Interconnect service charges are not royalty for tax purposes; the assessee's position was upheld and the appeal dismissed.

Interconnect service charges paid to a non-resident telecom operator were held not to constitute royalty for tax purposes. The Karnataka High Court followed a coordinate Bench decision on the same issue, found no infirmity in the order under challenge, and applied that view to reject the Revenue's contention. The issue was answered in favour of the assessee, and the appeal was dismissed.

---

---

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

Analysis: The question was already answered by a coordinate Bench, which held that interconnect service charges do not constitute royalty. The present appeal followed that view and found no infirmity in the order under challenge.

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

Final Conclusion: The appeal was dismissed by applying the coordinate Bench decision that interconnect service charges are not royalty.

Ratio Decidendi: Interconnect service charges paid for telecom services do not amount to royalty for tax purposes.

---