Ita/160/2015 Of M/S Vodafone Idea Limited v. Deputy Director Of Income Tax

ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14 DAY OF JULY, 2023 PRESENT THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR AND THE HON’BLE MR. JUSTICE RAMACHANDRA D. HUDDAR ITA NO. 160 OF 2015C/WITA NO. 161 OF 2015, ITA NO. 162 OF 2015ITA NO. 163 OF 2015, ITA NO. 164 OF 2015ITA NO. 64 OF 2020, ITA NO. 65 OF 2020ITA NO.66 OF 2020 IN ITA NO. 160 OF 2015 BETWEEN: M/s. VODAFONE IDEA LIMITED (FORMERLY KNOWN AS M/S VODAFONE MOBILE SERVICES LTD.) SUMAN TOWER, PLOT NO.18 SECTOR-11, GANDHINAGAR GUJARAT – 382 011. INDIA REP. BY ITS AUTHORIZED SIGNATORY SRI. ROHIT AGARWAL .…APPELLANT (BY SHRI. PERCY PARDIWALA, SENIOR ADVOCATE FOR SHRI. ANKUR PAI DHUNGAT, ADVOCATE) SHRI. ANKUR PAI DHUNGAT, ADVOCATE) ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 AND: 1. DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-1(1), NO.14/3A 6 FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001 INTERNATIONAL TAXATION CIRCLE-1(1), NO.14/3A 6 FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001 2. THE DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001 …RESPONDENTS INTERNATIONAL TAXATION RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001 …RESPONDENTS (BY SHRI. G.C. SRIVATSAVA, SPECIAL COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:30/12/2014 PASSED IN ITA NO.449/BANG/2013 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO. 47/INTL.TAXN.,/2012-13, DATED:25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED:28/01/2013, FOR THE ASSESSMENT YEAR 2008-09 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.449/BANG/2013 DATED: 30/12/2014 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO.47/INTL., TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2008-09. ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 3 IN ITA NO. 161 OF 2015 BETWEEN: M/s. VODAFONE IDEA LIMITED (FORMERLY KNOWN AS M/s. VODAFONE MOBILE SERVICES LTD.,) SUMAN TOWER, PLOT NO.18 SECTOR-11, GANDHINAGAR GUJARAT – 382 011. INDIA REP.BY ITS AUTHORIZED SIGNATORY SRI. ROHIT AGARWAL .…APPELLANT (BY SHRI. PERCY PARDIWALA, SENIOR ADVOCATE FOR SHRI. ANKUR PAI DHUNGAT, ADVOCATE) SHRI. ANKUR PAI DHUNGAT, ADVOCATE) AND: 1. DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-1(1), NO.14/3A 6 FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. 2. THE DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. …RESPONDENTS (BY SHRI. G.C. SRIVATSAVA, SPECIAL COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) (BY SHRI. PERCY PARDIWALA, SENIOR ADVOCATE FOR SHRI. ANKUR PAI DHUNGAT, ADVOCATE) SHRI. ANKUR PAI DHUNGAT, ADVOCATE) AND: 1. DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-1(1), NO.14/3A 6 FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. 2. THE DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. …RESPONDENTS (BY SHRI. G.C. SRIVATSAVA, SPECIAL COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 30/12/2014 PASSED IN ITA NO.450/BANG/2013 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO. 48/INTL.TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 4 OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2009-10 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.450/BANG/2013 DATED: 30/12/2014 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO.48/INTL., TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2009-10. IN ITA NO. 162 OF 2015 BETWEEN: M/s. VODAFONE IDEA LIMITED (FORMERLY KNOWN AS M/s. VODAFONE MOBILE SERVICES LTD.,) SUMAN TOWER, PLOT NO.18 SECTOR-11, GANDHINAGAR GUJARAT – 382 011. INDIA REP.BY ITS AUTHORIZED SIGNATORY SRI. ROHIT AGARWAL .