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“tax treaty”

Chapter X-A - GAARSection 102(11)Section 102(11)1,494 judgments

The decision most relied on for tax treaty is Union of India v. Azadi Bachao Andolan (263 ITR 706), cited in 691 judgments on BharatTax.

Leading authorities on tax treaty

Union of India v. Azadi Bachao Andolan
263 ITR 706 · 2003 · Supreme Court
691
citing judgments

A citizen is free to carry on business within the law, and mere tax planning without a motive to evade taxes through colorable devices is not frowned upon. The liability to taxation, for the purpose of tax treaty application, is a legal situation, not the fiscal fact of actual payment.

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.

India Vs. Azadi Bachao Andolan 263 ITR 706 (SC); and Vodafone International Holdings B.V v. Union of India
341 ITR 1 · 2012 · Supreme Court
295
citing judgments

Legitimate tax planning is permissible, allowing taxpayers to arrange their affairs to minimize tax liabilities while respecting the "look at test" for transaction genuineness and the separate entity principle in corporate taxation. The source of funds for treaty-beneficial structures does not automatically invalidate the transaction.

DIT v. Infrasoft Ltd.
39 Taxmann.com 88 · 2013 · High Court
269
citing judgments

Payments for the use of copyrighted software, without the transfer of any rights in the underlying copyright itself, do not constitute 'royalty' under the Income-tax Act or tax treaties. Such payments are often treated as business income, taxable only if a permanent establishment exists.

Motorola Inc. v. Dy. CIT
95 ITD 269 · 2005 · High Court
213
citing judgments

Revenue must demonstrate the existence of a Permanent Establishment (PE) of a foreign enterprise in India, including establishing that transactions underlying a Dependent Agent PE were not at arm's length. Income from the sale of goods is not taxable in India if title and risk in the goods pass outside India.

(i) Formula One World Championship Ltd. v. CIT
394 ITR 80 · 2017 · Supreme Court
200
citing judgments

This case provides foundational principles that illuminate the contours of the concept of 'Permanent Establishment' (PE) under tax treaties, especially regarding a 'fixed place' PE.

DIT v. Guy Carpenter & Co Ltd.
346 ITR 504 · 2012 · High Court
171
citing judgments

For fees for technical services to be taxable under a tax treaty's 'make available' clause, a transfer of technology enabling the recipient to independently perform the service in the future is necessary, beyond mere service rendition. The case also clarifies that re-insurance services do not constitute 'imparting' of information taxable as royalty.

Judgments citing tax treaty

Maruti Suzuki India Ltd., New Delhi vs. DCIT, New Delhi

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

ITA 961/DEL/2015[2010-11]Status: DisposedITAT Delhi09 Feb 2023AY 2010-11

Bench: Shri Shamim Yahya & Shri Kul Bharat[Assessment Year : 2010-11] Maruti Suzuki India Ltd., Vs Dcit, Plot No.1, Nelson Mandela Road, Circle-16(1), Vasant Kunj, New Delhi-110070. New Delhi. Pan-Aaacm0829Q Appellant Respondent [Assessment Year : 2010-11] Dcit, Vs Maruti Suzuki India Ltd., Circle-16(1), Plot No.1, Nelson Mandela Road, New Delhi. Vasant Kunj, New Delhi-110070. Pan-Aaacm0829Q Appellant Respondent Appellant By Shri Ajay Vohra, Sr.Adv., Shri Neeraj Jain, Adv. & Ms. Tejasvi Jain & Ms. Somya Jain, Ca Respondent By Shri G.C.Srivastava, Adv., Shri Kalrav Mehrotra, Adv. & Shri Mayank Patawari, Ca Date Of Hearing 11.11.2022 Date Of Pronouncement 09.02.2023

Section 143(3)Section 144CSection 144C(5)Section 43Section 43B

facts and in law in holding that SMC had a Permanent Establishment [“PE”] in India in terms of Article 5 of the India-Japan Tax Treaty "Treaty”] and income arising to SMC from sale of goods to the assessee was attributable to the activities of such alleged

