Appellant: Nagravision S.A.
Respondent: DCIT Circle-2(2)(2), International Taxation, New Delhi
PAN: AADCN6048B
The case revolves around the appellant, Nagravision S.A., appealing against the assessment and rectification orders passed by the Deputy Commissioner of Income Tax, concerning the A.Y. 2017-18, which involved a substantial tax demand and initiation of penalty proceedings under section 270A of the Income Tax Act.
The appellant contested the assessment on multiple grounds, arguing primarily that the revenues from the supply of Conditional Access Systems (CAS) and Middleware products should not be classified as royalties as defined under the India-Swiss tax treaty, asserting that such revenues constitute business income not taxable in India in the absence of a Permanent Establishment (PE).
After hearing the arguments, the tribunal agreed with the appellant, citing precedents and the definitions under the Double Taxation Avoidance Agreement (DTAA) between India and Switzerland. The tribunal’s detailed analysis supported the appellant’s position that the income in question was not taxable as royalties but as business income due to the lack of a PE in India.
The tribunal’s decision to allow the appeal on most grounds while remitting back certain issues concerning TDS credit for further examination illustrates the complexity of tax assessments involving international transactions and DTAAs. This case highlights the importance of clear treaty interpretations in the context of cross-border software transactions.
Order Pronounced in the open court on 31/01/2022.
R.K. Panda, Accountant Member
N.K. Choudhry, Judicial Member
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