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) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« General »
 Composition Dealers need not furnish data in serial number 4A of Table 4 of FORM GSTR-4
 I-T Dept may probe tax evasion through F&O trades
 IL&FS crisis: ICAI seeks explanation from audit firms
 Arun Jaitley pushes for more tax filing in FY19
 Are you filing Income Tax Return (ITR)? This is where you are trapped! Know what is Form 16 , Form 16A, Form 26AS, TDS statement
 Officials handling GST can assess all No centre-state wall
 How is long-term capital gain from Nabard bonds taxed?
 Himachal Pradesh government notifies TDS and TCS provisions
 Tax law panel may look to drop dividend distribution tax (DDT)
 Lifestyle to refund profiteered amount
 How to club tax benefits and retirement planning to ensure peace of mind

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 2018 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