Back
2026 Supreme(Online)(ITAT) 13905
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
Saktijit Dey, Vice President, Prabhash Shankar, Accountant Member
Goldman Sachs And Co. LLC – Appellant
Versus
ACIT – Respondent
ITA No.9029/Mum/2025
For the Appellants/Petitioners: Hiten Thakkar
For the Respondents: Krishna Kumar
Reimbursement of expenses, such as market data access costs and seconded employee-related expenditures, does not constitute taxable royalty or fees for technical services under tax treaties when there is no transfer of intellectual property, proprietary technology, or technical knowledge involved in the underlying transaction.
Headnote:(A) Income Tax Act, 1961 - Sections 143(3), 144C(13) and 195 - DTAA (Tax Treaty) - Taxation of receipts - Market data charges - Whether receipt in nature of royalty or business income - Held, payments for access to third-party databases, where no technology transfer or copyright assignment occurs, do not constitute royalty - Recovery of such costs cannot be taxed as royalty. (Paras 2, 3, 6, 19)
(B) Income Tax Act, 1961 - Secondment of employees - Taxability of reimbursement of expenses - Whether recovery of employee-related expenses constitutes Fees for Included Services or Fees for Technical Services - Held, reimbursements of employee-related costs do not qualify as technical services when such charges are not in the nature of technical service fees under applicable treaties. (Paras 8, 9)
Facts of the case:
The assessee, a non-resident corporate entity, received payments from group entities for market data access and cost recovery related to seconded employees. Revenue authorities contended these receipts were taxable as royalty income or fees for technical/included services. The assessee argued that the receipts were mere cost allocations and not taxable in the absence of a permanent establishment or the characterization of the receipts as royalty or technical fees under the relevant tax treaty.
Findings of Court:
The court observed that the nature of the transactions involving market data access did not result in the transfer of intellectual property or technical knowledge. Furthermore, regarding seconded employee costs, the court noted that such recoveries are not taxable as fees for technical or included services under the applicable treaty, relying on previous judicial precedents involving group entities.
Issues: Whether the receipt of market data charges and recovery of seconded employee-related expenses are taxable as royalty or fees for included/technical services in the hands of the non-resident assessee.
Ratio Decidendi: The court ruled that payments for data access without transfer of intellectual property or technology do not meet the definition of royalty under the tax treaty. Similarly, reimbursements for employee-related expenses recovered from associated enterprises do not qualify as taxable fees for technical or included services under the treaty framework.
Result: Appeal partly allowed; additions directed to be deleted.
| Table of Content |
|---|
| 1. assessment order challenged concerning taxability of market data recharge receipts. (Para 1 , 2 , 3) |
| 2. reimbursement of market data charges does not constitute royalty income under dtaa. (Para 4 , 5 , 6 , 7) |
| 3. reimbursement of seconded employee expenses is not fis/fts under dtaa. (Para 8 , 9) |
| 4. consequential grounds dismissed; appeal partly allowed. (Para 10 , 11) |
O R D E R
Per Saktijit Dey, Vice President:
By filing the present appeal, the assessee has challenged the final assessment order dated 13.11.2025 passed under Section 143(3) read with section 144C(13) of the Income Tax Act, 1961, (in short, ‘the Act’), pertaining to Assessment Year 2023-24, in pursuance to directions of learned Dispute Resolution Panel, (‘DRP’).
2. In Ground No.1, assessee has challenged the addition of Rs.53,09,97,431/- representing the market data recharge receipts, brought to tax as royalty income.
3. Briefly the facts are, that assessee is a non-resident corporate entity incorporated in United States of America (USA), and is a tax resident of USA. So far as its operations in India are concerned, the assessee is registered as a Foreign Portfolio Investor, (FPI), with Securities and Exchange Board of India, (SEBI) and carries on activities of making investments in securities in India. It is stated that assessee, previously known as Goldman Sachs & Co (‘GS & Co’) does not have any business connection/Permanent Establishment (‘PE’) in India in terms with India-USA Double Taxation Avoidance Agreement (‘DTAA’). In the year under consideration, the assessee had received payments from various associate enterprises in India, such as Goldman Sachs Services Private Limited (GSSPL), Goldman Sachs (India) Securities Private Limited (GSISPL), Goldman Sachs (India) Alternative Investment Management Private Limited (GSIAIMPL), Goldman Sachs Assets Management (India) Private Limited (GSAM), Goldman Sachs (India) Finance Private Limited (GSIFPL) and Goldman Sachs (India) Capital Markets Private Limited (GSICMPL) for providing management services, capital goods/services, Communication and technology expenses, investment and banking services, etc. Further, the assessee had shown some receipts as recovery of employee related expenses and recovery of other expenses. Out of such expenses, the assessee has offered some part while it claimed that rest of such income is not taxable in India. In course of assessment proceedings, the Assessing Officer noticed that an amount of Rs.53,09,97,431/- received by the assessee towards market data charges has not been offered to tax by claiming it as business receipt and in absence of PE, not taxable in India. The assessee further explained before the Assessing Officer that in its own case and in Assessment Years 2013-14, 2014-15, 2015- 16 and 2017-18, the receipts towards market data charges have been held to be not taxable in India by the Income Tax Appellate Tribunal (ITAT). The Assessing Officer, however, did not accept the claim of the assessee. Stating that the decisions of the ITAT in assessee's case have not been accepted by the Department and further appeals have been preferred to the High Court, the Assessing Officer held that the receipts from market data charges are in the nature of royalty, hence taxable in India both under the provisions of Treaty as well as under the domestic law. The aforesaid decision of the Assessing Officer was also upheld by learned DRP.
4. Before us, learned counsel appearing for the assessee submitted that the issue is squarely covered in favour of the assessee by the decisions of the Tribunal in consolidated order passed in Assessment Years 2013-14, 2014-15, 2015-16, 2017-18 on 08-05-2023. He drew our attention to the observations of the Coordinate Bench on the issue.
5. The learned Departmental Representative relied upon the observations of Assessing Officer and learned DRP.
6. We have considered rival submissions in the context of facts a
