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“use of equipment”

International TaxSection 9(1)(vi)Section 9(1)(vi)119 judgments

The decision most relied on for use of equipment is Asia Satellite Telecommunications Co. Ltd. v. DIT (332 ITR 340), cited in 359 judgments on BharatTax.

Leading authorities on use of equipment

Asia Satellite Telecommunications Co. Ltd. v. DIT
332 ITR 340 · 2011 · High Court
359
citing judgments

Payments for the use of equipment, such as satellite transponders, do not constitute 'royalty' under Section 9(1)(vi) of the Income-tax Act, 1961, or under applicable tax treaties, especially when there is no transfer of the right to use a process or underlying technology.

DIT v. New Skies Satellite BV
382 ITR 114 · 2016 · High Court
325
citing judgments

An amendment to the Income Tax Act, such as the Finance Act, 2012 amendment to Section 9(1)(vi) defining royalty, does not automatically override or alter the definition of 'royalty' as provided in a Double Taxation Avoidance Agreement (DTAA) unless the DTAA itself is bilaterally amended. The definition of royalty in a DTAA remains unaffected by unilateral changes to domestic law.

DIT v. Nokia Networks OY
358 ITR 259 · 2013 · High Court
276
citing judgments

Payments for the supply of software along with telecom equipment are not in the nature of royalty if they are for the use of a copyrighted article, not the copyright itself. Such payments are not taxable in India in the absence of a Permanent Establishment (PE).

Verizon Communications Singapore Pte Ltd. v. ITO
361 ITR 575 · 2014 · High Court
156
citing judgments

Payments for the use of equipment or copyrighted articles constitute royalty income under section 9(1)(vi) of the Income-tax Act, necessitating TDS deduction under section 195 and attracting disallowance under section 40(a)(i) for non-compliance.

DDIT v. Savvis Communication Corporation
69 Taxmann.com 106 · 2016 · ITAT
107
citing judgments

Payments for web hosting services, including data back-up, maintenance, security, and uninterrupted services, are not taxable as royalty under Section 9(1)(vi) of the Income Tax Act, as they do not constitute 'consideration for use of, or right to use, scientific equipment'.

Kotak Mahindra Primus Ltd. v. DDIT
11 SOT 578 · 2007 · ITAT
99
citing judgments

Payments for data processing services using a mainframe computer and specialized software are not taxable as fees for the use of equipment if the Indian entity lacks independent rights or physical access to use the computer or software.

Bharti Airtel v. ITO (TDS)
67 Taxmann.com 223 · 2016 · High Court
53
citing judgments

Payment for human intervention to install or put equipment in place, distinct from human intervention involved in the transportation of calls between networks, does not constitute Fee for Technical Services (FTS) under section 9(1)(vii) of the Income-tax Act.

Asia Satellite Telecommunication Co. Ltd. v. Dy. CITT
85 ITD 478 · 2003 · ITAT
44
citing judgments

Payments for transponder services do not constitute payment for the use of equipment and therefore do not qualify as royalty income under section 9(1)(vi) of the Income-tax Act for a non-resident. The use of satellite transponder services by broadcasters is not considered the use of equipment.

Judgments citing use of equipment

ADIT (It) 1(2), Mumbai vs. Credit Agricole Corporate and Investment Bank, Mumbai

Accordingly these grounds are dismissed as not pressed

ITA 1839/MUM/2015[2010-11]Status: DisposedITAT Mumbai20 Mar 2025AY 2010-11

Bench: Smt Beena Pillai, Jm & Ms Padmavathy S, Am I.T. (Tp) A. No. 1479/Mum/2015 (Assessment Year: 2010-11) Credit Agricole Corporate & Dcit (International Taxation)- Investment Bank (Formerly 2(1)(1), 1St Floor, Room No. 136, Known As ‘Calyon Bank’) Vs. 11Th Floor, Hoechst House, Scindia House, N.M. Marg, Nariman Point, Mumbai-400021. Ballard Pier, Mumbai-400038. Pan: Aaccc3872B Appellant) : Respondent)

Section 143(3)

note that Article-13(1) of the DTAA between India and France reads that "Royalties, fees for technical services and payments for the use of equipment arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State". Further

Credit Agricole Corporate and Investment Bank, Mumbai vs. DCIT (It) 2(1)(1), Mumbai

