TaxTMI 
TaxTMI 
2024 (2) TMI 450
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....arned Commissioner of Income-tax (Appeals)-42, New Delhi. 2. Since the issues arising in the appeals are identical, they have been clubbed together and disposed of in a common order, for the sake of convenience. 3. The issue in dispute arising in the appeals relates to the taxability of administrative fee received by the assessee as royalty under section 9(1)(vi) of the Act as well as under Article 12(3) of India-USA Double Taxation Avoidance Agreement (DTAA). 4. Briefly, the facts are, the assessee is a non-resident corporate entity incorporated in United States of America (USA) and tax resident of USA. It is stated, the assessee is a non-profit entity, hence, exempt from tax in USA. Copy of tax exemption certificate is available on rec....
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....s to the Indian Mobile manufacturers, MSAI collects certain amount from them and after retaining 30% of the amount collected, transfers 70% to the assessee because the database is maintained by GSMA and because eight digit IMEI Number is provided by GSMA Ltd., which is used by the mobile equipment manufacturers to complete 14 digit IMEI number. 6. In course of assessment proceedings, the Assessing Officer called upon the assessee to explain why the administrative fees received by the assessee should not be treated as royalty under section 9(1)(vi) of the Act as well as under Article 12(3) of India-USA DTAA. In response to the queries raised by the Assessing Officer, the assessee furnished detailed submissions stating that the amount receiv....
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....n the devices. He submitted, it is the device manufacturer who holds the technology to implant IMEI number into the end devices manufactured by them. He submitted, it is also the responsibility of the device manufacturer to ensure that each device receives a unique IMEI number implanted into it. Learned counsel submitted, since there is no provision of service by the assessee to MSAI or any other customer in India, there is no question of payment towards royalty or FTS. There is just sharing of revenue between the assessee and MSAI. He submitted, the assessee does not charge any amount from MSAI for any service. Rather, the amount paid by MSAI to the assessee is just sharing of revenue firstly collected by MSAI and later on distributed betw....
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....e a unique identification number, which can be incorporated/implanted in the mobile devices by device manufacturers in a combination with other numbers to be provided by the device manufacturer to create a 14 digit IMEI number, which is unique to each mobile device. As discussed earlier, in so far as India is concerned, the assessee has appointed MSAI as the reporting body (RB) through agreement dated 22.07.2011. As per the terms of the agreement, the assessee shall provide a database to MSAI through which TAC can be generated and allocated to the device manufacturer. As a RB, MSAI is required to assist GSMA in allocation of TAC to mobile device manufacturers, approve the representatives of mobile device manufacturers, and the brand owners ....
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....at it will not use any of the marks unless expressly and specifically permitted to do so in writing by the GSMA. 11. Thus, from the aforesaid facts, it is very much clear that the only service the assessee has provided to MSAI is, access to database maintained by it containing certain unique numbers, which in combination with some other numbers to be created by mobile equipment manufacturer would from the IMEI number to be implanted in the mobile device. For providing IMEI/TAC numbers, assessee and MSAI follow revenue sharing model of 70:30. The agreement makes it clear that MSAI will have no right or any right to use any copyright, intellectual property right, which may be associated with TAC allocation or in GSMA hosted IMEI database. Th....
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....ee, as a global administrator has created a database of unique numbers, which in combination with other numbers to be provided by mobile manufacturers can be implanted in the mobile devices to identify and keep track of the device. It is further to be noted that a particular IMEI number can be provided to only one mobile equipment manufacturer and has to be implanted in a single mobile equipment. This fact also proves that there is no transfer of use or right to use of any copyright of literary artistic or scientific work or use or right to use of any commercial or scientific experience or equipment. The database of IMEI number can be compared with the registration numbers granted to identify a particular vehicle, which is nothing but a num....