Case Number: ITA 191/DEL/2021
Appellant: Qualcomm Technologies, Inc., Hyderabad
Respondent: DCIT, Circle-3(1)(1), New Delhi
Assessment Year: 2016-17
Result: 2016-17
Case Filed on: 2021-03-09
Order Type: Final Tribunal Order
Date of Order: 2021-11-16
Pronounced on: 2021-11-16
The appellant, Qualcomm Technologies, Inc., based in Hyderabad, filed an appeal against the order dated 03.05.2019 by the Commissioner of Income Tax (Appeals)-43, New Delhi, under Section 263 of the Income Tax Act, 1961 for the assessment year 2016-17. The appeal was heard by the Income Tax Appellate Tribunal, Delhi Bench ‘D’ on 16.11.2021 through video conferencing.
The appellant challenged the order of the DCIT, Circle-3(1)(1), New Delhi, which treated the revenue received under the BREW agreement and test tool agreements as taxable under the provisions of the India-US Double Taxation Avoidance Agreement (DTAA) and Section 9(1)(vi) of the Income Tax Act, 1961. The appellant argued that these issues had been previously decided in their favor for earlier assessment years.
The appellant’s primary grievances were:
The counsel for the appellant, Sh. Ananya Kapoor, emphasized that these issues had been resolved in favor of the appellant in prior years, and there was no basis for a different conclusion for the assessment year 2016-17.
The Tribunal, after reviewing the submissions and the assessment history, found that the issues had indeed been consistently decided in favor of the appellant in previous years. The Tribunal referenced the earlier assessments, where similar revenue under the same agreements was not treated as royalty.
The Tribunal noted the following points:
Based on the consistent findings from previous assessments and the Tribunal’s earlier orders, the Tribunal concluded that the revenue from the BREW agreement and test tool agreements should not be treated as taxable royalty under the India-US DTAA and Section 9(1)(vi) of the Income Tax Act, 1961.
The Tribunal directed the AO to delete the additions made on these grounds for the assessment year 2016-17.
Order Pronounced: 16th November 2021
Judges: N. K. Billaiya, Accountant Member, and Sudhanshu Srivastava, Judicial Member
The decision reinforces the consistency in the application of tax laws and DTAA provisions, providing clarity on the treatment of revenue under similar agreements in future assessments. It underscores the importance of adhering to judicial precedents to ensure fair and uniform tax treatment.
Qualcomm Technologies, Inc. vs. DCIT, Circle-3(1)(1), Delhi – 2016-17 Royalty Taxation Dispute
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