Accordingly these grounds are dismissed as not pressed

ITA 1479/MUM/2015[2010-11]Status: DisposedITAT Mumbai20 Mar 2025AY 2010-11

Bench: Smt Beena Pillai, Jm & Ms Padmavathy S, Am I.T. (Tp) A. No. 1479/Mum/2015 (Assessment Year: 2010-11) Credit Agricole Corporate & Investment Bank (Formerly Known As ‘Calyon Bank’) 11Th Floor, Hoechst House, Nariman Point, Mumbai-400021. Pan: Aaccc3872B Vs. Dcit (International Taxation)- 2(1)(1), 1St Floor, Room No. 136, Scindia House, N.M. Marg, Ballard Pier, Mumbai-400038. Appellant) Respondent)

Section 143(3)

note that Article-13(1) of the DTAA between India and France reads that "Royalties, fees for technical services and payments for the use of equipment arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State". Further

Loparex Holding Bv, Mumbai vs. ACIT, International Taxation, Circle-3(1)(2), Mumbai

In the result the appeal filed by the assessee stands dismissed

ITA 4813/MUM/2023[2021-22]Status: DisposedITAT Mumbai28 Feb 2025AY 2021-22

Bench: Smt. Beena Pillai () & Shri Renu Jauhri ()

Section 234DSection 270ASection 274

member of the OECD India should limit its taxation at source on dividends, interests, royalties, fees for technical services or payments for the use of equipment to a rate lower or a scope more restricted than the rate or scope provided for in this Convention on the said items ... member of the OECD India should limit its taxation at source on dividends, interests, royalties, fees for technical services or payments for the use of equipment to a rate lower or a scope more restricted than the rate or scope provided for in this Convention on the said items

Criteo Singapore Pte. Ltd., Singapore vs. ACIT Ciricle 1(2)(1) International Taxation, New Delhi

In the result, the appeal of the assessee in ITA No

ITA 2122/DEL/2023[2020-21]Status: DisposedITAT Delhi18 Dec 2024AY 2020-21

Bench: Shri Saktijit Dey & Shri Naveen Chandra

For Appellant: Shri S.K. Aggarwal, CAFor Respondent: Shri Vijay B. Vasanta, CIT- DR
Section 139(1)Section 143(3)Section 244ASection 270ASection 9(1)(vi)Section 9(1)(vii)

Delhi AAR in the case of Dell International 305 ITR 037 dealing with a separate transaction in relation to use and right to use of equipment. 18. The ld AR placed heavy reliance on the decision of the Hon'ble Delhi High court in the case of Asia Satellite Telecommunications ... wherein the Hon’ble Court examined a similar issue of ‘use or right to use’ of equipment in the context of Telecommunication Services provided through the Transponder of a satellite. 19. Further, the ld. counsel for the assessee contended that the aforementioned principles of control and possession while interpreting

Tata Teleservices Ltd., New Delhi vs. ACIT, Circle-76(1), New Delhi

In the result the appeal of the assessee is allowed

ITA 1057/DEL/2018[2012-13]Status: DisposedITAT Delhi11 Dec 2024AY 2012-13

Bench: Sh. M. Balaganesh & Sh. Sudhir Kumarassessment Year: 2012-13 M/S Tata Vs. Assistant Commissioner Teleserviceslimited New Of Income Tax Circle 76(1) Delhi Districtcentral Laxmi Taxation Department Nagar New Delhi 110092 M/S Tata Teleservices Limited 2A, Old Ishwar Nahar Mathura Road New Delhi 110065 (Appellant) (Respondent)

Section 191Section 194Section 194HSection 201Section 201(1)

case was involved in providing interconnect usage charges; iv. That the Ld. CIT(A) completely failed to appreciate that there was no use of equipment by the Appellant of the other operator and therefore, the payment made by the Appellant to the other operators would not be regarded

Deputy Commissioner of Income-Tax, Corporate Circle 1(1), Chennai vs. Doosan Power Systems India Private Limited, Chennai

