Case Number: ITA 5479/DEL/2019
Appellant: Telstra Singapore Pte. Ltd.
Respondent: DCIT (International Taxation), Circle-3(1)(1), New Delhi
Assessment Year: 2016-17
Result: Final Tribunal Order
Case Filed on: 2019-06-21
Date of Order: 2022-07-13
Pronounced on: 2022-07-13
This case involves an appeal by Telstra Singapore against the order of the AO concerning the assessment years 2015-16 and 2016-17. The core issue revolves around the taxability of revenues received from Indian customers for providing telecommunication connectivity services, such as international private leased circuits and IP/VPN, classified as ‘Royalty’ under section 9(1)(vi) of the Indian Income Tax Act and Article 12(3) of the India-Singapore Tax Treaty.
The tribunal consolidated the appeals for both assessment years due to the commonality of the issues involved. The primary legal question was whether the payments received by Telstra Singapore from its Indian customers could be considered royalty payments, subjecting them to taxation in India.
The tribunal referenced earlier decisions in Telstra’s own cases for the assessment years 2011-12 and 2012-13, where similar issues were addressed. The Departmental Representative could not distinguish the current cases from these precedents. Following the legal framework established by the Delhi High Court and the Supreme Court, the tribunal found that the payments received by Telstra did not constitute royalties.
The tribunal directed the AO to delete the impugned additions, effectively relieving Telstra Singapore of the proposed tax liabilities for these transactions. This decision reiterates the importance of international tax treaties and the specific definitions of royalty payments, which have significant implications for multinational corporations engaged in cross-border services.
Presiding Officers: Sh. N. K. Billaiya, Accountant Member and Sh. N.K. Choudhry, Judicial Member
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