Case Law Details
Atos Origin IT Services Singapore Pte Ltd. Vs. Asst. Director of Income Tax (ITAT Mumbai)- Assessee who was tax resident of Singapore had entered into a hubbing agreement for providing data processing support to Standard Chartered Bank (SCB) a non resident company engaged in the business of banking in India. Assessee receive amount from SCB India for use of disc space along with embedded software in the hardware of the assessee at its data center in Singapore of the infrastructure of the assessee, whether CIT(A) was justified in treating the income earned by the assessee was of the nature of royalty within the meaning of Article 12(3) of DTAA and also within the meaning of clause (iii) of Explanation (2) below Sec.9(vi) of the Income tax Act. Held, No
As per definition in Article 12(3)(b), royalty meant payment of any kind received as a consideration for use or right to use any industrial, commercial or scientific equipment, other than payments received from activity described in para-4(b) of Article 8. The expressions ‘use’ and ‘right to use’ followed by the word “equipment” indicated that there must be some positive use or employment of equipment for the desired purpose. The customer must come face to face with the equipment, operate it or control it or control its functions in some manner. If an advantage was taken from sophisticated equipment installed and provided by another person it could not be said that the recipient/customer used the equipment as such. Even where an earmarked circuit was provided for offering the facility, unless there was material to establish that the circuit/equipment could be accessed and put to use by means of some positive acts, it did not fall within the category of royalty.
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH ‘L’: MUMBAI
ITA No. 2428/Mum/2009 Assessment Year :2005- 06
Atos Origin IT Services Singapore Pte Ltd. Vs. Asstt. Director of Income tax
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