2022 (7) TMI 1514 - AT - Income Tax

Income deemed to accrue or arise in India - Royalty receipts - taxability of the money received by the assessee from Indian customers for provision of Telecommunication connectivity services which included international private leased circuits, Multiprotocol Label Switching IP/VPN etc .- assessee is a company incorporated in Singapore engaged in the business of providing digital transmission of data through international private line or multi-protocol label switching etc. to facilitate high speed data connectivity - HELD THAT - This controversy is now well settled by the Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited 2021 (3) TMI 138 - SUPREME COURT Respectfully following the findings of the coordinate Bench 2020 (10) TMI 604 - ITAT DELHI for A.Y. 2011-12 and 2012-13, in the light of the decision of in the case of New Skies Satellite BV 2016 (2) TMI 415 - DELHI HIGH COURT and Hon ble Supreme Court (supra) we direct the AO to delete the impugned additions from both the assessment years. Decided in favour of assessee.

Summary

Issues involved: Taxability of money received by the assessee from Indian customers for provision of Telecommunication connectivity services as Royalty u/s 9(1)(vi) of the IT Act and under Article 12(3) of the India Singapore Tax Treaty.

Summary:
The Appellate Tribunal ITAT DELHI considered two separate orders of the AO dated 06.07.2018 and 03.04.2019 for A.Y. 2015-16 and 2016-17 framed u/s.143 (3) r.w.s. 144C (1) of the Act. The appeals were heard together due to common grievance regarding taxability of money received for Telecommunication services. The assessee, a Singapore company, provides digital data transmission services internationally. The AO treated the amount received from Indian customers as equipment/process royalty, which was upheld by the DRP.

The Tribunal noted that the issue had been previously considered in the assessee's own case for A.Y. 2011-12 and 2012-13. No distinguishing decision was presented by the DR in favor of the revenue. Considering the assessee's business activities and agreements with customers, the Tribunal found that the impugned additions should be deleted based on previous Tribunal decisions and High Court rulings. Citing relevant case law, the Tribunal directed the AO to delete the additions for both assessment years. Consequently, both appeals by the assessee were allowed, and the decision was announced in open court on 13.07.2022.