Herbert Smith Freehills LLP v. CIT(A): Non-UK partners of UK fiscally transparent firm are entitled to benefits under respective DTAAs with India.

15. [2026] 187 taxmann.com 916 (Delhi - Trib.)

Herbert Smith Freehills LLP v CIT(A)

A.Y.: 2015-16, 2018-19 & 2021-22

Dated: 13 May 2026

Articles 4 and 13 of the India-UK DTAA – Income attributable to partners, of a UK fiscally transparent entity, who were not residents of the UK, but were subject to tax in their respective countries in respect of share of profit. Accordingly, these partners qualified for benefits under DTAAs between India and respective countries

FACTS

The Assessee was a tax resident of the UK. In terms of UK tax law, it was a fiscally transparent partnership firm (“FTE”). Since the Assessee was an FTE in the UK, its income was distributed amongst its partners in their respective profit-sharing ratios for taxation purposes. The Assessee was rendering legal services globally. The firm had partners in the UK, and also in Germany, Australia, France, Belgium, China, and Japan. The share of profit attributable to non-UK partners was 17.88%. During the year, the firm earned revenue from Indian engagements. In respect of the share of revenue attributable to UK partners, the firm claimed it was not taxable a