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Issues: (i) Whether infrastructure data centre charges received by the assessee were taxable as royalty under the Income-tax Act, 1961 and the India-Singapore Double Taxation Avoidance Agreement. (ii) Whether management service fees received by the assessee were taxable as royalty under the Income-tax Act, 1961 and the India-Singapore Double Taxation Avoidance Agreement.
Issue (i): Whether infrastructure data centre charges received by the assessee were taxable as royalty under the Income-tax Act, 1961 and the India-Singapore Double Taxation Avoidance Agreement.
Analysis: The issue was treated as recurring and identical to earlier years in the assessee's own case. The Tribunal followed its coordinate bench decisions, which had held that infrastructure data centre services consisting of IT infrastructure management, mailbox hosting, and website hosting did not involve the use or right to use any software, process, equipment, or secret industrial information in the manner required for royalty treatment. In the absence of any change in facts or law, the earlier view was applied.
Conclusion: The receipt was not taxable as royalty. The addition relating to infrastructure data centre charges was deleted in favour of the assessee.
Issue (ii): Whether management service fees received by the assessee were taxable as royalty under the Income-tax Act, 1961 and the India-Singapore Double Taxation Avoidance Agreement.
Analysis: The issue was again found to be covered by earlier orders in the assessee's own case. The Tribunal followed the consistent view that the management service arrangement did not amount to royalty under section 9(1)(vi) of the Income-tax Act, 1961 read with Article 12 of the treaty. No new material or distinguishing feature was shown for the relevant assessment year, and the earlier reasoning was applied without departure.
Conclusion: The receipt was not taxable as royalty. The addition relating to management service fees was deleted in favour of the assessee.
Final Conclusion: The assessment additions made by treating both streams of receipts as royalty were set aside, and the assessee obtained full relief in the appeal.
Ratio Decidendi: Where receipts are for standard infrastructure support or service arrangements and the material facts remain unchanged, they cannot be taxed as royalty merely because they arise from technology-enabled or overseas-hosted services, unless the payer is shown to have obtained a right to use software, equipment, process, or other royalty-bearing rights.
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