TaxTMI 
TaxTMI 
2022 (9) TMI 1585
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....data through International Private Line ('IPL') or Multi-Protocol Label Switching ('MPLS'), etc. to facilitate high-speed data connectivity (hereinafter referred to as 'bandwidth services'). The Ld. Counsel for the assessee submits that the assessee provides bandwidth services outside India to its customers. It has entered into Global Business Service Agreement ('GBSA') with various customers. In the case where services are provided by an Indian telecom operator like Bharti Airtel in India and the services outside India are provided by the assessee, it enters into a One Stop Shopping Service Agreement ('OSS') with Bharti Airtel or any other Indian telecom operator, to facilitate single billing facility to the customer. Referring to Annexure 1 on Page 10 to 13 of the synopsis for an overview of the business process chart and details of services rendered by the assessee the Ld. Counsel for the assessee submits that as per the GBSA between the assessee and the customer, the customer enjoys an uninterrupted 24X7 service and such service would be available 99.60% of the time. If the service is unavailable or is not available as per the agreed speed, the customer shall be entitled to a r....
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....ch is placed at pages 95 to 116 of the Paper Book. 5.2 It is further submitted that the Hon'ble Delhi ITAT followed the aforesaid order for earlier years in assessee's own case for AY 2015-16 and 2016-17 in ITA Nos. 5880/Del/2018, 5479/Del/2019 vide order dated 13.07.2022 which is placed at pages 117 to 122 of Paper Book. 5.3 The Ld. Counsel also submits that its case is also covered by the decisions of the Delhi High Court in the case of Director of Income Tax vs. New Skies Satellite - BV (68 taxmann.com 8) and Asia Satellite Telecommunications Co. Ltd. (332 ITR 340) and a series of decisions of the ITAT Delhi Benches as under: * Verizon Communications India Pvt. Ltd. ITA No. 2235/Del/2019, dated 30 March 2020; * Thaicom Public Co. Ltd. (2018) 96 taxmann.com 577, dated 26 April 2018; * Independent New Services (P) Ltd. (2018) 90 taxmann.com 163, dated 25 January 2018; * Geo Connect Limited ITA Nos. 1927/Del/2008 & 127/Del/2011, dated 17 January 2017; * Bharti Airtel Ltd. (2016) 67 taxmann.com 223, dated 17 March. 6. The Ld. DR supported the orders of the authorities below. 7. Heard rival submission, perused the orders of the....
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....ld not fall within the expression "use or right to use". Mere receipt of service using equipment under the control, possession and operation of service provider would only be transaction of a service and not to "usc or right to use" an equipment, and would not attract 'Royalty' under the Act or the Tax Treaty. 14. The Revenue authorities are of the view that the consideration received by the assessee falls within the definition of Royalty both u/s 9(1)(vi) of the Act and also under provisions of Tax Treaty. 15. We find that the similar issue arose before the Hon'ble Delhi High Court in Asia Satellite Telecommunications Co. Ltd. vs. Director of IT (2011) 232 ITR 340 (Del), which in turn has been followed in DIT Vs. (1) New Skies Satellite BV (2) Shin Satellite Public Co. Ltd. (2016) 382 ITR 111 (Del). The assessee therein was engaged in the business of lease of transponder or allocation of transponder capacity on satellite for digital transmission services. The issue before the Hon'ble High Court (supra) was whether the amounts received from customers for availing the transponder capacity was chargeable to tax in India as 'Royalty'.....
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....r we find Delhi Benches of the Tribunal is several decisions have followed the decision of Hon'ble Delhi High Court and has held that the receipt from band width services do not qualify as 'Royalty' as per India Singapore Tax Treaty. Reliance is placed on Verizon Communications Singapore Pte Ltd. Vs. DDIT in ITA No.2235/Del/2019 order dated 30.03.2020. 18. Further in Thaicom Public Co.Ltd. [2018] 96 taxmann.com 577, the Delhi Bench of the Tribunal held that despite the amendment in the Act, income from digital broadcast services through transponders is not 'Royalty' as per India Thailand Treaty. Similar propositions have been laid down in various other decisions of Tribunal. 19. The Pune Bench of the Tribunal in John Deere India Pvt. Ltd. vs DDIT in ITA Nos.905 to 908/Pun/2015 reported in [2019] 102 taxmann.com 267, order dated 23.01.2019 vide para 100 relied on decision of Hon'ble Delhi High Court in Asia Satellite Telecommunications Co. Ltd (supra) and held that there was no lease of equipment but only use of broadband facilities. Applying the said ratio to the facts of the present case, we hold that in the case of assessee, there ....
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....said appeal is similar to the issue raised before us in the present appeal. We may also point out that the Hon'ble High Court of Delhi had also taken note of the ratio laid down by the IIon'ble Bombay High Court in CIT Vs. Seimens Aktiongesellschaft (supra), which in turn, has applied the ratio of the Hon'ble Supreme Court of Canada in R Vs. Melford Developments Inc., 82 DTC 6281 (1982) and observed as under:- "The ratio of the judgment, in our opinion, would mean that by a unilateral amendment it is not possible for one nation which is party to an agreement to tax income which otherwise was not subject to tax. Such income would not be subject to tax under the expression laws in force... While considering the Double Tax Avoidance Agreement the expression laws in force' would not only include a tax already covered by the treaty but would also include any other tax as taxes of a substantially similar character subsequent to the date of the agreement as set out in article I(2). Considering the express language of article (2) it is not possible to accept the broad proposition urged on behalf of the assessee that the law would be ....
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.... before the Hon'ble High Court was whether the amount received on account of reimbursement of lease line charges would qualify as 'royalty' under Article 12 of India UK Treaty and the second question was in respect of charges being attributable to PE in India. The Hon'ble High Court vide para 5 had noted the decision of Tribunal but had held that since the decision of - Tribunal was based on the findings of fact, there was no reason to entertain question Nos.4 and 5. 24. Applying the principle laid down by the Hon'ble High Court of Delhi in DIT Vs. New Skies Satellite BV (supra), we hold that where the provisions of DTAA overrides the provisions of Income-tax Act and the definition of 'royalty' having not been undergone any amendment in DTAA, the assessee was not liable to withhold tax on the lease line charges paid by it. The amended provisions of section 9(1)(vi) of the Act brought into force by the Finance Act, 2012 are applicable to domestic laws and the said amended definition cannot be extended to DTAA, where the term has been defined originally and not amended." 20. Now coming to the next connected plea of the assessee....