Articles 7 and 12 of India-Korea DTAA – the Assessee is entitled to set off business loss incurred by PE against Fees for technical services (FTS) earned by HO

6. [2025] 174 taxmann.com 500 (Delhi - Trib.)

Hyosung Corporation vs. ACIT

IT Appeal Nos. 2943/Mum/2023

A.Y.: 2021-22 Dated: 23 April 2025

Articles 7 and 12 of India-Korea DTAA – the Assessee is entitled to set off business loss incurred by PE against Fees for technical services (FTS) earned by HO

FACTS

The Assessee was a tax resident of Korea. It was engaged in power business in India. After setting off the business loss of PE against income of HO from FTS, the Assessee filed a return of its income in India, declaring Nil income, and claimed refund of taxes.

The AO denied set-off of losses of PE against FTS and taxed the FTS on the gross basis. The DRP upheld the order of the AO.

Aggrieved by the final order, the Assessee appealed to ITAT.

HELD

The determination of income under different heads must be made by giving effect to the set-off mechanism provided under Sections 70 and 71 of the Act.

The Assessee had two streams of i