…APPELLANT (BY SHRI. PERCY PARDIWALA, SENIOR ADVOCATE FOR SHRI. ANKUR PAI DHUNGAT, ADVOCATE) SHRI. ANKUR PAI DHUNGAT, ADVOCATE) AND: 1. DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-1(1), NO.14/3A 6 FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 5 2. THE DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. …RESPONDENTS INTERNATIONAL TAXATION RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. …RESPONDENTS (BY SHRI. G.C. SRIVATSAVA, SPECIAL COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 30/12/2014 PASSED IN ITA NO.451/BANG/2013 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO. 49/INTL.TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2010-11 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.451/BANG/2013 DATED: 30/12/2014 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO.49/INTL., TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2010-11. IN ITA NO. 163 OF 2015 BETWEEN: M/s. VODAFONE IDEA LIMITED (FORMERLY KNOWN AS M/s. VODAFONE MOBILE SERVICES LTD.,) SUMAN TOWER, PLOT NO.18 SECTOR-11, GANDHINAGAR GUJARAT – 382 011. INDIA ITA No.160/2015 C/W ITA Nos. 161/2015, IN ITA NO. 163 OF 2015 BETWEEN: M/s. VODAFONE IDEA LIMITED (FORMERLY KNOWN AS M/s. VODAFONE MOBILE SERVICES LTD.,) SUMAN TOWER, PLOT NO.18 SECTOR-11, GANDHINAGAR GUJARAT – 382 011. INDIA ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 6 REP.BY ITS AUTHORIZED SIGNATORY SRI. ROHIT AGARWAL .…APPELLANT (BY SHRI. PERCY PARDIWALA, SENIOR ADVOCATE FOR SHRI. ANKUR PAI DHUNGAT, ADVOCATE) AND: 1. DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-1(1), NO.14/3A 6 FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. 2. THE DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. …RESPONDENTS (BY SHRI. G.C. SRIVATSAVA, SPECIAL COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 30/12/2014 PASSED IN ITA NO.452/BANG/2013 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO. 50/INTL.TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2011-12 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.452/BANG/2013 DATED: 30/12/2014 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO.50/INTL., TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 7 TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2011-12. IN ITA NO. 164 OF 2015 BETWEEN: M/s. VODAFONE IDEA LIMITED (FORMERLY KNOWN AS M/s. VODAFONE MOBILE SERVICES LTD.,) SUMAN TOWER, PLOT NO.18 SECTOR-11, GANDHINAGAR GUJARAT – 382 011. INDIA REP.BY ITS AUTHORIZED SIGNATORY SRI. ROHIT AGARWAL .…APPELLANT (BY SHRI. PERCY PARDIWALA, SENIOR ADVOCATE FOR SHRI. ANKUR PAI DHUNGAT, ADVOCATE) AND: 1. DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-1(1), NO.14/3A 6 FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. 2. THE DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BENGALURU – 560 001. …RESPONDENTS (BY SHRI. G.C. SRIVATSAVA, SPECIAL COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 30/12/2014 PASSED IN ITA NO.453/BANG/2013 AND THE ORDER OF THE APPELLATE ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 8 COMMISSIONER IN ITA NO. 51/INTL.TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2012-13 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.453/BANG/2013 DATED: 30/12/2014 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO.51/INTL., TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2012-13. IN ITA NO. 64 OF 2020 BETWEEN: 8 COMMISSIONER IN ITA NO. 51/INTL.TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2012-13 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.453/BANG/2013 DATED: 30/12/2014 AND THE ORDER OF THE APPELLATE COMMISSIONER IN ITA NO.51/INTL., TAXN.,/2012-13, DATED: 25/03/2013 AND THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (INTL., TAXN.,) CIRCLE-I(1), BENGALURU DATED: 28/01/2013, FOR THE ASSESSMENT YEAR 2012-13. IN ITA NO. 64 OF 2020 BETWEEN: M/s. VODAFONE IDEA LIMITED (EARLIER KNOWN AS ‘VODAFONE SOUTH LIMITED’ WHICH NOW STANDS MERGED WITH ‘IDEA CELLULAR LTD’.) MARUTIINFOTECH CENTRE NO.11/1, 12/1, KORAMANGALA AMAR JYOTI LAYOUT BENGALURU – 560 071. PAN: AABCB 5847L REP. BY ITS VICE PRESIDENT-TAXATION MR. VAIBHAV MANGAL .