In the result, appeal filed by the revenue is dismissed

ITA 1149/CHNY/2023[2015-16]Status: DisposedITAT Chennai23 Oct 2024AY 2015-16

Bench: Shri Mahavir Singh, Hon’Ble & Shri S. R. Raghunatha, Hon’Bleआयकरअपीलसं./Ita No.: 1149/Chny/2023 िनधा"रणवष" / Assessment Year: 2015-16 Deputy Commissioner Of Doosan Power Systems India Income Tax, V. Private Limited, Corporate Circle -1(1), 18/2A, Sennerkuppam, Bye Chennai. Pass Road, Poonamallee, Chennai – 600 056. [Pan:Aabcb-5946-J] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ"क"ओरसे/Appellant By : Shri. Clement Ramesh Kumar, Cit ""यथ"क"ओरसे/Respondent By : Shri. Sandeep Bagmar, Ca सुनवाई क" तारीख/Date Of Hearing : 20.08.2024 घोषणा क" तारीख/Date Of Pronouncement : 23.10.2024 आदेश /O R D E R

For Appellant: Shri. Clement Ramesh Kumar, CITFor Respondent: Shri. Sandeep Bagmar, CA
Section 144BSection 147Section 195Section 40Section 9(1)(vi)

held that the payment of freight charges to HSC as above qualifies as Royalty for the use of equipment (ship) under the provisions of section 9(1)(vi) of the Act/Article 12 of the :-4-: ITA. No: 1149/Chny/2023 India-Korea tax-treaty. Thus, the freight charges of Rs.61 ... During the reassessment proceedings the AO held that the payment of freight charges to HSC as above qualifies as Royalty for the use of equipment (ship) under the provisions of section 9(1)(vi) of the Act/Article 12 of the India-Korea tax- treaty. Thus, the freight charges of Rs.61

ITO TDS Ward -1(2)(2) International Taxation, New Delhi vs. Bharti Airtel Limited, New Delhi

In the result, appeal is dismissed

ITA 8044/DEL/2019[2014-15]Status: DisposedITAT Delhi09 Oct 2024AY 2014-15

Bench: SHRI SAKTIJIT DEY (Vice President), SHRI NAVEEN CHANDRA (Accountant Member)

Section 201Section 201(1)Section 9(1)(vi)

Assessing Officer held that the payments made are in the nature of royalty as they are basically for the use or right to use of equipment or process. In this context, he relied upon certain judicial precedents. Thus, ultimately, he held that the remittances made by the assessee, being

Bharti Airtel Ltd., New Delhi vs. ACIT, Circle-4(2), New Delhi

In the result, appeal is dismissed

ITA 7891/DEL/2019[2014-15]Status: DisposedITAT Delhi09 Oct 2024AY 2014-15

Bench: SHRI SAKTIJIT DEY (Vice President), SHRI NAVEEN CHANDRA (Accountant Member)

Section 201Section 201(1)Section 9(1)(vi)

Assessing Officer held that the payments made are in the nature of royalty as they are basically for the use or right to use of equipment or process. In this context, he relied upon certain judicial precedents. Thus, ultimately, he held that the remittances made by the assessee, being

M/S. Idea Cellular Limited, Indore vs. The DCIT (TDS), Indore

Appeals are allowed

ITA 111/IND/2015[2013-14 (Quarter 4)]Status: DisposedITAT Indore01 Aug 2024

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 194Section 194HSection 194JSection 201(1)

amount to 'royalty'. 3.2 Without prejudice to the above, it is submitted that there is No "use of process" or any "use of equipment". Hence, the entire assumption of "process royalty"/"equipment royalty" does not arise in the case of the Appellant. 3.3 The provision apparently reads "secret formula ... praesenti but also for the right given to make use of the equipment at future point of time. There may not be actual use of equipment in prasenti but under a contract the right is derived to use the equipment in future. In both the situations, the royalty clause

M/S. Idea Cellular Limited, Indore vs. The DCIT (TDS), Indore

Appeals are allowed

ITA 110/IND/2015[2013-14 (for first three quarter)]Status: DisposedITAT Indore01 Aug 2024

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 194Section 194HSection 194JSection 201(1)

amount to 'royalty'. 3.2 Without prejudice to the above, it is submitted that there is No "use of process" or any "use of equipment". Hence, the entire assumption of "process royalty"/"equipment royalty" does not arise in the case of the Appellant. 3.3 The provision apparently reads "secret formula ... praesenti but also for the right given to make use of the equipment at future point of time. There may not be actual use of equipment in prasenti but under a contract the right is derived to use the equipment in future. In both the situations, the royalty clause

