2024 (9) TMI 1675 - HC - Income Tax

Accrual of income in India or not? - royalty income - interconnect service charges - HELD THAT - As decided in M/S. VODAFONE IDEA LIMITED 2023 ( 7) TMI 1164 - KARNATAKA HIGH COURT held that tax is not deductable when payment is made to non-resident telecom operator. This factual aspect is not refuted. No infirmity in the orders under challenge.

Summary

In the Karnataka High Court case, the primary legal issue was whether interconnect service charges qualify as royalty. The Hon'ble Mr. Justice S.G. Pandit and Hon'ble Mr. Justice C.M. Poonacha presided over the matter. The appellants were represented by Sri. Sanmathi E. I., while the respondent appeared through an authorized signatory. The court referenced a prior decision by a Co-ordinate Bench in ITA No. 160/2015, dated 14.07.2023, which concluded that interconnect service charges do not constitute royalty. The judgment emphasized, "The third question is, whether the payments made to NTOS for providing interconnect services and transfer of capacity in foreign countries is chargeable to tax as royalty." It was noted that the ITAT had previously determined that tax is not deductible on payments to non-resident telecom operators, which the Revenue did not dispute. Consequently, the court found no error in the challenged orders and dismissed the appeal, aligning with the Co-ordinate Bench's decision.