Bandwidth service receipts were held not to be royalty, following earlier rulings on identical facts and treaty treatment.

Payments for bandwidth services rendered outside India through IPLC/MPLS connectivity were examined as to whether they constituted royalty under section 9(1)(vi) and Article 12(3) of the India-Singapore Tax Treaty. The Tribunal followed its earlier coordinate bench rulings in the assessee's own case, noting that the factual and legal position for the year was unchanged and that identical receipts had already been held not to be royalty. On that basis, the bandwidth receipts were treated as not taxable as royalty.

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Issues: Whether payments received for bandwidth services rendered outside India through IPLC/MPLS connectivity amounted to royalty under section 9(1)(vi) of the Income-tax Act, 1961 and Article 12(3) of the India-Singapore Tax Treaty.

Analysis: The assessment and DRP directions proceeded on the footing that the receipts constituted equipment/process royalty. The Tribunal noted that the factual and legal matrix for the year under consideration was the same as in the assessee's earlier years, where identical receipts from bandwidth services had already been held not taxable as royalty. Following the earlier coordinate bench decisions in the assessee's own case, and in the absence of any change in facts or law, the same view was applied for the year under appeal.

Conclusion: The receipts from bandwidth services were not taxable as royalty. The issue was decided in favour of the assessee.

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