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)
Refund of pre-deposit cannot be withheld merely because litigation continues on the balance demand
In a significant judgment in IBM India Pvt. Ltd. v. Union of India (2026-VIL-955-BOM), the Bombay High Court has reaffirmed an important p...
-
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...
-
THE issues before the Bench are - Whether when an expenditure is claimed to have been incurred by an assessee for promotion of his busine...
-
The posting had been move to another website. Please click the link below to get the access of the same. https://taxofindia.wordpress....
-
The Reserve Bank of India has introduced a new framework governing export and import transactions under FEMA. These regulations are effectiv...
-
THE issues before the Bench are - Whether no penalty u/s 271(1)(c) is warranted even if assessee makes false claim of Sec 80IA benefits ...
-
This Tax Alert summarizes a recent ruling of the Delhi High Court (HC) [1] on whether the newly introduced pre-deposit requirement for fi...
-
The overall effective tax rate of a U.S. multinational corporation may have significant impact on the value of its stock. Therefore, it ...
-
This Tax Alert summarizes a recent judgement of the Supreme Court (SC) [1] on whether a show cause notice (SCN) under Section 74 of the ...
-
This Tax Alert summarizes a recent ruling of the Gujarat High Court (HC)1 on the taxability of corporate guarantee provided by the Petitio...
-
What is a Digital Signature? Answer: A digital signature authenticates electronic documents in a similar manner a handwritten signatur...
1 comment:
Allowability can be challenged for non deduction. Option is to apply equalization levy.
Post a Comment