…APPELLANT (BY SHRI. PERCY PARDIWALA, SENIOR ADVOCATE FOR SHRI. ANKUR PAI DHUNGAT, ADVOCATE) AND: THE DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE-2(1), 4 FLOOR BMTC BUILDING ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 9 6 BLOCK, KORAMANGALA BENGALURU – 560 095. (EARLIER DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-1(1), BANGALORE) …RESPONDENT (BY SHRI. G.C. SRIVATSAVA, SPECIAL COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 28/11/2019 PASSED IN IT(IT)A NO.1161/BANG/2015, FOR THE ASSESSMENT YEAR 2014-2015 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(IT)A NO.1161/BANG/2015 (ANNEXURE-R) DATED: 28/11/2019 FOR THE ASSESSMENT YEAR 2014-2015, TO THE EXTENT IT IS CHALLENGED BEFORE THIS HON’BLE COURT AND ETC. IN ITA NO. 65 OF 2020 BETWEEN: M/s. VODAFONE IDEA LIMITED (EARLIER KNOWN AS ‘VODAFONE SOUTH LIMITED’ WHICH NOW STANDS MERGED WITH ‘IDEA CELLULAR LTD’.) MARUTI INFOTECH CENTRE NO.11/1, 12/1 KORAMANGALA AMAR JYOTI LAYOUT BENGALURU – 560 071. PAN: AABCB 5847L ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 10 REP. BY ITS VICE PRESIDENT-TAXATION MR. VAIBHAV MANGAL .…APPELLANT (BY SHRI. PERCY PARDIWALA, SENIOR ADVOCATE FOR SHRI. ANKUR PAI DHUNGAT, ADVOCATE) AND: THE DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE-2(1), 4 FLOOR BMTC BUILDING 6 BLOCK, KORAMANGALA BENGALURU – 560 095. (EARLIER DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-1(1), BANGALORE) …RESPONDENT (BY SHRI. G.C. SRIVATSAVA, SPECIAL COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 28/11/2019 PASSED IN IT(IT)A NO.2818/BANG/2017, FOR THE ASSESSMENT YEAR 2015-2016 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(IT)A NO.2818/BANG/2017 (ANNEXURE-P) DATED: 28/11/2019 FOR THE ASSESSMENT YEAR 2015-2016, TO THE EXTENT IT IS CHALLENGED BEFORE THIS HON’BLE COURT AND ETC. IN ITA NO. 66 OF 2020 BETWEEN: M/s. VODAFONE IDEA LIMITED (EARLIER KNOWN AS ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 28/11/2019 PASSED IN IT(IT)A NO.2818/BANG/2017, FOR THE ASSESSMENT YEAR 2015-2016 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(IT)A NO.2818/BANG/2017 (ANNEXURE-P) DATED: 28/11/2019 FOR THE ASSESSMENT YEAR 2015-2016, TO THE EXTENT IT IS CHALLENGED BEFORE THIS HON’BLE COURT AND ETC. IN ITA NO. 66 OF 2020 BETWEEN: M/s. VODAFONE IDEA LIMITED (EARLIER KNOWN AS ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/202011 VODAFONE SOUTH LTD. WHICH NOW STANDS MERGED WITH ‘IDEA CELLULAR LTD’.) MARUTI INFOTECH CENTRE NO.11/1, 12/1, KORAMANGALA AMAR JYOTI LAYOUT BENGALURU – 560 071. PAN: AABCB 5847L REP. BY ITS VICE PRESIDENT-TAXATION MR. VAIBHAV MANGAL .…APPELLANT .…APPELLANT (BY SHRI. PERCY PARDIWALA, SENIOR ADVOCATE FOR SHRI. ANKUR PAI DHUNGAT, ADVOCATE) AND: THE DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE-2(1), 4 FLOOR BMTC BUILDING 6 BLOCK, KORAMANGALA BENGALURU – 560 095. (EARLIER DEPUTY DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-1(1), BENGALURU) …RESPONDENT (BY SHRI. G.C. SRIVATSAVA, SPECIAL COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL AND SHRI. M. DILIP, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 28/11/2019 PASSED IN IT(IT)A NO.1160/BANG/2015, FOR THE ASSESSMENT YEAR 2013-2014 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THESE QUESTIONS IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE AND ALLOW THE APPEAL, SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(IT)A NO.1160/BANG/2015 (ANNEXURE-R) DATED: 28/11/2019 FOR THE ASSESSMENT YEAR 2013-2014, TO THE EXTENT IT IS CHALLENGED BEFORE THIS HON’BLE COURT AND ETC. ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 12 THESE ITAs, HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 16.06.2023 COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY, P.S. DINESH KUMAR, J., PRONOUNCED THE FOLLOWING:- JUDGMENT These appeals are filed by the assessee. ITA Nos.160/2015, 161/2015, 162/2015, 163/2015 and 164/2015 are directed against the common order dated December 30, 2014 in IT(IT)A Nos. 1814 to 1818 & 734/Bang/2013 for A.Y[1]. 