DCIT, New Delhi vs. M/S. Maruti Suzuki India Ltd., New Delhi

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

ITA 1507/DEL/2015[2010-11]Status: DisposedITAT Delhi09 Feb 2023AY 2010-11

Bench: Shri Shamim Yahya & Shri Kul Bharat[Assessment Year : 2010-11] Maruti Suzuki India Ltd., Vs Dcit, Plot No.1, Nelson Mandela Road, Circle-16(1), Vasant Kunj, New Delhi-110070. New Delhi. Pan-Aaacm0829Q Appellant Respondent [Assessment Year : 2010-11] Dcit, Vs Maruti Suzuki India Ltd., Circle-16(1), Plot No.1, Nelson Mandela Road, New Delhi. Vasant Kunj, New Delhi-110070. Pan-Aaacm0829Q Appellant Respondent Appellant By Shri Ajay Vohra, Sr.Adv., Shri Neeraj Jain, Adv. & Ms. Tejasvi Jain & Ms. Somya Jain, Ca Respondent By Shri G.C.Srivastava, Adv., Shri Kalrav Mehrotra, Adv. & Shri Mayank Patawari, Ca Date Of Hearing 11.11.2022 Date Of Pronouncement 09.02.2023

Section 143(3)Section 144CSection 144C(5)Section 43Section 43B

facts and in law in holding that SMC had a Permanent Establishment [“PE”] in India in terms of Article 5 of the India-Japan Tax Treaty "Treaty”] and income arising to SMC from sale of goods to the assessee was attributable to the activities of such alleged

ACIT Circle 25-(1), Delhi vs. Value First Digital Media Pvt. Ltd., Gurgaon Haryana

In the result, ITA No. 3143/Del/2019 [A

ITA 2050/DEL/2021[2014-15]Status: PendingITAT Delhi08 Feb 2023AY 2014-15

Bench: Shri Narender Kumar Choudhry & Dr. B.R.R. Kumar

Section 250Section 40Section 72ASection 9(1)(vi)

from non- residents. Also, the payment for SMS charges is not taxable as Royalty both under the provisions of the Income-tax Act and tax treaty. - Ld. AO has grossly erred in treating payment for procurement of SMS as royalty following retrospective amendment made in Section

ACIT, Circle-26(1), New Delhi vs. Value First Digital Media Pvt. Ltd., New Delhi

In the result, ITA No. 3143/Del/2019 [A

ITA 5127/DEL/2019[2016-17]Status: DisposedITAT Delhi08 Feb 2023AY 2016-17

Bench: Shri Narender Kumar Choudhry & Dr. B.R.R. Kumar

Section 250Section 40Section 72ASection 9(1)(vi)

from non- residents. Also, the payment for SMS charges is not taxable as Royalty both under the provisions of the Income-tax Act and tax treaty. - Ld. AO has grossly erred in treating payment for procurement of SMS as royalty following retrospective amendment made in Section

ACIT, Circle-26(1), New Delhi vs. Value First Digital Media Pvt. Ltd., New Delhi

In the result, ITA No. 3143/Del/2019 [A

ITA 3143/DEL/2019[2012-13]Status: DisposedITAT Delhi08 Feb 2023AY 2012-13

Bench: Shri Narender Kumar Choudhry & Dr. B.R.R. Kumar

Section 250Section 40Section 72ASection 9(1)(vi)

from non- residents. Also, the payment for SMS charges is not taxable as Royalty both under the provisions of the Income-tax Act and tax treaty. - Ld. AO has grossly erred in treating payment for procurement of SMS as royalty following retrospective amendment made in Section

Mufg Bank Ltd. (Earlier Known As the Bank of Tokyo Mitsubishi Ufg Ltd.), Delhi vs. ACIT, Circle-2(2)(1), Int. Taxation, Delhi

In the result, the appeal is partly allowed for statistical

ITA 1246/DEL/2022[2015-16]Status: DisposedITAT Delhi31 Jan 2023AY 2015-16

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2015-16

Section 144C(3)Section 234DSection 244ASection 254Section 271(1)(c)

refund despite holding in the impugned order that interest on income-tax refund is to be taxed @ 10% under Article 11 of India-Japan tax treaty. 1.2 That on the facts and circumstances of the case and in law, the Ld. AO has failed to appreciate that interest on income ... tax refund earned by the Appellant is taxable @ 10% under Article 11 of India-Japan tax treaty. 2. Levy of interest under section 234D of the Act. 2.1 That on the facts and circumstances of the case and in law, the Ld. AO has erred in charging interest under section

Kony Inc., Usa vs. ACIT, Circle- 2(1)(2), Intl. Taxation, New Delhi

In the result, appeal is allowed, as indicated above

ITA 616/DEL/2021[2017-18]Status: DisposedITAT Delhi11 Jan 2023AY 2017-18

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2015-16

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

Assessing Officer held the view that the receipts from annual maintenance charges of the software are in the nature of FIS/FTS, both under the tax treaty as well as under section 9(1)(vii) of the Act. Accordingly, he brought to tax the amount of Rs.1,23,20,383/-. Learned ... annual maintenance charges being not ancillary or subsidiary to any royalty income cannot be brought to tax under Article 12(4)(a) of the tax treaty. Therefore, it has to be seen, whether it can come within the purview of Article 12(4)(b) of the tax treaty. As could

