Income Classified as Business Income, not Taxable in India for Non-Resident Assessee: ITAT upholds CIT(A) Ruling

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) upheld the Commissioner of Income Tax (Appeals) [CIT (A)] ruling that income received by a non-resident entity should be classified as business income and not taxable in India. The case involved receipts totaling ₹8,98,36,327, which did not qualify as Fees for Technical Services (FTS) under the India-Singapore Double Taxation Avoidance Agreement (DTAA) due to the absence of a Permanent Establishment (PE) and the non-fulfillment of the “make available” clause. The Revenue appellant challenged the CIT (A) order dated March 27, 2023, but the ITAT confirmed that the income should be treated as business income, not taxable in India. This ruling reinforces the importance of the DTAA provisions and the criteria for classifying income as business profits versus FTS, impacting how non-resident entities’ incomes are assessed for tax purposes in India.