2008-09 to 2012-13 and ITA Nos. 64/2020, 65/2020, 66/2020 are directed against the common order dated November 28, 2019 in IT(IT)A Nos. 1160-1161/Bang/2015 and 2818/Bang/2017 for A.Y[2]. 2013-14 to 2015-16 passed by the ITAT[3], have been admitted to consider following questions of law: 1. Whether the Income-Tax Appellate Tribunal (ITAT) was correct in holding that the application of the Double Taxation Avoidance Agreement (DTAA) cannot be considered in proceedings under Section 201 of the Act and that it is not open to the payer to take benefit of the DTAA when he is making payment to a non- resident? 1 Assessment Years 2 Assessment Years 3 Income Tax Appellate Tribunal ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 13 2. Whether the ITAT was correct in holding that amendment to provisions of royalty under Section 9(1)(vi) by inserting Explanation 5 and 6 under the Income-tax Act (hereinafter referred to as the 'Act') will also result in amendment of the DTAAS? 1. Whether the Income-Tax Appellate Tribunal (ITAT) was correct in holding that the application of the Double Taxation Avoidance Agreement (DTAA) cannot be considered in proceedings under Section 201 of the Act and that it is not open to the payer to take benefit of the DTAA when he is making payment to a non- resident? 1 Assessment Years 2 Assessment Years 3 Income Tax Appellate Tribunal ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 13 2. Whether the ITAT was correct in holding that amendment to provisions of royalty under Section 9(1)(vi) by inserting Explanation 5 and 6 under the Income-tax Act (hereinafter referred to as the 'Act') will also result in amendment of the DTAAS? 3. Whether ITAT was correct in holding that payments made to non-resident telecom operators for providing interconnect services and transfer of capacity in foreign countries is chargeable to tax as royalty in view of the inclusion of the terms "right" & "process" in the clarificatory Explanation 2, 5 and 6 of Section 9(1)(vi) of the Act, and consequently, appellant was bound to deduct tax at source thereon under Section 195 of the Act? 4. Whether the income tax authorities in India have jurisdiction to bring to tax income arising from extra-territorial source, that is outside India, in respect of business carried on by foreign companies outside India just because Indian residents use and pay for the facilities provided by these foreign companies contrary to the Constitution of India, International Law and Treaties and law declared by the Apex Court? 5. Whether the first respondent was correct in holding that for the current assessment year the withholding tax liability should be levied at a higher rate at 20% in accordance with section 206AA of the Act? 6. Whether the Hon'ble Tribunal was right in repelling the contention of the Appellant to the effect that, as a deductor, it ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 14 cannot be held liable for non-reduction of tax at source for payments made for the Assessment Year 2008-09 to Assessment Year 2012-13 on the basis of a subsequent amendment to Section 9(1)(vi) whereby Explanation 5 and 6 were introduced? 2. Heard Shri. Percy Pardiwala, learned Senior Advocate for the Assessee and Shri. G.C. Shrivastsava, Special Counsel for the Revenue. 3. Briefly stated the facts of the case are, Assessee holds an ILD[4]License and provides telecommunication services. It is responsible to provide connectivity to calls originating or terminating outside India. In order to provide ILD services, assessee avails certain services offered by NTOs[5] to provide seamless connectivity to its customers. Assessee had entered into agreements with NTOs for international carriage and connectivity services. As per the agreement, assessee has to pay inter-connectivity charges to NTOs. 4 International Long-Distance 5 Non-resident Telecom Operators ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 15 4. Assessee entered into a CTA[6] with MIS Belgacom International Carrier Services S.A.