IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘D’ BENCH, NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 3382/DEL/2023 [A.Y. 2021-22]

Nunhems Netherlands B.V. Vs. A.C.I.T HSIDC Building Vanijya Nikunj International Taxation Udyog Vihar, Phase – V, Gurgaon Gurgaon PAN – AAECN 4582 D (Applicant) (Respondent)

Assessee By : Shri Nageshwar Rao, Adv.

Shri Pratik Rath, Adv Department By : Ms. Anjula Jain, CIT-DR Date of Hearing : 12.09.2025 Date of Pronouncement : 08.12.2025

ORDER

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-

This appeal by the assessee is directed against the order dated

28.09.2023 u/s 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 [the Act, for short] for A.Y 2021-22.

2. The assessee has raised the following grounds of appeal:

“1. That Ld. AO & majority Ld. DRP erred in treating remuneration of ₹3,58,03,282 received from providing testing services to Nunhems India ('AE') as royalty income under India-Netherlands DTAA. Order by majority of Ld. DRP is non-speaking and contrary to/ignoring Hon'ble Tribunal's decisions.

2. That Ld. AO and majority Ld. DRP erred on facts and in law in not appreciating that the agreement is not for use of any intangible property in the form of "information concerning industrial, commercial or scientific experience" or "copyright" or "equipment" and the provision of services does not make available any technical knowledge, know how or skill, hence such services are not taxable as per DTAA as held by single member of Ld. DRP.

3. That Ld. AO and Ld. DRP erred on facts and in law in not appreciating that, the Assessee is a "Service Provider" and performs specific research related activities and is not imparting or sharing any specialized knowledge or experience with its AE.

4. That Ld. AO and Ld. DRP erred in facts and in law making an addition of Rs. 10,66,76,030/- received for providing IT support services to its AE by construing same as FTS.

5. That the Ld. AO and Ld. DRP erred in facts in not appreciating that IT support charges are in nature of cost-to-cost reimbursement without any profit element involved.

6. That Ld. AO and Ld. DRP erred in facts and in law in not appreciating that the provision of IT support services provided by the Assessee to its AE does not amount to use or right to use of "scientific, industrial and commercial equipment" and thereby cannot be treated as royalty.

7. That Ld. AO and Ld. DRP failed in appreciating that the scope of royalty as under the DTAA is narrower than the definition contained in the Income Tax Act, 1961 ('Act').

8. That Ld. AO and majority of Ld. DRP erred on facts and in law in not appreciating that IT support services provided to by the Assessee does not satisfy the "make available" clause under the DTAA and hence it is not liable to be taxed as Fee for Technical Services.

9. That the Ld. AO and Majority of Ld. DRP erred in law in ignoring decisions of Hon'ble Courts on identical facts.

10. That the Ld. AO has erred on facts and in law in routinely initiating penalty proceedings under section 270(A) of the Act on the ground of under reporting of income or misreporting of income. 11. Assessee submits that the above grounds of appeal are without prejudice to each other and further craves leave to add, alter, amend, substitute to above grounds of appeal.

3. Briefly stated, the facts of the case are that the assessee company is registered under the law of Netherlands. The company’s purpose, by collaboration with partners, is to improve vegetable varieties and solutions for customers, the vegetable value chain and consumers worldwide.

4. The assessee, during the subject year, received an amount of Rs 3,58,03,283/- on account of testing services rendered to Nunhems India Private Limited ('Nunhems India') to improve plant varieties. The assessee also received Rs 10,66,76,030 on account of reimbursement of information technology ('IT') support services from Nunhems India Private Limited ('Nunhems India'). The Asses