Shared Service Payment not taxable as Royalty

The Mumbai Bench of the Income Tax Appellate Tribunal dismissed Revenue appeals and held that payments made by Deloitte Touche Tohmatsu India LLP to Deloitte Global Holdings Services Ltd., UK, towards Global Brand, Global Communications, and Global Technology/Knowledge Management services were not taxable as “royalty” under Article 13(3) of the India–UK Double Taxation Avoidance Agreement. 

The Tribunal reaffirmed that the arrangement merely involved centralized support and shared services within the Deloitte network without transfer of copyright, intellectual property rights, or confidential commercial know-how. 

Consequently, the assessee was held not liable to deduct tax at source under Section 195 of the Income Tax Act.