHI
BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER&
SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER
आअसं .3530/िद ी/2023(िन.व. 2021-22)
ITA No.3530/DEL/2023 (A.Y.2021-22)
Coforge BPS America Inc.,
2727, LBJ Freeway Suite 800, Dallas 75324
Texas, United States of America
PAN: AAVCS-8528-B ...... अपीलाथ /Appellant
बनाम Vs.
Assistant Commissioner of Income-Tax,
Circle 1(2)(1), International Taxation,
Pratyaksh Kar Bhawan, Civic Centre, E-2 Block,
4th Floor, Minto Road, New Delhi 110002 ..... ितवादी/Respondent
अपीलाथ ारा/ Appellant by: Shri Alok Vasant, Chartered Accountant &
Ms. Poonam Ahuja, Advocate
ितवादी ारा/Respondent by: Shri M.S Nethrapal, CIT-DR
सुनवाई की ितिथ/ Date of hearing : 09/12/2025
घोषणा की ितिथ/ Date of pronouncement : 09/03/2026
आदे श/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the Assessment Order dated 16.10.2023 passed u/s.143(3) r.w.s. 144C(13) of the Income Tax At,1961(hereinafter referred to as 'the Act'), for AY 2021-22.
2. Facts of the case as emanating from records are: The assessee company was incorporated in the United States of America. It is engaged in providing process solutions and digital platforms to multiple industries viz. Title, Mortgage and captive Business Development services. As part of its BPO/ITES services, the Assessee provides tax information needed by Mortgage Company for the title 2 ITA No.3530/DEL/2023 (A.Y.2021-22) under mortgage. The Assessee also provides services like Tax reports that there are no taxes outstanding on the property, Property Information (clean title of the property), Tax payment status/outstanding tax liabilities/tax defaults, etc. The assessee also provides, property title searches related service. The Assessee as part of its captive business development (BD) services perform, (i) independent business development by identifying and suggesting new opportunities for its group companies, and (ii) by engaging with title process service providers and abstractors at behest of Coforge Business Process Solutions Pvt. Ltd. earlier known as SLK Global Solutions Pvt. Ltd (in short 'Coforge India') to provide title search and related services.
During the period relevant to assessment year under appeal, the assessee inter alia received following payments for the services under two segments:
- Title process services : Rs.7,73,45,014/-
- Marke ng support services : Rs.28,44,91,579/-
The assessee did not offer above payments to tax claiming them to be not taxable in India under India-US Double Taxation Avoidance Agreement (DTAA). Per contra the Assessing Officer vide impugned assessment order held that the payments received by assessee for title process service is in the nature of 'royalty' under section 9(1)(vii) of the Act and Article 12(3) of the India-US DTAA. With regard to Marketing Support Services, the Assessing Officer held that the payments are in the nature of 'Fee for Technical Services/Fee for Included Services' within the meaning of Article 12(4)(b) of the India-US DTAA. Hence, the present appeal by the assessee.
3. Shri Alok Vasant, appearing on behalf of the assessee at the outset submits that the assessee does not wish to press Ground No. 2 of appeal challenging validity 3 ITA No.3530/DEL/2023 (A.Y.2021-22) of the assessment order on the ground of limitation. He pointed that the assessee has filed an application dated 22.07.2024 seeking withdrawal of Ground No. 2 of appeal.
In light of above statement made by ld. Authorized Representative of the assessee and application of the assessee dated 22.07.2024, ground No. 2 of appeal is dismissed as withdrawn.
4. The assessee, in appeal has assailed the assessment order primarily on two issues. The relevant grounds raised in appeal reads as under:
"3.1. The Ld. Dispute Resolution Panel ("Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in alleging that the receipts from Title Process Services amounting to Rs.7,73,45,014 are royalty whereas the Appellant only provided access to third party databases which collated information available in public domain about titles, mortgages, tax payment status, etc. of properties in US, and receipts for such access do not fall within the definition of royalty as envisaged under Article 12 of the India US Double Taxation Avoidance Agreement ("India US Treaty').
3.2. The Ld. Dispute Resolution Panel (Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in alleging that the Appellant is making available industrial and commercial experience to its Indian AE while providing access to third party databases which collated information available in public domain about titles, mortgages, tax payment status, etc. of properties in US.
