Commissioner of Income Tax (International Taxation)-1, New Delhi v. GE Precision Healthcare LLC

1. FACTS OF THE CASE

Revenue challenged ITAT’s 17 January 2024 order in ITA 2623/Del/2023. The disputed Rs.10,75,55,532 arose from sublicensing standardised software tools to Indian subsidiaries. Separately, Rs.9,17,39,690 of technical-service fees was conceded taxable. Re-filing delay of 276 days was condoned.

Source: PDF p. 2

2. DISCUSSION BY THE COURT

ITAT followed AY 2020–21: these software receipts were business income, not royalty, and were not taxable in India under Article 7 without a permanent establishment. The Court rejected the attempt to tax the same receipts as other sources under section 56(1)/Article 23(3). The earlier High Court decision conformed to Engineering Analysis, (2022) 3 SCC 321.

Source: PDF p. 3

3. JUDICIAL DECISION

Revenue’s appeal was dismissed; no substantial question of law arose on the covered issue.

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4. OUTCOME

Assessee retained relief on the disputed software receipts; the separately conceded technical-service income was not exempted.

Source: PDF p. 4

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

Classification precedes the residual article

The receipts were characterised as business income governed by Article 7. Relabelling the same income as other sources did not avoid the treaty result on this record.

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Preserve the permanent-establishment premise

Absence of an Indian PE was material to the Article 7 result. The order does not give every software supplier unconditional immunity regardless of rights transferred or PE facts.

Source: PDF p. 3

Do not combine different receipt streams

The source expressly records taxable technical-service fees separately from the disputed software receipts. Extending the software result to those fees would contradict the judgment.

Source: PDF p. 3