Case Law Details
GSMA Limited Vs DCIT (ITAT Delhi)
Introduction: The recent ruling by the Income Tax Appellate Tribunal (ITAT) Delhi in the case of GSMA Limited vs DCIT has significant implications on the taxability of administrative fees received by the non-resident corporation. The dispute revolves around whether the fees should be treated as royalty under Section 9(1)(vi) of the Income Tax Act or Article 12(3) of the India-USA Double Taxation Avoidance Agreement (DTAA).
Detailed Analysis: GSMA Limited, a non-profit entity incorporated in the USA, serves as the global decimal administrator, providing International Mobile Equipment Identification (IMEI) numbers for mobile devices globally. The administrative fees in question relate to access to the IMEI database, maintained by GSMA outside India. The primary purpose is to prevent mobile device misuse, including theft, by blacklisting specific IMEI numbers.
The Assessing Officer argued that the administrative fees could be considered royalty, citing Section 9(1)(vi) of the Income Tax Act and Article 12(3) of the India-USA DTAA. The disagreement centered around whether GSMA’s services involved the use of patented technology, trademarks, or imparting information concerning technical, industrial, commercial, or scientific experience.
GSMA Limited contended that it did not provide any technology for IMEI implantation, emphasizing that device manufacturers held this responsibility. The fees received were characterized as revenue-sharing with A.B. Mobile Standards Alliance Pvt. Ltd. (MSAI), the Indian entity facilitating access to the IMEI database.
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