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: ACCOUNTING STANDARD :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: form 3cd :: VAT Audit :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: due date for vat payment :: TDS :: list of goods taxed at 4% :: VAT RATES :: Central Excise rule to resale the machines to a new company
 
 
« General »
 Companies should invest in upgradation of tax technology
 Top House tax writer suggests measures to mitigate the impact of the border tax
 Consumer goods distributors, wholesalers to bear the brunt of GST
 GST classification woes to continue
 There will be no tax on farm or agriculture income
 RBI, Income Tax Acts to be amended for electoral bonds, Jaitley says
  Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016
 I-T zeroes in on Mumbai trader in first crackdown after demonetisation
  Tax queries answered by Dilip Lakhani, Senior Chartered Accountant
 Income Tax Department Failed To Unearth Black Money Despite Information
 Govt filing twice as many cases as private cos in Supreme Court

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