Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: cpt :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: ACCOUNTING STANDARD :: due date for vat payment :: VAT RATES :: articles on VAT and GST in India
 
 
« General »
 Income Tax notification: Aadhaar-PAN linking must from July 1
 Filing ITR just got easier for salaried class with CBDT's one-page form
 Why consumers should welcome GST
 Retailers need to file single GST return every month
 Aadhaar is must for income tax returns if you have one; Here's how you can file it online
 Will it be a tax haven above the law?
 Your mutual fund investment tax efficient? Here are 3 steps to ensure utmost efficiency for your portfolio
 Finally a goods and services tax. But what lies ahead?
 Tax May Rise On Outbound M&As, Indian Mncs’ Investments
 Filing income tax return? Do remember to claim benefits on your reimbursements
 Banks will have a hard slog ahead to get GST-ready

Data service payments not taxable: AAR
July, 25th 2008

The Authority for Advance Ruling (AAR), a quasi judicial body dealing in tax issues related to foreign companies, has held that monthly payments made by Dell India to an overseas entity for voice and data services provided through telecom networks, is not royalty and hence not taxable. Since the Income Tax Act provides for taxing royalty payments, classification of an income under the head royalty has serious revenue implication for corporates.

In this case, the I-T department made a claim that Dell Indias payment to BT America was royalty. The payments made by Dell India to BT America has been in accordance with an agreement entered into between BT America and Dell USA. According to the I-T department, since the services rendered were incidental to the agreement between Dell USA and BT America that involves the right to use its point-to-point circuit, the consideration has a character of royalty. Dell India contended that the agreement between its US parent and BT America does not involve right to use any equipment. Also no equipment was installed following the agreement. Therefore, two major features that characterise royalty payment are absent, Dell India argued.

The AAR accepted the views of the company on this matter. It said the consideration was in relation to the rendition of services. And the element of use of equipment or grant of right for such use are absent in these transactions.

BT America used its own equipment and network to render the services under question. Citing the decisions of Andhra Pradesh High Court and Supreme Court on similar issues, the AAR held that right to use equipment implies control of equipment, whereas mere possession or custody of equipment without control can only result into use of the equipment. In the present case there is no control of equipment and hence it cannot be construed.

The AAR held that grant of right implies possession and control of the equipment and the arrangement between the parties involved in this case does not point to control.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
SEO Company Search Engine Optimization Company US SEO Local SEO Company Website SEO Company Alabama SEO Company Alaska SEO Company Arizona SEO Company Arkansas SEO Company California SEO Company Colorado SEO Company Connecticut SEO Company Delawa

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions