Facts of the Case

The Revenue filed an appeal under Section 260A of the Income-tax Act, 1961 challenging the order dated 09.02.2024 passed by the Income Tax Appellate Tribunal in ITA No. 2855/Del/2023 for Assessment Year 2021–22. The Tribunal had allowed the assessee’s appeal by deleting additions made by the Assessing Officer in respect of various receipts earned by the non-resident assessee, Expeditors International of Washington Inc., a US-based logistics company.

The Assessing Officer had treated receipts from sale of logistic support services, reimbursement of global account management charges, and reimbursement of lease line charges as taxable in India, characterising them as Fees for Technical Services or Fees for Included Services under the Income-tax Act and the India–USA DTAA, and as royalty in respect of lease line charges. The additions aggregated to substantial amounts running into hundreds of crores.

Issues Involved

Whether receipts from logistic support services are taxable as Fees for Technical Services or Fees for Included Services, whether reimbursements of global account management charges partake the character of FTS/FIS, whether lease line charges are taxable as royalty under the Act or the India–USA DTAA, and whether the Tribunal erred in deleting the additions by relying on earlier years’ decisions.

Appellant’s Arguments

The Revenue challenged the Tribunal’s reliance on its own decisions in earlier assessment years and contended that the nature of services rendered by the assessee involved technical and managerial elements bringing the receipts within the ambit of FTS/FIS. It was argued that the Tribunal mechanically followed earlier orders without independently examining the facts of the year under consideration.

Respondent’s Arguments

The assessee submitted that the issues were recurring and had been consistently decided in its favour by the Tribunal from Assessment Year 2010–11 onwards. It was argued that there was no change either in facts or in law for Assessment Year 2021–22. The assessee further submitted that the Revenue itself had accepted that the issues stood covered by binding precedents, including earlier judgments of the Delhi High Court in the assessee’s own case.

Court Order / Findings

The Delhi High Court noted that the Tribunal, from paragraph 6 onwards of its order, had recorded detailed findings that all issues raised for Assessment Year 2021–22 were identical to those decided in favour of the assessee in preceding assessment years. The Court took note of the Revenue’s fair concession that the Tribunal’s reliance on its earlier orders could not be contested.

The Court further noted that the Tribunal’s earlier orders for various assessment years had already been examined by the Delhi High Court in a batch of nine appeals, decided by a common judgment dated 13.02.2025, with the lead case being Commissioner of Income Tax (International Taxation)-1, New Delhi vs. Expeditors International of Washington Inc., wherein the High Court had declined to interfere with the Tribunal’s findings.

In view of the settled position and absence of any change in facts or law, the Court held that no substantial question of law arose from the Tribunal’s order for Assessment Year 2021–22.

Important Clarification

The Court clarified that where an issue has been consistently decided in favour of an assessee in earlier years and such decisions have attained finality up to the High Court level, the principle of consistency applies with full force. In the absence of any distinguishing facts or contrary binding precedent, the Revenue cannot seek re-agitation of the same issues year after year.

Final Outcome

The appeal filed by the Revenue was dismissed. The Delhi High Court held that no substantial question of law arose for consideration and upheld the order of the Income Tax Appellate Tribunal deleting additions relating to logistic support services, reimbursement of global account management charges, and lease line charges for Assessment Year 2021–22.

Link to download order-  https://www.mytaxexpert.co.in/uploads/1769506644_THECOMMISSIONEROFINCOMETAXINTERNATIONALTAXATION1NEWDELHIVsEXPEDITORSINTERNATIONALOFWASHINGTONINC..pdf

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