Telstra Singapore Pte Ltd. Vs DCIT (ITAT Delhi)
Bandwidth Is Not Royalty—Again & Again: Telstra Singapore Wins Yet Another Round at ITAT Delhi
Assessee, a Singapore tax resident, received ₹8.90 crore from Indian customers for providing international telecom connectivity services such as IPLC & MPLS. AO, following earlier draft orders, treated bandwidth receipts as royalty u/s 9(1)(vi) & Article 12(3) of India–Singapore DTAA, alleging use of equipment, process & imparting of information, and passed final order u/s 143(3) r.w.s. 144C. Penalty proceedings u/s 270A were also initiated.
ITAT Delhi allowed Assessee’s appeal in full. Tribunal noted that the issue is no longer res integra and is squarely covered in Assessee’s own case from AY 2011-12 onwards, where it has been consistently held that bandwidth / connectivity charges are not royalty. Tribunal recorded that not only multiple ITAT orders from AYs 2011-12 to 2021-22, but also Hon’ble Delhi High Court vide judgment dated 24.07.2024 (467 ITR 302) has dismissed Revenue’s appeals and affirmed that such receipts are business income, not royalty.
Revenue’s attempt to rely on Supreme Court decision in State of Kerala vs Asianet Satellite Communications (2025) was rejected. Tribunal held that Asianet dealt with entertainment tax & constitutional entries, not income-tax royalty provisions, and had no application to cross-border telecom bandwidth services. Merely because signals pass through sophisticated infrastructure, payer does not get possession, control or right to use equipment or process.
Following binding precedents in Assessee’s own case, ITAT held that bandwidth charges cannot be taxed as royalty either under the Act or DTAA. AO was directed to delete entire addition of ₹8.90 crore. Penalty ground became purely consequentia
FULL TEXT OF THE ORDER OF ITAT DELHI
