9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (5) TMI 586 - AT - Income TaxIndia and Singapore DTAA - Royalty payment - amount received by assessee from SCB India for use of disc space in the hardware of the assessee at its data centre in Singapore - Held that - In this case, the assessee did not have the right to access the computer hardware except for transmitting raw data for further processing. The assessee had no control over computer hardware or physical access to it. There was nothing to show any positive act of utilization, application or employment of equipment for the desired purpose. Therefore, there was nothing to show any positive act of utilization, application or employment of equipment for the desired purpose. Thus payment was not royalty within the meaning of Article 12(3)(b) - in favour of assessee.
Issues: Taxability of amount receivable as royalty.
Analysis: 1. The appeal was against the order for the assessment year 2005-06 regarding the taxability of an amount receivable from Standard Chartered Bank (SCB) as royalty. 2. The Assessing Officer considered the payment made by SCB as royalty under Article 12(3)(a) of the Double Taxation Avoidance Agreement (DTAA) between India and Singapore due to constructive control over infrastructure and use of embedded software provided by the assessee. 3. The assessee argued that the fee was business profit and not taxable as royalty under Article 7(1) of DTAA unless the assessee had a permanent establishment (PE) in India. The CIT(A) upheld the Assessing Officer's decision, considering it as royalty under DTAA and Income-tax Act. 4. The Tribunal noted a previous decision in the assessee's favor for the assessment year 2004-05, where it was held that the payment was not royalty as there was no positive use or employment of equipment by the recipient/customer. 5. The Tribunal found the facts identical to the previous year, where the assessee had no control or access to the computer hardware, leading to the conclusion that the payment was not royalty under Article 12(3)(b) of DTAA. Consequently, the order of the CIT(A) was set aside, and the addition made was deleted. 6. The appeal of the assessee was allowed, ruling in favor of the assessee regarding the taxability of the amount received from SCB as royalty.
|