33. The Ld. Dispute Resolution Panel ("Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in alleging that the Appellant is allowing the use of its Informational Technology platform/ digital platform and infrastructure which are in essence industrial, commercial or scientific equipment of the Appellant and further alleging that the receipts received by the Appellant shall qualify as royalty.
3.4. The Ld. Dispute Resolution Panel ('Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in not appreciating the ratio of the judicial decisions which were relied upon by the Appellant during the course of the hearing on the issue of title process services.
4.1. The Ld. Dispute Resolution Panel ("Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in alleging that the Marketing Support Services ("MSS") receipts amounting to Rs.28,44,91,579 are covered under Fees for Included 4 ITA No.3530/DEL/2023 (A.Y.2021-22) Services ("FIS") whereas these are mere sales and marketing services and thus do not fall within the definition of FIS as envisaged under Article 12 of the India US Treaty.
4.2. The Ld. Dispute Resolution Panel ("Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in wrongly assuming that the definition of Fees for Included Services in Article 12(4) of India US Treaty includes the word "managerial"
and incorrectly interpreting that the concept of "make available' in the context of managerial and consultancy services has a different connotation and that 'make available' is more identifiable with technical services.
4.3. The Ld. Dispute Resolution Panel ("Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case in alleging that the Assessee failed in describing the nature of MSS and failed to prove that MSS did not satisfy the make available clause as envisaged under Article 12 of the India US Treaty, even though detailed explanations together with evidences were duly furnished in the replies in response to the show-cause notice of Ld. AO and also during the course of hearing before Ld. DRP.
4.4. The Ld. Dispute Resolution Panel ("Ld. DRP*) has completely misunderstood the 'make available clause' in the definition of Fees for Included Services under the India-US DTAA and has tried to justify the consideration for MSS as taxable in India by inexplicably and incorrectly • stating that such services result in enduring benefit to recipient of services; and • linking the same to Title Services, which has been wrongly characterized as royalty.
4.5. The Ld. Dispute Resolution Panel (Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in not appreciating the ratio of the judicial decisions which were relied upon by the Appellant during the course of the hearing on the issue of MSS."
5. The ld. Authorized Representative of the assessee (AR) submits that undisputedly the assessee is based in the United States of America (USA). The assessee is, inter alia, providing process solutions, viz.:
(i) Title, mortgage search services; &
(ii) Captive business development services [Marketing Support Service (MSS)] for its group companies.
6. The Assessing Officer (AO), vide draft assessment order dated 30.12.2023, has erred in holding that the receipts in lieu of title search services received by the assessee are in the nature of royalty within the meaning of section 9(1)(vi), of the 5 ITA No.3530/DEL/2023 (A.Y.2021-22) Act and under Article 12(3) of the India-US DTAA. Further, the AO held that the receipts in respect of MSS received by the assessee are in the nature of Fees for Technical Services (FTS)/Fees for Included Services (FIS) within the meaning of Article 12(4)(b) of the India-US DTAA. The assessee filed objections before the Dispute Resolution Panel (DRP). The DRP, vide directions dated 21.09.2023, rejected the objections. Thus, the AO passed the impugned final assessment order making addition of Rs.7,73,45,014/- as receipts in the nature of Royalty and Rs.28,44,91,579/- in respect of MSS as FTS.
7. The ld. AR submits that, in so far as Title Process Services are concerned, the assessee only providing access to third party database. The assessee collates relevant data from information already available in public domain about title, mortgage, tax payment status etc, in respect of properties situated in US and provides such data to Coforge India. On the basis of databases provided by the assessee, Coforge India generates Title search reports and delivers them to customers. The assessee recovers actual cost plus markup of 10% thereon from its Indian Associated Enterprises (AE). The assessee while providing title process service neither shares its own experience, techniques, or methodology employed in searching databases nor imparts any information relating thereto. Thus, the payments received by the assessee for providing data for title search services cannot, in any manner, be termed as royalty. The ld. AR, in support of his submissions, placed reliance on the decision in the case of LNRS Data Services Ltd. vs. ACIT, 170 taxmann.com 171 (Delhi - Trib.) and Uptodate Inc. vs. DCIT, 150 taxmann.com 231 (Delhi - Trib.).