M/S. Idea Cellular Limited, Indore vs. The DCIT (TDS), Indore

Appeals are allowed

ITA 109/IND/2015[2012-13]Status: DisposedITAT Indore01 Aug 2024AY 2012-13

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 194Section 194HSection 194JSection 201(1)

amount to 'royalty'. 3.2 Without prejudice to the above, it is submitted that there is No "use of process" or any "use of equipment". Hence, the entire assumption of "process royalty"/"equipment royalty" does not arise in the case of the Appellant. 3.3 The provision apparently reads "secret formula ... praesenti but also for the right given to make use of the equipment at future point of time. There may not be actual use of equipment in prasenti but under a contract the right is derived to use the equipment in future. In both the situations, the royalty clause

R1 Rcm Holdco Inc. (Formerly Known As R1 Rcm Inc.), Usa vs. DCIT, Int. Taxation, Gurgaon

In the result, the appeal filed by the assessee is allowed

ITA 2044/DEL/2023[2020-21]Status: DisposedITAT Delhi26 Jul 2024AY 2020-21

Bench: SHRI G.S. PANNU, HON'BLE (Vice President), SHRI ANUBHAV SHARMA (Judicial Member)

For Appellant: Shri S.K. Aggarwal, CAFor Respondent: Shri Vijay B. Vasanta, CIT-DR
Section 143(3)Section 9(1)(vi)Section 92C

Infrastructure, the same cannot be characterized as royalty under the Act or under the tax treaty because (a) There is no use/right to use of equipment or process provided to R1 India & (b) Possession and control of such IT infrastructure is not with R1 India and relied upon case laws ... use of such third-party software by Rl India by directly accessing/ downloading such software from the website of Microsoft/ third party constitutes use of equipment / IT infrastructure of the Appellant by Rl India and is hence, taxable as equipment royalty. e. The reliance placed

Bnp Paribas, Mumbai vs. ACIT (It), Circle 1(3)(1), Mumbai

In the result, the appeal of the assessee is partly allowed

ITA 4449/MUM/2023[AY 2021-22]Status: DisposedITAT Mumbai21 Jun 2024

Bench: Shri Narendra Kumar Billaiya & Shri Anikesh Banerjee

For Appellant: Shri Farooq IraniFor Respondent: Shri Satyapal Kumar, CIT-DR
Section 139Section 142Section 143Section 143(2)Section 143(3)Section 144C(13)Section 148Section 2

assessee amounting to Rs. 132,335,594/- applying the provisions of Article 13(Royalties, fees for technical services and payments for use of equipment) of the India-France Tax Treaty. This issue is also covered by the order of the Tribunal in assessee's own case

Kddi Corporation, Japan vs. Deputy Commissioner of Income Tax (International Taxation), Circle 2(1), Bangalore

ITA 811/BANG/2024[2017-18]Status: DisposedITAT Bangalore05 Jun 2024AY 2017-18

Bench: Shri Chandra Poojari & Shri Keshav Dubeyit(It)A No.811/Bang/2024 & Sp No.22/Bang/2024

Section 143(3)Section 144C(13)Section 147Section 201Section 9Section 9(1)(vi)

praesenti but also for the right given to make use of the equipment at future point of time. There may not be actual use of equipment in prasenti but under a contract the right is derived to use the equipment in future. In both the situations, the royalty clause ... Court, that mere custody or possession of equipment without effective control can only result in use of the equipment whereas a right to use the equipment implies control over the equipment. We do not think that such distinction has any legal basis. In the case of Rashtriya Ispat Nigam

ACIT Circle 25(1), New Delhi vs. Verizon Communications India Pvt Ltd., New Delhi

The appeal of the Revenue is dismissed

ITA 360/DEL/2023[2017-18]Status: DisposedITAT Delhi31 May 2024AY 2017-18

Bench: SHRI G.S. PANNU, HON'BLE (Vice President), SHRI ANUBHAV SHARMA (Judicial Member)

For Appellant: Shri S.K. Aggarwal, CAFor Respondent: Shri Vizay B. Vasanta, CIT-DR
Section 143(3)Section 194Section 195Section 40Section 9Section 9(1)(vi)

assessee company stated before the AO that these payments are not in the nature of royalty as there is no use/right of use of equipment and/or process granted to it and the retrospective amendment made in the definition of ‘Royalty’ under the Act vide Finance