Inter Continental Hotels Group (Asia Pacific) Pte Ltd., Gurgaon vs. DCIT, Circle- 2(1)(1), International Taxation, New Delhi

In the result, the appeal is allowed

ITA 4608/DEL/2019[2013-14]Status: DisposedITAT Delhi11 Jan 2023AY 2013-14

Bench: Shri G.S. Pannu & Shri Saktijit Dey

Section 144C(3)

circumstances of the case and in law, the CIT(A) has erred in observing that interpreting the term ‘make available’ in reference to other tax treaties, is not permissible. 2. That on the facts and in the circumstances of the case and in law, the CIT(A) has erred ... erred in upholding the observations of the Ld. A.O that interpreting the term ‘make available’ in reference to other tax treaty, is not permissible. 2. The above grounds of appeal are independent and without prejudice to one another. 3. That the Appellant reserves its right to add, alter, amend and/or

Inter Continental Hotels Group (Asia Pacific) Pte Ltd., Singapore vs. ACIT, Circle- 2(1)(1), International Taxation, New Delhi

In the result, the appeal is allowed

ITA 2986/DEL/2019[2014-15]Status: DisposedITAT Delhi11 Jan 2023AY 2014-15

Bench: Shri G.S. Pannu & Shri Saktijit Dey

Section 144C(3)

circumstances of the case and in law, the CIT(A) has erred in observing that interpreting the term ‘make available’ in reference to other tax treaties, is not permissible. 2. That on the facts and in the circumstances of the case and in law, the CIT(A) has erred ... erred in upholding the observations of the Ld. A.O that interpreting the term ‘make available’ in reference to other tax treaty, is not permissible. 2. The above grounds of appeal are independent and without prejudice to one another. 3. That the Appellant reserves its right to add, alter, amend and/or

DCIT, Circle- 1(2)(1), International Taxation, New Delhi vs. Convergys Customer Management Group Inc., New Delhi

In the result, assessee’s appeal is partly allowed, whereas,

ITA 7782/DEL/2018[2014-15]Status: DisposedITAT Delhi11 Jan 2023AY 2014-15

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2014-15

Section 9(1)(vi)

Further, learned Commissioner (Appeals) held that receipts from link charges do not qualify as equipment royalty and process royalty under Article 12 of the tax treaty. Being aggrieved, both the assessee and Revenue are before us. 4. Learned counsel appearing for the assessee submitted, issues arising in both the appeals ... hands of the assessee. Therefore, it is held, that the said payments do not constitute Royalty under the provisions of Article 12 of the tax treaty and the ground is allowed in favour of assessee.” 7.2.1 It is also seen that the Ld. CIT (A) has taken due cognizance

Kony Inc., Usa vs. DCIT, Circle- 2(1)(2), Intl. Taxation, New Delhi

In the result, appeal is allowed, as indicated above

ITA 7462/DEL/2018[2015-16]Status: DisposedITAT Delhi11 Jan 2023AY 2015-16

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2015-16

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

Assessing Officer held the view that the receipts from annual maintenance charges of the software are in the nature of FIS/FTS, both under the tax treaty as well as under section 9(1)(vii) of the Act. Accordingly, he brought to tax the amount of Rs.1,23,20,383/-. Learned ... annual maintenance charges being not ancillary or subsidiary to any royalty income cannot be brought to tax under Article 12(4)(a) of the tax treaty. Therefore, it has to be seen, whether it can come within the purview of Article 12(4)(b) of the tax treaty. As could

Travelport International Operations Limited, Berkshire vs. ACIT Circle-3(1)(1) International Taxation-3, New Delhi

In the result, the appeals are partly allowed

ITA 1567/DEL/2022[2019-20]Status: DisposedITAT Delhi10 Jan 2023AY 2019-20

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Dey

Section 143(3)Section 144C(13)

erred in holding the Appellant to be a conduit entity under the stepping-stone conduit framework and thereby denying the eligibility of India-UK tax treaty based on the following allegations: • No corporate structure of the group was provided by the Appellant during the assessment proceedings • Group entities are held ... appreciating that India-UK treaty benefits are available by reasons of residence, domicile, place of incorporation as per Article 4 of India- UK tax treaty which are evidently satisfied in the case of the Appellant. 5.4 Without prejudice to the grounds above, on the facts and circumstances of the case

