Dismissing the appeal of the Revenue, Court held that consideration received on basis of agreements from telecommunication operators for Bandwidth and inter-connectivity usage of their customers. Provisions of double taxation avoidance agreement override statutory provisions and amendments thereto. Receipts not assessable as royalty in India. No alienation of copyrighted articles, patents, trademarks, designs, models, secret formulae or processes, property or information. Mere advantage or benefit derived from service provided cannot be countenanced to fall within meaning of expressions use or right to use. Receipts under agreements for provision of bandwidth not royalty. That even if Explanations 2 and 6 to section 9 applied, the position would remain unaltered since there was no transfer or conferment of a right in respect of a patent, invention or process. Customers and those availing of the services provided by the assessee were not accorded a right over the technology possessed or infrastructure by it. The underlying technology and infrastructure remained under the direct and exclusive control of the assessee and the parties availing of the assessee’s services were not provided a corresponding general or effective control over any intellectual property or equipment. The agreements merely enabled them to avail of the services offered by the assessee. A person who was provided mobile communication services or access to the internet did not stand vested with a right over a patent, invention or process. The consideration that the service recipient paid also could not be recognised as being intended to acquire a right in respect of a patent, invention, process or equipment. The word “process” being liable to be construed ejusdem generis was lent added credence by clause (iii) employing the expression “or similar property” which followed. It was intended to extend to a host of intellectual properties. Neither the concept of process nor equipment royalty were attracted and the considerations for the transactions in question were not taxable under article 12 of the Double Taxation Avoidance Agreement. (AY. 2011-12, 2012-13, 2014-15 to 2019-20)
CIT(IT) v. Telstra Singapore Pte Ltd. (2024) 467 ITR 302/ 165 taxmann.com 85 / 340 CTR 265/ 242 DTR 1 (Delhi)(HC)
S. 9(1)(vi) : Income deemed to accrue or arise in India-Royalty-Provision of connectivity solutions-Services to customers of Indian companies outside India-Consideration received on basis of agreements from telecommunication operators for Bandwidth and inter-connectivity usage of their customers-Provisions of double taxation avoidance agreement override statutory provisions and amendments thereto-Receipts not assessable as royalty in India-No alienation of copyrighted articles, patents, trademarks, designs, models, secret formulae or processes, property or information-Mere advantage or benefit derived from service provided cannot be countenanced to fall within meaning of expressions use or right to use-Receipts under agreements for provision of bandwidth not royalty-Use or right to use-DTAA-India-Singapore.[S.90(2),260A, Art.3(2), 12(3)]