DCIT Vs Maxis International SDN BHD (Karnataka High Court)
The Karnataka High Court dismissed the appeal filed by the Deputy Commissioner of Income Tax (DCIT) against Maxis International SDN BHD, concerning whether interconnect service charges paid by the assessee amounted to royalty. The issue was previously addressed by a Co-ordinate Bench of the same court in ITA No.160/2015 and connected appeals. In its judgment dated 14.07.2023, the Bench held that interconnect service charges do not constitute royalty. The judgment noted that payments made to non-resident telecom operators for providing interconnect services and transfer of capacity in foreign countries are not chargeable to tax as royalty. The Revenue had relied on prior ITAT decisions, including Viacom, but the factual position—establishing that similar payments in subsequent years were not taxable as royalty—was not disputed. The Single Judge hearing the present appeal relied on the Co-ordinate Bench decision, finding no infirmity in the earlier order. Consequently, following the precedent set in ITA No.160/2015, the appeal was dismissed, affirming that interconnect service charges are outside the scope of royalty under tax law.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Heard Sri. E.I.Sanmathi, learned counsel for the appellant.
2. Perused the appeal papers.
