DCIT Vs Orange (Karnataka High Court)
The Karnataka High Court dismissed the Revenue’s appeal concerning the taxability of interconnect service charges, specifically whether such payments qualify as “royalty.” The Court noted that the issue had already been examined by a Co-ordinate Bench in an earlier judgment dated 14.07.2023, which held that payments made for interconnect services and transfer of telecom capacity do not constitute royalty. It was also observed that, in subsequent assessment years, the Income Tax Appellate Tribunal had held that tax was not deductible on such payments made to non-resident telecom operators, and this position was not disputed by the Revenue. The learned Single Judge had relied on the same precedent, and the High Court found no infirmity in that approach. Following the earlier binding decision, the Court held that the question of law must be answered against the Revenue. Accordingly, the appeal was dismissed, reaffirming that interconnect usage charges are not taxable as royalty.
Read SC Judgment in this case: Interconnect Service Charges Not Royalty to Non-Resident Telecom Operators: SC
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Heard Sri. E.I.Sanmathi, learned counsel for the appellants and learned counsel Sri. Harprith Singh Ajmani for respondents.
2. Perused the appeal papers.
