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)
ITAT Amendment Rules, 2025 – Key Procedural Changes and Practical Takeaways
The Income-tax Appellate Tribunal has recently notified the Income-tax (Appellate Tribunal) Amendment Rules, 2025, introducing 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...
-
Section 68 -Cash credits Section 69 -Unexplained investments Section 69A - Unexplained money, etc Section 69B -Amount of investme...
-
In a landmark development that could have far-reaching implications for multinational groups operating in India, the Hon’ble Bombay High C...
-
An eminent concern within the GST framework pertains to the entitlement of Input Tax Credit (ITC) concerning expenditures associated with In...
-
LEASE-DEED (A brief Introduction) Lease defined. A lease of immovable property is a transfer of a right to enjoy such property, mad...
-
The taxation of transactions within a Hindu Undivided Family (HUF) is governed by specific provisions under the Income Tax Act, 1961. This...
-
The overall effective tax rate of a U.S. multinational corporation may have significant impact on the value of its stock. Therefore, it ...
-
In the case of "Maya Gopinathan vs Anoop SB 2024 INSC 334," the Hon'ble Supreme Court provided insightful guidance on the de...
-
As per Income Tax Laws, any sum received or receivable in cash or kind under an agreement for not carrying business or profession is treat...
-
Introduction The law relating to companies is laid down in Companies Act, 2013 and the rules made thereunder and t...
1 comment:
Allowability can be challenged for non deduction. Option is to apply equalization levy.
Post a Comment