Case Law Details
HCG Global Communications Ltd. Vs DCIT (ITAT Bangalore)
In the case of HCG Global Communications Ltd. Vs DCIT before the ITAT Bangalore, it was held that interconnect usage charges received by a foreign company from an Indian telecom operator are not taxable as “royalty” under the Income Tax Act. This decision was based on the judgment of the jurisdictional High Court and supported by several tribunal rulings.
The ITAT Bangalore addressed an appeal filed by HCG Global Communications Ltd. against the Final Assessment Order dated 24.11.2020, under section 147 r.w.s. 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961. The appeal contested the taxability of interconnect usage charges received from Vodafone Idea Ltd., amounting to Rs. 1,83,63,303/-, as “royalty” under section 9(1)(vi) of the Act.
Facts of the Case: HCG Global Communications Ltd., a Hong Kong-based telecom operator, had received charges from Vodafone Idea Ltd. for providing telecom interconnect facilities during the Financial Year relevant to Assessment Year 2011-12. The Assessing Officer (AO) sought to tax these charges as “royalty” based on proceedings under sections 201 and 201A of the Act against Vodafone Idea Ltd.
Proceedings and Arguments: The AO’s decision was upheld by the Dispute Resolution Panel (DRP), relying on previous tribunal rulings favoring the Revenue. However, during the appeal before the ITAT, the Assessee cited the judgment of the jurisdictional High Court in Vodafone Idea Ltd. Vs. DDIT, wherein it was held that interconnect charges are not taxable as “royalty” under the Act.
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