6 ITA No.3530/DEL/2023 (A.Y.2021-22)8. In respect of Marketing Support Services (MSS), the ld. AR of the assessee submits that the said services are rendered by the assessee to the Coforge India in accordance with the terms of agreement for provision of marketing services entered into between the assessee and the Indian company on 01.05.2016 (at page 149 to 155 of the paper book). The marketing support services include advice, guidance, and suggestions pertaining to customer queries and problems, assistance in identifying customers, and solutions for orders by Coforge India. The assessee is remunerated by way of reimbursement of actual costs plus a markup of 10% thereon for rendering aforesaid services. The scope of work relating to MSS as detailed in Article 2 of the Agreement does not in any manner fall within the meaning of FTS/FIS defined in Article 12(4)(b) of India-US DTAA. Marketing Support Services are neither technical in nature nor do they make available technical know how, skill etc. Referring to Illustration 7 in India-US DTAA Protocol he submitted that the payment for services rendered in context of marketing services cannot be characterized as FIS. To support his arguments, the ld. AR of the assessee placed reliance on the following decisions:
- Shell India Markets (P) Ltd. 160 taxmann.com 175 (Bombay);
- Anand NVH Products Inc vs ACIT 145 taxmann.com 412 (Delhi-Trib.); and
- ABB Inc vs DDIT 59 taxmann.com 159 (Bang-Trib.)
9. Per contra, Shri M.S. Nethrapal, representing the Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee.
The ld. DR submits that the payments received by the assessee in respect of title process services are in the nature of sharing of commercial experience. The assessee has developed expertise in providing Title Support Services. The information provided by the assessee to the Indian company is used by the Indian 7 ITA No.3530/DEL/2023 (A.Y.2021-22) AE to generate title search reports, which in turn generates business for the Indian AE from clients such as banks, insurance companies, etc. The Indian AE earns income because of the commercial experience of the assessee and the information provided by the assessee. Therefore, the receipts of the assessee in lieu of providing databases fall within the definition of royalty u/s 9(1)(vi) of the Act as well as Article 12 of the India-US DTAA.
9.1. In respect of MSS, the ld. DR submits that the assessee has failed to discharge its onus in proving that MSS does not "make available" any technical knowledge, experience, skill, know-how, etc. Reiterating findings of the AO, the ld. DR placed reliance on the following decisions:
- H.J Heinz Company vs. ADIT, 180 taxmann.com 473 (Delhi-Trib.);
- ACIT vs. Sabre Decision Technologies International LLC, 152 taxmann.com 51 (Delhi-Trib.); &
- Leonhardt Andra Und Partner, GmbH vs. CIT, 122 Taxman 223 (Calcutta).
10. We have heard the submissions made, considered the decisions on which reliance has been placed by rival sides and have examined the orders of the authorities below. The assessee, in the present appeal has assailed the additions made by the AO in respect of two streams of receipts by the assessee, i.e:
(i) Title Search Services Rs.7,73,45,014/-; and
(ii) Marketing Support Services Rs.28,44,91,579/-.
It is an undisputed fact that the assessee is based in the USA and is providing title search-related services to its Indian AE Coforge India. The assessee collates information with regard to title of properties, mortgage status, tax payment status 8 ITA No.3530/DEL/2023 (A.Y.2021-22) with respect to properties situated in US from databases already available in the public domain. The assessee ostensibly provides access to information forming part of existing databases. No material is available on record that suggest that the assessee shares its experience, techniques, or methodology employed in compiling or accessing such databases or imparts any information relating thereto. The assessee merely provides access to relevant extract of existing information available in the public domain. The AO has invoked provisions of Article 12(3) to contend that the payments received by the assessee for rendering title search services are in the nature of royalty on the ground that the assessee is receiving consideration for its commercial experience. Here, it would be relevant to refer to Article 12(3) of the India-US DTAA, which defines the term "royalty". The relevant extract of the same is reproduced herein below:
"3. The term "royalties" as used in this Article means :
(a) payments of any kind received as a consideration for the use of, or the right to use, any copyright or a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof ; and
(b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of Article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 of Article 8."
