THE DEPUTY COMMISSIONER OF INCOME TAX V. ORANGE 78 RULE OLIVAIER DE SERRES PARIS

WA/1311/2024

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax International Taxation, the Commissioner of Income Tax International Taxation, and the Central Board of Direct Taxes against Orange 78 Rule Olivaiier de Serres Paris and Vodafone Idea Limited. The core issue was whether interconnect service charges paid would amount to royalty, which has implications for tax liability. The appellants sought to overturn the order of the learned Single Judge, which had dismissed their earlier petition on this matter, referencing a previous judgment that interconnect service charges are not considered royalty. The High Court of Karnataka, comprising Justice S.G. Pandit and Justice C.M. Poonacha, heard the arguments and decided to dismiss the appeal, affirming the lower court's decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 758871 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 02-09-2024
• Assessment Year: misc
• Other Referred Cases: ITA.No.160/2015
• Laws Referred To: Karnataka High Court Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: HARPRITH AJMANI
• Assessee Lawyers: SANMATHI I
• Keywords: Income Tax; Interconnect service charges; International Taxation; Royalty; Tax
• Section: 4

Judgement Text

" - 1 - NC: 2024:KHC:35644-DB WA No. 1311 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA WRIT APPEAL NO. 1311 OF 2024 (T-IT) BETWEEN: 1. THE DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE 2(2), ROOM NO 430, 4TH FLOOR, BMTC BUILDING, 80 FT ROAD, 6TH BLOCK, KORMANGALA, BENGALURU 560095. 2. THE COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, ROOM NO 741, 7TH FLOOR, BMTC BUILDING, 80 FT ROAD, 6TH BLOCK, KORMANGALA, BENGALURU- 560095. 3. THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE NORTH BLOCK, CENTRAL SECRETARIAT, NEW DELHI- 110001 REP. BY ITS CHAIRMAN. …APPELLANTS (BY SRI. SANMATHI E I.,ADVOCATE) AND: 1. ORANGE 78 RULE OLIVAIER DE SERRES PARIS (FRANCE) REPRESENTED BY ITS AUTHORISED SIGNATOR VODAFONE IDEA LIMITED Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:35644-DB WA No. 1311 of 2024 10TH FLOOR, BIRLA CENTURION CENTURION MILLS COMPOUND PANDURANG BUDKKAR MARG WORLI MUMBAI-400030. 2. VODAFONE IDEA LIMITED 10TH FLOOR, BIRLA CENTURION, CENTURION MILLS COMPOUND, PANDURANG BUDKKAR MARG, WORLI, MUMBAI -400030 REP. BY ITS DIRECTORS. …RESPONDENTS (BY SRI.HARPRITH SINGH AJMANI ., ADVOCATE) THIS APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO 1.SET ASIDE THE ORDER DATED 23/11/2023 IN WP NO.17055/2023 PASSED BY THE LEARNED SINGLE JUDGE AND 2. GRANT SUCH OTHER ORDER. THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT AND HON'BLE MR JUSTICE C.M. POONACHA ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard Sri. E.I.Sanmathi, learned counsel for the appellants and learned counsel Sri.Harprith Singh Ajmani for respondents. 2. Perused the appeal papers. - 3 - NC: 2024:KHC:35644-DB WA No. 1311 of 2024 3. The question involved in the appeal is as to whether interconnect service charges paid would amount to royalty. 4. The above issue was considered by a Co-ordinate Bench of this court in ITA.No.160/2015 and connected appeals. By judgment dated 14.07.2023 it is held that interconnect service charges would not constitute royalty. Paragraph No.21 of the judgment reads as follows: “The third question is, whether the payments made to NTOS for providing interconnect services and transfer of capacity in foreign countries is chargeable to tax as royalty. It was argued by Shri.Pardiwala, that for subsequent years in assessee’s own case, the ITAT has held that tax is not deductable when payment is made to non-resident telecom operator. This factual aspect is not refuted. Thus the Revenue has reviewed its earlier stand for the subsequent assessment years placing reliance on Viacom etc35, rendered by the ITAT. In that view of the matter this question also needs to be answered against the Revenue.” 5. Learned Single Judge has also placed reliance on the above decision of the Co-ordinate Bench. Therefore, we do not find any infirmity in the order under challenge. - 4 - NC: 2024:KHC:35644-DB WA No. 1311 of 2024 6. Following the decision of Co-ordinate Bench dated 14.07.2023 in ITA No.160/2015 and connected appeals, the above appeal stands dismissed. SD/- (S.G.PANDIT) JUDGE SD/- (C.M. POONACHA) JUDGE MPK CT:bms List No.: 1 Sl No.: 34 "