Reliance Jio Subsidiaries’ Telecom Revenues Treated as Business Profits, Not “Royalties/FTS” Under DTAA: ITAT [Read Order]

In a recent ruling, the Income Tax Appellate Tribunal (ITAT) has partly allowed the appeals filed by Reliance Jio Infocomm Pte. Limited (Singapore) and Reliance Jio Infocomm USA Inc., holding that payments received for telecommunications and operational services from Reliance Jio Infocomm Limited (India) do not constitute “royalty” or “fees for technical services” under the Income-tax Act, 1961, or the respective Double Taxation Avoidance Agreements (DTAAs).

The appeals arose from reassessment orders passed under Sections 147 and 144C(13) for Assessment Year 2019–20, wherein the Assessing Officer had treated receipts for voice termination, bandwidth, and annual operation and maintenance services, amounting to ₹44.17 crore, as taxable in India. The Department contended that such receipts were “process royalty” under Section 9(1)(vi)/(vii) and Article 12 of the India–Singapore DTAA.

Appearing for the assessee, Nimesh Vora and Moksha Mehta argued that the services were purely commercial and did not “make available” any technical knowledge or skill to the Indian entity, a key condition under Article 12 of both the India–Singapore and India–USA treaties. They further submitted that the income constituted business profits, not taxable in India absent a permanentestablishment (PE).

On the other hand, the respondent supported the Assessing Officer’s view that the receipts constituted “process royalty”/fees for technical services under Section 9(1)(vi)/(vii) of the Income Tax Act and Article 12 of the DTAA.

After hearing both sides, the tribunal comprising Beena Pillai (Judicial Member) and Bijayananda Pruseth (Accountant Member) noted that the facts and issues were identical to those adjudicated in the assessee’s own case for earlier years and in the case of Reliance Jio’s US subsidiary for AY 2020–21 and also observed that the provisions of Article 12 in both DTAAs are pari materia, employing substantially similar language on the taxation of royalties and fees for technical services, particularly the “make available” clause.

The tribunal observed that the receipts were not taxable in India as royalty or fees for technical services and allowed the relevant grounds of appeal. So the legal challenge to the reopening of assessment was dismissed as infructuous, noting that the Finance Act, 2026, had amended Section 153B, rendering the issue academic.

Accordingly, the appeal filed by the assessee in both appeals stands partly allowed.

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