Travelport International Operations Limited, Berkshire vs. ACIT Circle-3(1)(1), International Taxation-3, New Delhi

In the result, the appeals are partly allowed

ITA 1566/DEL/2022[2018-19]Status: DisposedITAT Delhi10 Jan 2023AY 2018-19

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Dey

Section 143(3)Section 144C(13)

erred in holding the Appellant to be a conduit entity under the stepping-stone conduit framework and thereby denying the eligibility of India-UK tax treaty based on the following allegations: • No corporate structure of the group was provided by the Appellant during the assessment proceedings • Group entities are held ... appreciating that India-UK treaty benefits are available by reasons of residence, domicile, place of incorporation as per Article 4 of India- UK tax treaty which are evidently satisfied in the case of the Appellant. 5.4 Without prejudice to the grounds above, on the facts and circumstances of the case

Yamazen Machinery Tools India P.Ltd, New Delhi vs. ACIT, Circle-27(2), New Delhi

In the result, the appeal is partly allowed

ITA 582/DEL/2020[2015-16]Status: DisposedITAT Delhi10 Jan 2023AY 2015-16

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2015-16

Section 192Section 195Section 40Section 9

treated as FTS under 11 | P a g e AY: 2015-16 section 9(1)(vii) of the Act and Article 12 of the tax treaty. Accordingly, there was no obligation on the part of the assessee to withhold tax at source under section 195 of the Act. Resultantly

ACIT, International Taxation, Circle 3(1)(2), New Delhi vs. Sabre Decision Technologies International Llc, Usa

In the result, the appeal of the revenue is dismissed

ITA 7354/DEL/2017[2013-14]Status: DisposedITAT Delhi03 Jan 2023AY 2013-14

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Tarandeep Singh, AdvFor Respondent: Sh. Gangadhar Panda, CIT-DR
Section 234ASection 44DSection 9Section 9(1)(vi)

providing transponder facility (for telecasting its channel in various countries including India) is not taxable as royalty under India-US Double Taxation Avoidance Agreement ('tax treaty'). • In the case of Atos Information Technology HK Ltd. (ITA Nos. 237- 240/MUM/2016),the Hon'ble ITAT held that the payments received ... There is no concept of rendering any advice. Moreover the above cases have been decided on the basis of interpretations of the Indo-US Tax Treaty not the domestic law. The treaty benefit is not available to the assessee. 4.4.10 Further, the assessee quoted the case of Qualcomm India Private

Sabre Decision Technologies International Llc, New Delhi vs. ACIT, International Taxation, Circle 3(1)(2), New Delhi

In the result, the appeal of the revenue is dismissed

ITA 5782/DEL/2017[2014-15]Status: DisposedITAT Delhi03 Jan 2023AY 2014-15

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Tarandeep Singh, AdvFor Respondent: Sh. Gangadhar Panda, CIT-DR
Section 234ASection 44DSection 9Section 9(1)(vi)

providing transponder facility (for telecasting its channel in various countries including India) is not taxable as royalty under India-US Double Taxation Avoidance Agreement ('tax treaty'). • In the case of Atos Information Technology HK Ltd. (ITA Nos. 237- 240/MUM/2016),the Hon'ble ITAT held that the payments received ... There is no concept of rendering any advice. Moreover the above cases have been decided on the basis of interpretations of the Indo-US Tax Treaty not the domestic law. The treaty benefit is not available to the assessee. 4.4.10 Further, the assessee quoted the case of Qualcomm India Private

Nan Lion Ship Management Llc, Mumbai vs. Assistant Commissioner of Income Tax (International Taxation) -3(3)(1), Mumbai

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

ITA 1857/MUM/2022[2019-20]Status: DisposedITAT Mumbai30 Dec 2022AY 2019-20

Bench: Shri Amit Shukla, Jm & Shri Gagan Goyal, Am आयकरअपीलसं./ I.T.A. No. 1857/Mum/2022 (निर्धारणवर्ा / Assessment Year: 2019-20) Acit (Int. Tax) – 3(3)(1), Nan Lian Ship Management 1630, 16Th Floor, Air India Llc Building Nariman Point, C/O- Chamber 2 & 3, Cosmos बिधम/ Mumbai-400 021 Trade Place, Ground Floor, Vs. Khatu Building, Opp-Bse, Fort, Mumbai-400 001 स्थायीलेखासं./जीआइआरसं./ Pan No. Aagcn0478E (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant By : Shri Nishit Gandhi /Dhanlaxmi Iyer, Ld. Ars प्रत्यथीकीओरसे/Respondent By : Shri Soumendu Kumar Das, Ld. Dr सुनवाईकीतारीख/ : 03.11.2022 Date Of Hearing घोषणाकीतारीख / : 30.12.2022 Date Of Pronouncement आदेश / O R D E R Per Amit Shukla: The Aforesaid Appeal Has Been Filed By The Assessee Against The Final Assessment Order Dated 27.05.2022, Passed By Ld. Ao U/S 2

