No Sec. 195 TDS on sum paid by ‘Deloitte India’ to ‘Deloitte UK’ for shared service of brand, communication & tech.

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TDS u/s 195

Case Details: Deloitte Haskins & Sells LLP v. DCIT - [2022] 141 205 (Mumbai-Trib.)

Judiciary and Counsel Details

    • Pramod Kumar, Vice-President & Amit Shukla, Judicial Member
    • P.J. PardiwalaNiraj ShethAshesh Safi Ninad Patade for the Appellant.
    • Milind Chavan for the Respondent.

Facts of the Case

The question before the Mumbai Tribunal was:

“Whether the appellants- Deloitte Haskins & Sells LLP (Deloitte India) were liable to deduct tax at source under Section 195 of the Act on the payments made to Holdings- Deloitte Global Holdings Ltd (Deloitte UK) by treating it to be Royalty under Article 13(3) of the India-UK DTAA”

The terms on which the activities are carried out by Holdings and the expenses recovered by it from the members have been enshrined in the “Shared Services Agreement”.

Though many services have been enumerated in the “Shared Services Agreement”, however, the dispute was with regard to the payments made under the head global brand, global communication, and global technology/knowledge management.


The Mumbai Tribunal held that the scope of services and the terms under heads need to be analyzed as per the definition and scope of Article 13(3), whether these services fall within the definition of Royalty.

As regards payment for items of global brands, holdings assists in implementing brand strategy for use of network of Deloitte members and also provide member firms with common training, policies, and guidance related to the brands. Further, it will work together with all the member firms leadership, industries, and functions on promoting brand addition eminence building.

Thus, providing common policies or guidance relating to the brand and collaborating with member firms ostensibly cannot be reckoned as use of or right to use any copyright of literary, artistic, or scientific work.

Insofar as payments for global activities are given in Global Communication, Holdings distributes the publications and reports for DTTI and supports global public relations, thought leadership initiatives, events, guidance, common standards, etc. so that there is an alignment of all the member firms for internal and external communication.

From a bare perusal of aforesaid activities, it cannot be held that it is for use of or right to use of any copyright of literary, artistic, or scientific work or for any other terms given in Article 13(3).

Lastly, as regards the services mentioned in global technology/global management, from the bare perusal of the same it cannot be said to be for use of or right to use any copyright or any literary, artistic, or scientific work or any transfer of intellectual property rights.

Therefore, the payment made to Deloitte UK didn’t fall within the scope and definition of Royalty under Article 13(3) of India UK DTAA and consequently, assessee was not required to deduct TDS.

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