THE DEPUTY COMMISSIONER OF INCOME TAX V. ORANGE 78 RUE OLIVAIER DE SERRES PARIS (FRANCE)

WA/1100/2024

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 Orange and Vodafone Idea Limited concerning the classification of interconnect service charges as royalty. The appellants challenged the order of the learned Single Judge, which relied on a Co-ordinate Bench's decision that interconnect service charges do not amount to royalty. The High Court of Karnataka, after hearing the arguments and reviewing the relevant judgments, upheld the Single Judge's decision and dismissed the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 699240 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 02-09-2024
• Assessment Year: misc
• Other Referred Cases: ITA.No.160/2015
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: HARIPRITH AJMANI
• Assessee Lawyers: SANMATHI
• Keywords: Income Tax; Interconnect service charges; Royalty; Tax

Judgement Text

" - 1 - NC: 2024:KHC:35640-DB WA No. 1100 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. 1100 OF 2024 (T-IT) BETWEEN: 1. THE DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION WARD 2(2) ROOM NO.430, 4TH FLOOR, BMTC BUILDING, 80 FT ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU-560095. 2. THE COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION ROOM NO.741, 7TH FLOOR, BMTC BUILDING, 80 FT ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU-560095. 3. THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE NORTH BLOCK, CENTRAL SECRETARIAT NEW DELHI-110001 REPRESENTED BY ITS CHAIRMAN. …APPELLANTS (BY SRI. SANMATHI E. I., ADV.) AND: 1. ORANGE 78 RUE OLIVAIER DE SERRES PARIS (FRANCE) REP. BY ITS AUTHORISED SIGNATOR, Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:35640-DB WA No. 1100 of 2024 VODAFONE IDEA LIMITED 10TH FLOOR, BIRLA CENTURION, CENTURION MILLS COMPOUND, PANDURANG BUDKKAR MARG WORLI, MUMBAI-400030 REP. BY ITS DIRECTORS MR BENOIT DELAPLACE. 2. VODAFONE IDEA LIMITED 10TH FLOOR, BIRLA CENTURION, CENTURION MILLS COMPOUND PANDURANG BUDKKAR, MARG WORLI, MUMBAI-400030 REPRESENTED BY ITS DIRECTORS. …RESPONDENTS (BY SRI.HARIPRITH SINGH AJMANI, ADV.) THIS APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED 23.11.2023 IN WP NO.5338/2022 (T-IT) PASSED BY THE LEARNED SINGLE JUDGE. 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:35640-DB WA No. 1100 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:35640-DB WA No. 1100 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.: 30 "