[7] to acquire bandwidth capacity on EIG[8] which works through a submarine cable system and M/s. Omantel Telecommunications Company[9], a member of consortium which owns the EIG system. The agreement allows each party to transfer to other telecommunication entity the whole or a part of its total allocated capacity in the EIG Cable system without any restrictions by way of an IRU[10]. In pursuance to the EIG agreement, Omantel had transferred certain portion of its capacity in the EIG cable system to Belgacom and in turn, Belgacom had transferred a portion of its capacity to the assessee for consideration. 6 Capacity Transfer Agreement 7 ‘Belgacom’ for short 8 Europe-India Gateway 9 ‘the Omantel’ for short 10 Indefeasible Right to Use ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 16 6 Capacity Transfer Agreement 7 ‘Belgacom’ for short 8 Europe-India Gateway 9 ‘the Omantel’ for short 10 Indefeasible Right to Use ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 16 5. The AO[11] issued a notice stating that the payments made by assessee to NTOs and Belgacom for the A.Y. 2008-09 to 2015-16 were made without deducting TDS[12] under Section 195 of the Income Tax Act 1961[13] and assessee was liable to be treated as ‘defaulter’ under Section 201 of the Act. Assessee sent its reply explaining that the NTOs are located outside India and they provide telecom services outside India. Hence, it was not necessary to deduct TDS in India. 6. The AO passed an assessment order dated January 28, 2013 holding assessee as ‘defaulter’ for failure to deduct TDS while making payments to the NTOs and Belgacom. The AO also held that payments made to NTOs for provision of bandwidth and IUC[14] are taxable 11 Assessing Officer 12 Tax Deducted at Source 13 ‘the Act’ for short 14 Inter- connectivity Usage Charges ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 17 under the head ‘other income’ and treated the same as Royalty/FTS[15]. 7. Assessee challenged AO’s order before the CIT(A)[16]. The CIT(A) vide order dated March 25, 2013, dismissed assessee’s appeal holding that payments made to NTOs are chargeable to tax in India under Section 195 of the Act as Royalty. He held that the IUC payments could not be taxed under the head ‘other income’. The issue regarding FTS was not adjudicated. 8. On further appeal, the ITAT has partly-allowed assessee’s appeal and confirmed the findings recorded by the CIT(A). Hence, this appeal. 9. Shri. Percy Pardiwala, for the Assessee, praying to allow the appeal, submitted: 15 Fee for Technical Services 16 Commissioner of Income Tax(Appeals) ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 18 Re: Question No. 1 as follows: the payments made by assessee cannot be the payments made by assessee cannot be characterised as royalty or FTS or business profits, as no part of the activity was admittedly carried out in India; profits, as no part of the activity was admittedly carried out in India; in GE India Technology Centre Private Limited Vs. CIT[17], the Apex Court has held that apart from Section 9(1), Sections 4, 5, 9, 90 and 91 of the Act, the provisions of the DTAA are relevant while applying the provisions of deduction of TDS. from Section 9(1), Sections 4, 5, 9, 90 and 91 of the Act, the provisions of the DTAA are relevant while applying the provisions of deduction of TDS. Re: Question No. 2 as follows: that the payments made by assessee to the NTOs[18] could not be characterised as royalty, as payment is made to use the process or an that the payments made by assessee to the NTOs[18] could not be characterised as royalty, as payment is made to use the process or an equipment; 17 [2010] 327 ITR 456 (SC) 18 Overseas Telecom Operators ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 19 that this question of law is covered in assessee’s that this question of law is covered in assessee’s favour in Engineering Analysis Centre of Excellence