Interconnect service charges do not constitute royalty, with the High Court following prior precedent and rejecting taxability.

Interconnect service charges paid to a non-resident telecom operator were examined on the question whether they constituted royalty and were chargeable to tax. The High Court followed an earlier Coordinate Bench ruling that such charges do not amount to royalty, and found no infirmity in the order under challenge. The issue was accordingly answered against the Revenue and in favour of the assessee.

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Issues: Whether interconnect service charges paid to a non-resident telecom operator constitute royalty and are chargeable to tax.

Analysis: The issue had already been decided by a Coordinate Bench, which held that interconnect service charges do not constitute royalty. The Court followed that decision and found no infirmity in the order under challenge.

Conclusion: The issue was answered against the Revenue and in favour of the assessee.

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