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Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
Before: SH. N. K. BILLAIYA & SH. N.K. CHOUDHRY
ORDER PER N.K. BILLAIYA, AM:
5479/Del/2019 are two separate orders of the AO dated 06.07.2018 and 03.04.2019 respectively for A.Y.2015-16 and 2016-17 framed u/s.143 (3) r.w.s. 144C (1) of the Act.
Since the grievance is common in both these appeals they were heard together and are being disposed of by this common order for the sake of convenience and brevity.
The substantive common grievance which was argued before us on both these appeals relate to the taxability of the money received by the assessee from Indian customers for provision of Telecommunication connectivity services which included international private leased circuits, Multiprotocol Label Switching IP/VPN etc. taxable as Royalty as under section 9(1) (vi) of the IT Act and under Article 12(3) of the India Singapore Tax Treaty. At the very outset the Counsel for the assessee stated that the impugned quarrel has been considered and decided by this Tribunal in assessee’s own case in A.Y.2011-12 and 2012-13.
The DR could not bring any distinguishing decision in favour of the revenue.
We have carefully considered the orders of the authorities below. The undisputed fact is that the assessee is a company incorporated in Singapore and is a tax resident of Singapore. It is engaged in the business of providing digital transmission of data through international private line or multi-protocol label switching etc. to facilitate high speed data connectivity.
The assessee provides bandwidth services outside India to its customers. It has entered into Global Business Services Agreement with various customers. As per global business services agreement between the assessee and the customer, the customer, enjoys an uninterrupted 24 x 7 services and such services would be 99.60% of the time.
The returns for the impugned assessment years were selected for scrutiny assessment wherein the AO has considered the amount received from Indian customers for the provision of bandwidth services outside India as equipment/ process royalty u/s. 9 (1) (vi) of the Act r.w. Article 12 (3) of the India- Singapore tax treaty. The action of the AO was upheld by the DRP.
We find that the impugned quarrel was considered by this Tribunal in assessee’s own case in and 286/Del/2016 for A.Y. 2011-12 and 2012-13. The relevant findings of this Tribunal read as under :-
xxxxx
This view of the coordinate Bench find support from the decision of the Hon’ble High Court of Delhi in the case of New Skies Satellite BV in 474 and 500/2014 and 244/2014 order dated 08.02.2016. The relevant findings of the Hon’ble High Court read as under :-
This controversy is now well settled by the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited in 432 ITR 471.
Respectfully following the findings of the coordinate Bench, in the light of the decision of Hon’ble Jurisdictional High Court of Delhi (supra) and the Hon’ble Supreme Court (supra) we direct the AO to delete the impugned additions from both the assessment years.
In the result, both the appeals by the assessee are allowed.
Decision announced in the open court on 13.07.2022.