For Appellant: Shri Nishit GandhiFor Respondent: Shri Soumendu Kumar Das
Section 144C(5)Section 2Section 44BSection 9(1)(vi)

clause (iva) of the ‘Explanation 2’ to Sec. 9(1)(vi) of the Act, AND Article 12(3)(b) of the India-Singapore Tax Treaty. Before proceeding any further, it may be relevant to point out that the fact that the assessee during the year under 24 I.T.A. No. 1857/Mum/2022 ... term ‘royalty’ as contemplated in ‘Explanation 2’ to Sec. 9(1)(vi) of the Act, AND Article 12(3)(b) of the India-Singapore tax treaty. The term ‘royalty’ as defined in the ‘Explanation 2’ of Sec. 9(1)(vi) of the Act, reads as under: "Explanation

Pdr Solutions Fzc, Mumbai vs. Dy.Comm of Income Tax - Circle (Intl Tax) 3(3) (2), Mumbai

ITA 1856/MUM/2022[2018-19]Status: DisposedITAT Mumbai30 Dec 2022AY 2018-19

Bench: Shri G.S. Pannu & Shri Sandeep Singh Karhail

For Appellant: Shri Porus Kaka a/wFor Respondent: Shri Amit Kumar Soni
Section 143(3)Section 144C(13)Section 144C(5)Section 9Section 9(1)(vi)

Registration services is taxable as 'Royalty' under Section 9(1)(vi) of the Income Tax Act, 1961 (Act') and under the India- UAE treaty (tax treaty"). ). The AO based on his conclusion contended that the Appellant is the owner of the domain name and is imparting the right ... hosting services is taxable as 'Royalty under Section 9(1Xvi) of the Income Tax Act, 1961 (Act') and under the India- UAE treaty (tax treaty') in the absence of any physical access or control or possession or independent right being granted by the appellant to the payer. The Assessing Officer

Pdr Solutions Fzc, Mumbai vs. Dy.Comm of Income Tax - Circle (Intl Tax) 3(3) (2), Mumbai

ITA 1855/MUM/2022[2017-18]Status: DisposedITAT Mumbai30 Dec 2022AY 2017-18

Bench: Shri G.S. Pannu & Shri Sandeep Singh Karhail

For Appellant: Shri Porus Kaka a/wFor Respondent: Shri Amit Kumar Soni
Section 143(3)Section 144C(13)Section 144C(5)Section 9Section 9(1)(vi)

Registration services is taxable as 'Royalty' under Section 9(1)(vi) of the Income Tax Act, 1961 (Act') and under the India- UAE treaty (tax treaty"). ). The AO based on his conclusion contended that the Appellant is the owner of the domain name and is imparting the right ... hosting services is taxable as 'Royalty under Section 9(1Xvi) of the Income Tax Act, 1961 (Act') and under the India- UAE treaty (tax treaty') in the absence of any physical access or control or possession or independent right being granted by the appellant to the payer. The Assessing Officer

Edenred Pte Ltd, Mumbai vs. Dy. Comm of Income Tax International Taxation-2(2), Mumbai

In the result, the appeal by the assessee is allowed

ITA 1562/MUM/2022[2019-20]Status: DisposedITAT Mumbai29 Dec 2022AY 2019-20

Bench: Shri G.S. Pannu & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Amit Kumar Soni
Section 143(3)Section 144C(5)Section 9(1)(vi)

India-Singapore DTAA. In M/s Reliance Jio Infocomm Ltd. (supra) for AY 2016-17, the Tribunal observes that though the India-Singapore Tax Treaty is amended by Notification No. SO 935(E) dated 23.03.2017, however, the definition of 'royalty' therein has not been tinkered with and remains as such ... fees received towards IDC services, the Tribunal has consistently expressed the view that the services cannot be treated as royalty under the India-Singapore Tax treaty. In aforesaid view of the matter, we hold that member login fee is not in the nature of royalty under the treaty provision. Accordingly