Interconnect service charges were held not to be royalty, following earlier precedent on telecom connectivity payments.

Interconnect service charges paid for telecom connectivity were held not to constitute royalty, because the issue was covered by an earlier co-ordinate Bench decision treating payments for interconnect services and transfer of capacity in foreign countries as outside the scope of royalty. Applying that precedent, the Court found no infirmity in the order under challenge and dismissed the appeal.

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Issues: Whether interconnect service charges paid for telecom connectivity constitute royalty chargeable to tax.

Analysis: The question was covered by an earlier decision of a co-ordinate Bench holding that payments made for interconnect services and transfer of capacity in foreign countries do not amount to royalty. Following that decision, no infirmity was found in the order under challenge.

Conclusion: Interconnect service charges do not constitute royalty. The appeal was dismissed.

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