TaxTMI 
TaxTMI 
2023 (8) TMI 1375
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.... 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter called 'the Act'). The relevant Assessment Years are 2013-14 and 2014-15. 2. Common issues are raised in these appeals; hence, they were heard together and are being disposed off by this consolidated order. 3. Brief facts of the case are as follows: Assessee is a telecom company incorporated and a tax resident of Spain. It is engaged in the business of providing telecommunications services, interconnection services, internet services, etc. The assessee has entered into interconnect services agreements that enables subscribers of one telecom operator to call a subscriber of another operator in any part of the world and vice-versa for receiving the calls from subscribers o....
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.... * Interconnect Usage Charge (hereinafter referred to as 'IUC') refers to the consideration paid by the recipient telecom operator for provision of service (of carriage/ transmission of calls), pursuant to the interconnect agreements, by the other telecom operator. Per the interconnect agreements, invoices are issued on a monthly basis indicating the applicable rate per minute, destination country and traffic volume in minutes. 6. The assessee was of the view that the receipts towards Interconnect Usage Charges ("IUC") are not taxable in India since these do not amount to royalty/FTS but would constitute business income which is not taxable in the absence of a Permanent Establishment (PE) in India. Hence, assessee had not filed ....
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....ed AR submitted whether it is liable to be taxed under section 5 has been specifically considered by the Bangalore Bench of the Tribunal in the case of Vodafone South Ltd., (supra) wherein it has been clearly held that inference drawn by the Revenue authorities income is deemed to accrue or arise in India or received in India is incorrect. 10. We have heard the rival submission and perused the material on record. At the outset, we notice that Assessment Year 2010-11 has been considered by the AO as the base year and has been followed in the subsequent Assessment Years. The Tribunal in ITA Nos. 2657/Bang/2019, 180/Bang/2021 and 817/Bang/2022 for Assessment Years 2010-11 to 2012-13 has decided the issue in favour of the assessee vide order....
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....mers is not "secret" but a standard commercial process followed by the industry players. Hence, same cannot be classified as "secret process" as per clause 3 o Article 13 of India-Spain DTAA Page 21 Para 5.2.17 We hold that payments received by assessee towards interconnectivity utility charges from Indian customers / end users cannot be considered as Royalty / FTS to be brought to tax in India under section 9(1)(vi)/(vii) of the Act and also as per DTAA Page 26 Para 5.2.20 The payment received by the non-resident assessee amounts to be the business profits of the assessee which is taxable in the resident country and is not taxable in India under Article 5 of the DTAA as there is no case of permanent establishment of the assesse....
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.... Assessing Officer is right in articulating that where income is actually received or accrues in India, resort to deeming provision is not warranted and in such a case, provisions contained in section 5(2) is sufficient to create a charge in respect of non resident's income. However, while drawing inference that payments made by a resident would also indicate accrual or arising of the income in the hands of non resident in India. It is pertinent to mention that section 9 of the Act is a deeming section and it provides for taxation of specified income, received by foreign tax resident in India. It has different sub sections. Section 9(1)(i) of the Act provides for taxation of business income of non resident, whereas section 9(1)(vi) and ....
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....perform the business activities pursuant to which it received income. Once the situs is outside India, then in order to determine whether the payments made by a resident of India to a non resident involves element of income is to be examined u/s 9 and in the present case, the Assessing Officer has examined the applicability of section 9(1) (vi) & 9(1)(vii)i.e. the payments involve royalty as well as fee for technical services. The two judgments relied upon by the assessee namely decision of the Hon'ble Delhi High Court in the case of EON Technology (P.) Ltd. (supra) and the order of the ITAT in the case of Adani Enterprises Ltd. (supra) are fully applicable on the facts of the present case. The inference drawn by the learned Revenue aut....