11. A bare reading of the definition of the term "royalty" would show that it refers to consideration received for information concerning industrial, commercial, or scientific experience. We are not in agreement with the findings of the AO. The expression "commercial experience" under Article 12 implies transfer of specialized, actionable knowledge or know-how that equips the recipient of service 9 ITA No.3530/DEL/2023 (A.Y.2021-22) to apply that experience on its own. For collating relevant information from existing databases available in public domain no commercial experience is required. In any case, it does not emerge from the documents available on record that the assessee has shared the methodology employed for searching database or has imparted any information relating thereto. The assessee has forwarded relevant information extracted from existing database to Coforge India for preparing title search report of property with reference to ownership - chain of title, mortgage - encumbrances, tax due/disputes, etc. As is evident from the submissions of the assessee, the assessee is not sharing any commercial information; it is only providing information extracted from data available in the public domain. The assessee procures and provides access to different databases to the Indian AE for title search. Based on such data, the Indian AE generates reports and delivers them to customers. The assessee does not share its own experience, techniques, or methodology employed for searching databases or for obtaining the requisite information sought by the Indian AE. Mere provision of relevant information extracted from databases available in the public domain, in our considered view, does not result in the use of, or the right to use, any commercial experience. Hence, we have no hesitation in holding that the payment received by the assessee with respect to title search services do not fall within the ambit of Article 12(3) of the India-US DTAA.
12. In the case of Uptodate Inc. vs. DCIT (supra), the Coordinate Bench, in the facts where the assessee collated data relating to healthcare as available in public domain and created a databse and allowed access to said database to its customers against subscription fee, held that payments received for providing material/content available in the database of the assessee, collated from the public 10 ITA No.3530/DEL/2023 (A.Y.2021-22) domain, do not fall within the ambit of royalty as defined under Article 12(3) of the Treaty. The relevant findings of the Coordinate Bench are as under:
"8. In the facts of the present appeal, undisputedly, the materials/contents available in the database of the assessee are collated from public domain and assessee certainly is not the creator of such content or material. The assessee has simply put the collated data in database in a user friendly manner. That being the factual position emerging on record, it cannot be said that in terms with Article 12(3) of the Treaty, the assessee has transferred right to use of any copyright of literary, artistic or scientific work or any other secret formula or process or information concerning industrial, commercial, scientific experience. Further, the assessee has not transferred right to use of any industrial, commercial, or scientific equipment as the subscriber are only granted access to online database. By way of illustration, we may observe that various law journals have created online database by collating judgments/orders of courts, tribunals etc. and access is allowed to subscribers upon payment of subscription. However, by allowing such access there is no transfer of right to use of any copyright. Further, the terms of the agreement, as discussed earlier, restricts the subscribers from exploiting or modifying the contents. Thus, it is very much clear, only limited right of access to the database was granted to customers on subscription basis. Therefore, in our view, the amount received will not fall within the ambit of royalty as defined under Article 12(3) of the tax treaty. It is relevant to observe, while treating the subscription fee received by the assessee as royalty, the Departmental Authorities have heavily relied upon the decision of the Hon'ble Karnataka High Court in case of Samsung Electronics Co. Ltd. (supra). The other decision cited by learned Departmental Representative has simply relied upon the decision rendered in case of Samsung Electronics Co. Ltd. (supra). However, the decision of the Hon'ble Karnataka High Court stands recovered by the decision of Hon'ble Supreme Court in case of Engineering Analysis (supra) [Emphasized by us]
13. The aforesaid decision supports our view that payments made for mere providing access to date already available in public domain does not fall within the meaning of royalty as defined under Article 12(3) of the India-US DTAA. Thus, the addition made in respect of payment received by the assessee for provisioning of Title Search Service is not in the nature of royalty as defined under DTAA, hence addition of Rs.7,73,45,014 is deleted. In the result, the assessee succeeds on ground no. 3 of appeal.
11 ITA No.3530/DEL/2023 (A.Y.2021-22)14. The next addition made by the AO is with regard to amount received by the assessee for providing Marketing Support Services, holding it to be FIS under Article 12(4)(b) of India-US DTAA. The assessee is providing MSS to its Indian AE pursuant to agreement for the provision of marketing and other services dated 01.05.2016. Article 2 of the said agreement provides the details of the Marketing Support Services rendered by the assessee. The same is reproduced herein below:
"ARTICLE 2: ENGAGEMENT A. Marketing Services 2.2.1 SLK GLOBAL AMERICA shall upon request from SLK GLOBAL BPO endeavor to identify customers and marketing for SLK GLOBAL BPO in the Territory. SLK GLOBAL BPO shall be free to accept or reject the orders obtained from such customers identified by SLK GLOBAL AMERICA. SLK GLOBAL AMERICA understands that it has been granted authority only to solicit orders for the Product/ services for transmittal to SLK GLOBAL BPO. SLK GLOBAL AMERICA neither has the express nor implied authority to accept orders on behalf of SLK GLOBAL BPO without the concurrence of SLK GLOBAL BPO. Further, any acceptance of orders by SLK GLOBAL AMERICA shall not bind SLK GLOBAL BPO in any way. The marketing services would include the following:
2.2.2 Advise, guidance and suggestion pertaining to customer queries and problems i.e., appropriateness of the product/service vis-à-vis the applications in question.
