THE DEPUTY COMMISSIONER OF INCOME TAX V. M/S. SINGAPORE TELECOMMUNICATIONS LTD

WA/334/2024

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax, the Commissioner of Income Tax, and the Central Board of Direct Taxes against M/S. Singapore Telecommunications Ltd. and Vodafone Idea Limited. The core issue was whether interconnect service charges paid by these companies would amount to royalty, which has tax implications. The High Court of Karnataka at Bengaluru, referencing a previous judgment (ITA No.160/2015), upheld that such charges do not qualify as royalty, thus not subject to tax as royalty payments. The appeal was dismissed based on this precedent.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 727820 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 25-03-2024
• 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: HARPREET SINGH AJMANI
• Assessee Lawyers: Y V RAVIRAJ
• Keywords: Income Tax; Interconnect service charges; International Taxation; Royalty
• Section: 4

Judgement Text

" - 1 - NC: 2024:KHC:13585-DB WA No. 334 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF MARCH, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA WRIT APPEAL NO.334 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 FEET ROAD, 6TH BLOCK KORAMANGALA BENGALURU-560095. 2. THE COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION RANGE-2, ROOM NO.741 7TH FLOOR, BMTC BUILDING 80 FEET ROAD, 6TH BLOCK KORAMANGALA 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. Y V RAVIRAJ, ADV.) AND: 1. M/S. SINGAPORE TELECOMMUNICATIONS LTD., SINGAPORE 31 EXETER ROAD COMCENTRE SINGAPORE -239732 SINGAPORE Digitally signed by A K CHANDRIKA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:13585-DB WA No. 334 of 2024 REP. BY ITS AUTHORISED SIGNATORY MR.KOH BOON CHYE. 2. VODAFONE IDEA LIMITED 10TH FLOOR, BIRLA CENTURION CENTURION MILLS COMPOUND PANDURANG BUDKKAR MARG WORLI, MUMBAI-400030 REP. BY ITS DIRECTORS. …RESPONDENTS (BY SRI.HARPREET SINGH AJMANI, ADV. FOR SRI PRANAV VENKAT VISHWANATH, ADV. FOR C/R1) THIS APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN W.P.NO.17270/2021 (T-IT) DATED 23.11.2023. THIS APPEAL, COMING ON FOR PRELIMINARY HEARING, THIS DAY, S.G.PANDIT J., DELIVERED THE FOLLOWING: JUDGMENT Heard Sri.Y.V.Raviraj learned counsel for the appellants and learned counsel Sri.Harpreet Singh Ajmani, for Sri.Pranav Venkat Vishwanath, learned Counsel for the Caveator/respondent No.1. 2. Perused the appeal papers. 3. The question involved in the appeal is as to whether interconnect service charges paid would amount to royalty. - 3 - NC: 2024:KHC:13585-DB WA No. 334 of 2024 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 orders under challenge. - 4 - NC: 2024:KHC:13585-DB WA No. 334 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/- JUDGE SD/- JUDGE NC CT:bms "