GSMA Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi Holds that Administration Fee and Subscription Fee Received by GSMA Ltd. Are Not Taxable as Royalty under Section 9(1)(vi) and Article 12(3) of the India–U.S. DTAA
Executive Summary:
The Assessee, GSMA Ltd., a U.S. tax resident and the sole global administrator for IMEI/TAC allocation, received Administration Fee from its Indian Reporting Body (MSAI) and Subscription Fee from Indian customers towards access to market intelligence data. The Assessing Officer characterized both the Administration Fee and the Subscription Fee as “Royalty” within the meaning of Section 9(1)(vi) of the Act and Article 12(3) of the India–U.S. DTAA, and the DRP upheld this view. The Tribunal, however, following its own decisions in the Assessee’s earlier years and applying the ratio of binding judicial precedents, held that neither receipt involved any transfer of rights in respect of copyright or any commercial exploitation thereof. Accordingly, the Tribunal deleted both additions and held that the receipts did not constitute “Royalty”.
Factual Matrix of the Case:
1. The Assessee, GSMA Ltd., is a company incorporated in USA and tax resident of USA. It’s having no physical presence in India.
2. It has been appointed by the Global Mobile Industry as sole Global Decimal Administrator. It’s responsible is to coordinate the allocation and administration of International Mobile Equipments Identifiers (IMEI)/ Type Allocation Codes (TAC) numbers unique to identify mobile devices word-wide as per 3GPP standards.
