Reliance Jio Infocomm USA Inc. Vs DCIT (ITAT Mumbai)
The appeal was filed against the final assessment order dated 30.06.2023 passed under sections 143(3) read with 144C(13) for Assessment Year 2020–21, pursuant to directions issued by the Dispute Resolution Panel (DRP) under section 144C(5).
Facts of the Case
The assessee, a wholly owned subsidiary of an Indian telecom company, is engaged in telecom-related services including technical support through its Advanced Technology Operation Centre (ATOC) in the USA, international long-distance services (including voice termination), and marketing and sales support services.
For AY 2020–21, the assessee declared income of ₹21.05 crore. During the year, it received payments from India under three categories:
- Technical services (offered to tax as FTS),
- Voice termination services (treated as business income, not taxed in India due to absence of PE),
- Marketing and sales support services (not treated as FTS under DTAA).
The dispute centered on whether receipts from voice termination services (₹23.20 crore) constituted “royalty” taxable in India.
Assessee’s Contentions
The assessee argued:
- Voice termination services involve standard telecom services without transfer of any rights, secret process, or intellectual property.
- The services merely facilitate call connectivity using its own infrastructure.
- There is no transfer of equipment, process, or rights to the Indian entity.
- The receipts are business profits and not taxable in India due to absence of Permanent Establishment (PE) under Article 5 read with Article 7 of the India–USA DTAA.
- Retrospective amendments to domestic law cannot override DTAA provisions.
Assessing Officer’s Findings