2.2.3 Assistance in identifying customers and solicitation of orders by SLK GLOBAL BPO in Territory, advertising or promoting of the product.
2.2.4 Assistance by mail, facsimile and phone in connection with the marketing services."
15. Before proceeding further, it would be apposite to refer to the provisions of Article 12(4) of India-US DTAA that explains the expression 'FIS'. The same reads as under:-
"4. For purposes of this Article, "fees for included services" means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services :12 ITA No.3530/DEL/2023 (A.Y.2021-22)
(a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received ; or
(b) make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design."
Protocol to India US DTAA further refers to Memorandum of Understanding concerning fee for included services in Article 12. The relevant exceprts from the Protocol are extracted herein under:
"Article 12 includes only certain technical and consultancy services. But technical services, we mean in this context services requiring expertise in a technology. By consultancy services, we mean in this context advisory services. The categories of technical and consultancy services are to some extent overlapping because a consultancy service could also be a technical service. However, the category of consultancy services also includes an advisory service, whether or not expertise in a technology is required to perform it.
Under paragraph 4, technical and consultancy services are considered included services only to the following extent:
(1) as described in paragraph 4(a), if they are ancillary and subsidiary to the application or enjoyment of a right, property or information for which are royalty payment is made; or (2) as described in paragraph 4(b), if they make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design. Thus, under paragraph 4(b), consultancy services which are not of a technical nature cannot be included services."
[Emphasized by us]
16. A perusal of the services rendered by the assessee, as per the agreement, would show that the MSS are in the nature of advisory services and fall within the meaning of consultancy services. As per India- US DTAA and Protocol thereto, to fall within the meaning of FIS as explained under Article 12(4)(b) make available condition is mandatorily required to be satisfied. The expression 'make available ' means transfer of technical knowledge, skill, experience, know how or process of the development and transfer of technical designs. The Protocol makes it clear that any consultancy service which is not of technical nature cannot be 'included 13 ITA No.3530/DEL/2023 (A.Y.2021-22) service'. Thus, in the instant case "make available" condition as set out in the India- US DTAA is not satisfied. Therefore, the receipts for providing MSS do not fall within the meaning of FIS under Article 12(4)(b) of India-US DTAA. Accordingly, the addition made by the AO of Rs. 28,44,91,579/-, treating it as FIS, is unsustainable. In the result, the assessee succeeds on ground no. 4 of appeal.
17. We have thoughtfully considered the case laws on which the ld. DR has placed reliance. The decisions rendered in the respective case laws are based on peculiar facts of each case, which are distinguishable to the facts of instant case. Hence, the said decisions do not support the cause of Revenue.
18. The assessee, in ground of appeal no. 5 and 6, has assailed charging of interest under sections 234A and 234B of the Act. Levy of interest under aforesaid sections is consequential and mandatory, hence, ground No. 5 and 6 of appeal are dismissed.
19. In ground of appeal No. 7, the assessee has assailed initiation of penalty proceedings under section 270A of the Act. Challenge to penalty proceedings at this stage is premature, hence, ground No. 7 of appeal is dismissed.
20. In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on Monday the 09th day of March, 2026.
Sd/- Sd/-
(BRAJESH KUMAR SINGH) (VIKAS AWASTHY)
लेखाकार सद /ACCOUNTANT MEMBER ाियक सद /JUDICIAL MEMBER
िद ी / Delhi, िदनां क/Dated: 09/03/2026
NV/-
14
ITA No.3530/DEL/2023 (A.Y.2021-22)
ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ /The Appellant ,
2. ितवादी/ The Respondent.
3. The PCIT
4. िवभागीय ितिनिध, आय.अपी.अिध., िद ी /DR, ITAT, िद ी
5. गाड फाइल/Guard file.
BY ORDER,
//True Copy//
(Asstt. Registrar) ITAT, DELHI
1. Date of dictation of Tribunal order 02.03.2026
2. Date on which typed draft order is placed before the dictating Member 03.03.2026
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