Receipts from Bandwidth Charges Are Not Taxable as Royalty: ITAT Delhi:

Receipts from Bandwidth Charges Are Not Taxable as Royalty: ITAT Delhi The Income Tax Appellate Tribunal (ITAT), Delhi, has recently ruled in favour of an appellant company, holding that the earnings from bandwidth services are not taxable royalty income. The main issue was whether the payments received by Telstra Singapore Pte Ltd (appellant), for providing telecommunications connectivity services to Indian Customers, are taxable as royalty under Section 9(1)(vi) of the Income Tax Act and Article 12(3) of the India-Singapore Tax Treaty.

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The company received Rs 8,90,26,680 from Indian Customers, which was treated as taxable royalty by the Assessing Officer in the assessment order dated December 18, 2024. The assessee company argued that the issue was already covered by ITAT in the assessee's own case for the previous assessment year from 2011-12 onwards, and the Income Tax Department's appeals were rejected by the Delhi High Court. The Tribunal agreed with the assessee's contentions and held that the AO had ignored the fact that this issue had already been ruled in favour of the assessee in the past. It found that both the ITAT and Delhi High Court had ruled that bandwidth services are not taxable as royalty.

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Based on this, the Tribunal held that the receipts from Bandwidth charges are not taxable as royalty income either under section 9(1)(vi) of the Income Tax Act or Article 12(3) of India-Singapore DTAA.