Topic
The tribunal quashed a Rs 89.13 lakh service tax demand, holding that royalty payable under a mining lease granted before 1 April 2016 falls outside the service tax net. It also ruled that the extended limitation period cannot be invoked, benefiting entities with pre-2016 mining assignments.
The ITAT held that Arcadis N.V.’s headquarters support fees and IT recharge amounts fail the ‘make-available’ test in Article 12 of the India-Netherlands DTAA, so they are not taxable as royalty. The ruling narrows the treaty’s royalty provision to genuine technical knowledge transfers, affecting multinationals receiving similar support fees from Indian subsidiaries.
The ITAT Delhi has ruled that fees paid for credit ratings and surveillance services do not qualify as royalty or fees for technical services under the India-Singapore DTAA unless there is a transfer of technical know-how to the client. This sets a crucial precedent for multinational rating agencies and foreign service providers, clarifying the taxability of intangible services in cross-border transactions.
The ITAT Delhi has ruled that payments for satellite bandwidth services do not qualify as royalty under Section 9(1)(vi) of the Income Tax Act, even after the Finance Act 2012’s clarificatory amendments. This affirms that Double Taxation Avoidance Agreements take precedence over domestic tax law changes, protecting foreign service providers from retrospective TDS demands and setting a critical precedent for cross-border digital infrastructure payments.
ITAT Delhi clarifies that payments for live sports broadcasting rights do not qualify as 'royalty' under Section 9(1)(vi) of the Income Tax Act, exempting such transactions from TDS obligations under Section 195. The ruling shields broadcasters from disallowances under Section 40(a)(i) and sets a precedent for distinguishing between live rights and intellectual property royalties.
ITAT Bangalore holds that software licensing fees without transfer of copyright or source code do not constitute 'royalty' or 'fees for technical services' under the Indo-Swiss DTAA, aligning with the Supreme Court's Engineering Analysis ruling. This decision reinforces the distinction between business profits and taxable royalty, impacting multinational software vendors and tax authorities.
CETAT holds royalty not a tax under MMDR Act, excludes forest transit fees, entry tax, terminal tax from transaction value; extended limitation and penalty not applicable without wilful suppression.