2024 (9) TMI 1676 - 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

The Karnataka High Court, presided by Hon'ble Justices S.G. Pandit and C.M. Poonacha, addressed the issue of whether interconnect service charges constitute "royalty." The court referenced a previous decision by a Co-ordinate Bench in ITA No. 160/2015, which concluded that such charges do not amount to royalty. The judgment cited paragraph 21 from the earlier case, stating: "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... the ITAT has held that tax is not deductible when payment is made to non-resident telecom operator." The court found no error in the previous judgment and dismissed the current appeal, aligning with the Co-ordinate Bench's decision from July 14, 2023.