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| DATE: | (Date of pronouncement) |
| DATE: | August 22, 2008 (Date of publication) |
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Where the applicant entered into an arrangement with BTA USA for obtaining telecom bandwith for two-way transmission of voice and data through sub-sea cables, HELD:
(i) The agreement was for rendering a ‘service’ and did not involve consideration for the ‘use or right to use equipment’ and not ‘royalty’ u/s 9 (1) (via). The consideration was not a ‘rental’ as the payee was not in custody or control of the equipment of BTA. The meanings of the words “use” and “right to use” explained in detail. It is also not ‘royalty’ u/s 9 (1) (iii). It is also not “fees for included services” under Article 12 (4) of the DTAA.
(ii) The argument that as the applicant’s business consists of revenue from offshore customers, it must be considered to have earned income from a source outside India is not correct as the entire operations are carried out in India. Source is referable to the starting point or the origin or the spot where something springs into existence.
(iii) Question as to whether there is a PE left open for want of facts.
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