[Opinion] The International Tax Roundup | Tracking the Significant Tax Treaty Decisions

Dr Sunil Moti Lala – [2026] 184 taxmann.com 233 (Article)

1. Introduction

The International Tax Roundup for February 2026 is a comprehensive digest of critical judicial developments in the realm of international tax law. This edition covers 37 significant tax treaty decisions, providing readers with essential insights into the evolving landscape of cross-border taxation. The digest is structured to address complex legal controversies on Treaty Benefits, Permanent Establishment (PE), Business Profits, Dividends, Interest, Royalties, Fees for Technical Services (FTS), Capital Gains, and Foreign Tax Credit (FTC) mechanisms. This edition covers the judicial precedents dealing with:

(a) Treaty Benefits (2 cases) [see Para 2]

(b) Subsidiary PE and Dependent Agent PE (2 cases) [see Para 3]

(c) Business Profits, covering commission and attribution of profits (3 cases) [see Para 4]

(d) Refund of DDT in excess of the rate under DTAA (1 case) [see Para 5]

(e) Interest paid by the Indian branch and interest on refund (3 cases) [see Para 6]

(f) Royalty, covering software, database subscription, etc. (6 cases) [see Para 7]

(g) FTS, covering support charges, No FTS clause, etc. (10 cases) [see Para 8]

(h) Treaty benefits in respect of capital gains (1 case) [see Para 9]

(i) Taxability of salary earned abroad but received in India (1 case) [see Para 10]

(j) Exchange of Information under India-Hong Kong DTAA (1 case) [see Para 11]

(k) Availability of foreign tax credit due to procedural lapses (5 cases) [see Para 12]

(l) Others (2 cases) [see Para 13]

2. Treaty Benefits

2.1 Treaty Benefits – Allowed

Where assessee, a US tax resident, was denied DTAA relief solely due to delayed electronic filing of Form 10F and TRC, since neither section 90 nor Rule 21AB prescribes any time limit for filing, such procedural lapse was curable, and once filed, Form 10F would relate back to claim made in return and, thus, denial of DTAA benefit was unjustified [India – US DTAA]

DCIT (IT) v. Thogarchedu Subha Sri [2026] 183 taxmann.com 481 (Hyderabad – Trib.) [AY. 2023-24]

Assessee, a non-resident and tax resident of the USA, filed her return claiming beneficial tax rates under DTAA. However, while processing the return, CPC denied the benefit of DTAA on the grounds of non-filing of Form No. 10F, and recomputed tax under normal provisions, raising a demand. Assessee subsequently filed Form No. 10F along with TRC during rectification proceedings under section 154. Revenue contended that the due date under section 139(1) was 31-07-2023, whereas Form 10F was filed electronically only on 26-08-2024, and furnishing Form 10F was a mandatory precondition for DTAA benefits. The Tribunal held that from a combined perusal of section 90 and rule 21AB, it was evident that no time limit had been prescribed either under the Act or the rules for filing said form. Further, Form 10F did not create the right to claim the DTAA benefit; it only facilitated the verification of information. Thus, the delay in filing Form 10F was a curable procedural defect, and once the form was furnished, the same would relate back to the claim of DTAA benefit made in the return of income. [CIT (IT-4), Mumbai v. Reliance Telecom Ltd. [2021] 133 taxmann.com 41 (SC) and Principal CIT v. Wipro Ltd. [2022] 140 taxmann.com 223 (SC) distinguished]

2.2. Treaty Benefits Denied

Where the assessee, a Singapore company, was a 100 per cent subsidiary of a Hong Kong company whose ultimate parent was in China, and it had no real and continuous business activities in Singapore, exemption of capital gains on transfer of shares and CCDs of an Indian company under India-Singapore DTAA was not available, and capital gains were taxable in India. (India – Singapore DTAA)

Hareon Solar Singapore (P.) Ltd. v. Deputy CIT, IT [2026] 183 taxmann.com 125 (Delhi – Trib.) [AY. 2020-21]

Assessee, a Singapore company, subscribed to equity shares and CCDs of an Indian company in 2015 and transferred them in June 2019, claiming exemption of capital gains under section 90 read with Articles 13(4A) and 13 (5) of India–Singapore DTAA. Assessee furnished Singapore TRC and asserted satisfaction of Article 24A LOB. AO denied DTAA benefit, treating the assessee as a shell/conduit entity lacking commercial substance and taxed capital gains in India. The Tribunal noted that the assessee was a 100 per cent subsidiary of the Hong Kong company whose ultimate parent was in China; it had no employees or operational expenditure; and the bank account was operated by signatories resident in the USA and Taiwan. It concluded that since the assessee had no real and continuous business activities in Singapore and control and management were exercised outside Singapore, it was merely interposed to obtain treaty benefit and capital gains on transfer of equity shares/CCDs were taxable in India [Fullertone Financial Holdings Pte. Ltd. v. ACIT [2025] 180 taxmann.com 241 (Mumbai – Trib.) distinguished]

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