Bnp Paribas, Mumbai vs. Assistant Commissioner of Income Tax(Internationa Taxation)-Circle 1(3)(1), Mumbai

In the result, the appeal of the assessee is partly allowed

ITA 3416/MUM/2023[2020-21]Status: DisposedITAT Mumbai13 May 2024AY 2020-21

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopal

For Respondent: Ajay Kumar Sharma
Section 143(2)Section 143(3)Section 144CSection 144C(5)Section 270A

assessee amounting to Rs. 132,335,594/- applying the provisions of Article 13(Royalties, fees for technical services and payments for use of equipment) of the India-France Tax Treaty. This issue is also covered by the order of the Tribunal in assessee’s own case

Home Credit International A.S., Czech Republic vs. Assistant. Deputy Commissioner of Income Tax, International Taxation, Gurgaon

In the result, appeal is partly allowed, as indicated above

ITA 2068/DEL/2023[2020-2021]Status: DisposedITAT Delhi10 May 2024AY 2020-2021

Bench: Shri Saktijit Dey, Vice- & Shri Pradip Kumar Kediaassessment Year: 2020-21

Section 143(3)Section 144C(13)Section 9(1)(vi)

commercial equipment. He has further observed that the agreement between the assessee and Indian group entities provide for use or right to use of equipment. Thus, in these premises, he treated the receipts as royalty. 9. However, before learned DRP, to counter the aforesaid finding of the Assessing Officer ... understood in the context of a tangible equipment only. And in case of a tangible product, the clause 'use or right to use' such equipment is to be understood as actual use whereby the tangible equipment is placed under the control and possession of the user. 14. Owing

Jcdecaux S.A., New Delhi vs. ACIT, Circle-2(1)(2), International Taxation, New Delhi

In the result, the appeal of the assessee is party allowed

ITA 2473/DEL/2022[2018-19]Status: DisposedITAT Delhi03 May 2024AY 2018-19

Bench: Dr. B. R. R. Kumarms. Astha Chandra

For Appellant: Sh. K. M. Gupta, Adv. &For Respondent: Sh. Om Parkash, Sr. DR
Section 143(3)Section 234BSection 270ASection 9(1)(vii)

India-France DTAA, which is reproduced herein below: "Article 13 - Royalties and fees for technical services and payments for the use of equipment 25 JCDECAUX S.A. 2. However, such royalties, fees and payments may also be taxed in the Contracting State, in which they arise and according to the laws

Globe Teleservices Limited, Hong Kong vs. The Deputy Commissioner of Income-Tax (International Taxation), Circle-2(1), Bangalore

ITA 349/BANG/2024[2017-18]Status: DisposedITAT Bangalore24 Apr 2024AY 2017-18

Bench: Smt Beena Pillai & Shri Laxmi Prasad Sahuit(It)A Nos. 348 & 349/Bang/2024

For Appellant: Shri Rohan Sogani, CA &For Respondent: Shri A. Sreenivasa Rao, CIT-DR
Section 147Section 191Section 201Section 9(1)(vi)

praesenti but also for the right given to make use of the equipment at future point of time. There may not be actual use of equipment in prasenti but under a contract the right is derived to use the equipment in future. In both the situations, the royalty clause ... Court, that mere custody or possession of equipment without effective control can only result in use of the equipment whereas a right to use the equipment implies control over the equipment. We do not think that such distinction has any legal basis. In the case of Rashtriya Ispat Nigam

Globe Teleservices Limited, Hong Kong vs. The Deputy Commissioner of Income-Tax (International Taxation), Circle-2(1), Bangalore

ITA 348/BANG/2024[2014-15]Status: DisposedITAT Bangalore24 Apr 2024AY 2014-15

Bench: Smt Beena Pillai & Shri Laxmi Prasad Sahuit(It)A Nos. 348 & 349/Bang/2024

For Appellant: Shri Rohan Sogani, CA &For Respondent: Shri A. Sreenivasa Rao, CIT-DR
Section 147Section 191Section 201Section 9(1)(vi)

praesenti but also for the right given to make use of the equipment at future point of time. There may not be actual use of equipment in prasenti but under a contract the right is derived to use the equipment in future. In both the situations, the royalty clause ... Court, that mere custody or possession of equipment without effective control can only result in use of the equipment whereas a right to use the equipment implies control over the equipment. We do not think that such distinction has any legal basis. In the case of Rashtriya Ispat Nigam