Payments to overseas telecommunication service providers towards provision of International Private Leased Circuit/ dedicated bandwidth to be taxable as Royalty

Recently, the Chennai Bench of the Income-tax Appellate Tribunal (Tribunal), in the case of Verizon Communications Singapore Pte. Ltd (Tax-payer) held that the consideration for provision of International Private Leased Circuit (IPLC) / dedicated bandwidth qualify as Royalty under the provisions of Income-tax Act, 1961 (Act) read with the provisions of relevant Double Taxation Avoidance Agreement (DTAA). The Tribunal held that such consideration would be regarded as towards use of process or equipment.  IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH ‘C’ : CHENNAI [BEFORE SHRI HARI OM...