Income-tax writ appeal on whether interconnect service charges paid to non-resident telecom operators constitute royalty. Following a Co-ordinate Bench judgment answering in the negative, the appeal is dismissed, costs easy, subject to the pending SLP before the Apex Court.
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NC: 2024:KHC:25831-DB WA No. 214 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF JULY, 2024 PRESENT
THE HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR WRIT APPEAL NO. 214 OF 2024 (T-IT)
BETWEEN:
…APPELLANTS
(BY SRI. Y.V. RAVIRAJ, SENIOR STANDING COUNSEL)
AND:
Digitally signed by SHAKAMBARI Location: HIGH COURT OF KARNATAKA
COMMUNICATIONS GLOBAL NETWORK SERVICES LIMITED., CENTURY HOUSE, 16-PAR-LA-VILLE ROAD, HAMILTON HM 08, BERMUDA, REPRESENTED BY ITS ATTORNEY MR. VAIBHAV KULKARNI
…RESPONDENT
(BY MS.TANMAYEE RAJKUMAR, ADVOCATE)
THIS WRIT 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 WP NO.5738/2017 DATED 13/10/2023.
NC: 2024:KHC:25831-DB WA No. 214 of 2024
THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, KRISHNA S DIXIT J., DELIVERED THE FOLLOWING:
JUDGMENT
The question involved in this appeal is as to whether ‘interconnect service charges’ paid would amount to royalty. A Co-ordinate Bench of this Court in ITA No.160/2015 & connected matters vide judgment dated 14.07.2023 has specifically answered the same in the negative with the following observations in para 21:
"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 Paridwala 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 etc. rendered by the ITAT. In that view of the matter this question also needs to be answered against the Revenue."
The impugned judgment of the learned Single Judge has been structured in terms of said Co-ordinate Bench judgment.
for the Revenue submits that SLP has been pending before the Apex Court against the said Co-ordinate Bench judgment.
NC: 2024:KHC:25831-DB WA No. 214 of 2024
However, full particulars of the same are not furnished at the
Bar. Be that as it may.
In view of the Co-ordinate Bench judgment, this appeal is liable to be and accordingly dismissed , costs having been made
easy. Subject to the outcome of pending SLP before the Apex Court.
Sd/JUDGE
Sd/JUDGE
YN
List No.: 1 Sl No.: 7
1 issue framed by the court
Whether interconnect service charges paid to foreign telecom operators amount to royalty chargeable to tax.
1 provisions across 1 enactments
The Commissioner of Income Tax (International Taxation)
The Deputy Commissioner of Income Tax (International Taxation), Circle 1(1)
Communications Global Network Services Limited
Krishna S Dixit
Ramachandra D. Huddar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
