Bandwidth service receipts not taxable as royalty where services were provided outside India under the India-Singapore tax treaty.

Consideration for bandwidth services provided outside India to Indian telecom operators was held not to constitute royalty under section 9(1)(vi) of the Income-tax Act or Article 12 of the India-Singapore Tax Treaty. The Tribunal followed its earlier ruling in the assessee's own case and held that the services did not amount to equipment royalty or process royalty. The receipt was therefore not taxable as royalty, and the addition made on that basis was deleted in favour of the assessee.

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Issues: Whether consideration received for bandwidth services provided outside India to Indian telecom operators was taxable as royalty under section 9(1)(vi) of the Income-tax Act, 1961 and Article 12 of the India-Singapore Tax Treaty.

Analysis: The issue was covered by the Tribunal's earlier decision in the assessee's own case for preceding assessment years. The Tribunal followed its earlier view that bandwidth services provided outside India did not amount to equipment royalty or process royalty and that the consideration was not taxable as royalty in view of the beneficial provisions of the India-Singapore tax treaty.

Conclusion: The receipt from bandwidth services was not taxable as royalty, and the addition made on that basis was deleted in favour of the assessee.

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