In a relief to Urban Ladder Home Décor Solutions, the Bangalore ITAT ruled that Payments made for online advertising and marketing to non-resident payees such as Facebook, Amazon Web Services (AWS) for advertising, marketing does not tantamount to payment of ‘Royalty’ under the relevant tax treaties.
ITAT relying on the SC’s dictum in ‘Engineering Analysis Centre of Excellence Private Limited’ held that beneficial DTAA provisions are to be considered for determining the taxability of income. On perusal of agreements with the non-resident payees, ITAT observed that mere usage of facility provided by Facebook or Rocket Science does not render the payment as ‘Royalty’, as copyright attached to the facility is not parted with. In the case of AWS, the payment is made only for using information technology infrastructure facilities on a rental basis. Hence the question of transferring the copyright over those facilities does not arise at all. Thereby, concluding that payments made to non-residents do not give rise to any income chargeable in India, and thus there was no requirement to deduct tax at source u/s 195. The judgement brings with it good tidings for the non-resident recipient companies, as erstwhile it was becoming challenging for the companies to claim credit in their home country, if tax was perceived as wrongly withheld in the source country (in this case India). The ruling would also go a long way in reinstating the foreign investors’ confidence in the taxation & legislative prowess of the country.
Subscribe to:
Post Comments (Atom)
GST Not Leviable on Transfer of Leasehold Rights of MIDC Plots: SC Dismisses Revenue’s SLP
In a significant development, the Supreme Court has dismissed the Revenue’s Special Leave Petition (SLP) challenging a Bombay High Court (...
-
· Legal Framework: Section 171 of the Income Tax Act, 1961 provides the legal framework for the partition of a Hindu Undivided...
-
New utility for generation of Form 16A in pdf format provided by https://www.tdscpc.gov.in is very light and is sized only 8.43 MB while ...
-
1. Introduction Cross-border investment structures often employ intermediate holding companies in jurisdictions like the Cayman Islands. A c...
-
A new website launched for TDS related matters www.tdscpc.gov.in TRACES – T DS R econciliation A nalysis and C orrection E nabling S yste...
-
Issue before the Income-tax Appellate Tribunal (ITAT) Whether the phrase “paid up capital and general reserves” should be defined as “Ne...
-
Introduction Employee welfare is a cornerstone of corporate responsibility, and gratuity forms a critical part of the social security benefi...
-
Facts Saptarshi Ghosh (the tax payer) was a salaried employee of TCS Limited (employer), an Indian company. He was on deputation to the U...
-
Selling a property can trigger a significant tax liability in the form of capital gains tax. However, the Income-tax Act, 1961, allows you...
-
In the complex landscape of India’s Goods and Services Tax (GST), the tax treatment of non-compete fees has emerged as a critical area f...
-
The newly enacted Income Tax Act, 2025, marks a significant step toward simplification by consolidating multiple presumptive taxation sche...
1 comment:
Allowability can be challenged for non deduction. Option is to apply equalization levy.
Post a Comment