TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Court Upholds Decision on Tax Treaty Override, Emphasizes International Agreement Respect</h1> <h3>The Commissioner of Income Tax (IT) -4 Versus M/s. Reliance Infocomm Ltd.</h3> The Commissioner of Income Tax (IT) -4 Versus M/s. Reliance Infocomm Ltd. - TMI Issues:Whether the payee's amount is taxable as royalty under the DTAA between India and Netherlands and thus liable for tax withholding u/s. 195Rs. Whether the Tribunal erred in relying on the Delhi High Court decision without considering other High Court decisionsRs. Whether the Respondent-Assessee failed to deduct tax at source while making royalty paymentsRs.Analysis:The primary issue in this case revolves around whether the Respondent-Assessee failed to deduct tax at source while making royalty payments to the payee Company as required by law. The Revenue contended that the payee's income was taxable in India, and thus, tax withholding was necessary. The Revenue relied on amendments to Section 9(1)(vi) of the Income Tax Act, 1961, introduced by the Finance Act, 2015, to support their position. These amendments aimed to clarify the taxability of foreign-based payees in India.The Delhi High Court's judgment in the case of Director of Income Tax v/s. New Skies Satellite BV played a crucial role in this matter. The High Court's observations highlighted the retrospective nature of the amendments and emphasized that mere changes in domestic law do not override provisions of Double Tax Avoidance Agreements (DTAA). The Court stressed that any alteration to tax laws must also be reflected in the DTAA to be applicable. The Delhi High Court's decision underscored that amendments to the Act do not automatically impact international treaties, and such changes must be explicitly incorporated into the agreements.Moreover, the Court emphasized that India's shift in position regarding the OECD Commentary does not influence the interpretation of royalty definitions in existing agreements. The judgment emphasized that unilateral legislative amendments cannot be imposed on treaties between sovereign states without explicit agreement modifications. The Court referenced previous decisions to support the principle that mere amendments to domestic law do not supersede DTAA provisions.Given the detailed analysis and conclusions reached by the Delhi High Court in a similar case involving the same foreign-based company, New Skies Satellite BV, the Bombay High Court found no grounds to interfere with the Appeal. The judgment highlighted the importance of respecting international agreements and the limitations of domestic legislative changes in the context of tax treaties. As a result, the Appeal was dismissed based on the considerations and precedents established by the Delhi High Court's decision.
TaxTMI 