Private Limited Vs. CIT[19] (Hereinafter referred to as ‘Engineering Analysis’), reiterated by the Bombay High Court in CIT Vs. Reliance Infocom Limited[20]. Excellence Private Limited Vs. CIT[19] (Hereinafter referred to as ‘Engineering Analysis’), reiterated by the Bombay High Court in CIT Vs. Reliance Infocom Limited[20]. Re: Question No. 3 as follows: equipment; 17 [2010] 327 ITR 456 (SC) 18 Overseas Telecom Operators ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 19 that this question of law is covered in assessee’s that this question of law is covered in assessee’s favour in Engineering Analysis Centre of Excellence Private Limited Vs. CIT[19] (Hereinafter referred to as ‘Engineering Analysis’), reiterated by the Bombay High Court in CIT Vs. Reliance Infocom Limited[20]. Excellence Private Limited Vs. CIT[19] (Hereinafter referred to as ‘Engineering Analysis’), reiterated by the Bombay High Court in CIT Vs. Reliance Infocom Limited[20]. Re: Question No. 3 as follows: the Amendments made in the Act cannot be incorporated while construing the scope of the definition of the term ‘royalty’ in the relevant Article of the DTAA[21] and the payments made by assessee cannot be characterised as "royalty" as defined in the relevant Article of DTAA; incorporated while construing the scope of the definition of the term ‘royalty’ in the relevant Article of the DTAA[21] and the payments made by assessee cannot be characterised as "royalty" as defined in the relevant Article of DTAA; in Viacom 18 Media Limited Vs. ADIT[22]rendered by ITAT Mumbai and relied upon by the ITAT for by ITAT Mumbai and relied upon by the ITAT for the A.Ys. 2009-10 to 2011-12, the ITAT has held 19 (2021) 125 taxmann.com 42 (SC) 20 ITA No. 1395/2016 21 Double Taxation Avoidance Agreements. 22WP. No.36/2018 ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 20 that TDS was deductable at source. However, for subsequent years in assessee’s own cases[23], the ITAT has taken a different view and held that the definition in the DTAA could not be enlarged by relying upon the provisions of Explanations 5 and 6; that, for a payment to be characterised as one for use of, or for the right to use certain intellectual property, firstly, the grantor of that right should be denuded from that property and it should vest completely with the recipient and secondly, the possession, dominion and control over such property should be fully granted to the user. The amendment brought by the Finance Act, 2012 by insertion of Explanation 5 seeks to do away with the second condition but the first condition remains unchanged; that, for a payment to be characterised as one for use of, or for the right to use certain intellectual property, firstly, the grantor of that right should be denuded from that property and it should vest completely with the recipient and secondly, the possession, dominion and control over such property should be fully granted to the user. The amendment brought by the Finance Act, 2012 by insertion of Explanation 5 seeks to do away with the second condition but the first condition remains unchanged; 23 194 ITD 263 and 134 taxmann.com 234 (Mum-Trib.) ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 21 the NTOs have not denuded themselves of utilising the process. The payment made by assessee to the NTOs is not the payment for the use or the right to use process or the equipment as alleged by the Revenue, as held by the judgment of the Delhi High Court in Asia Satellite Telecommunications Company Limited Vs. Director of Income Tax[24]and Director of Income Tax Vs. New Skies Satellite BV[25]. utilising the process. The payment made by assessee to the NTOs is not the payment for the use or the right to use process or the equipment as alleged by the Revenue, as held by the judgment of the Delhi High Court in Asia Satellite Telecommunications Company Limited Vs. Director of Income Tax[24]and Director of Income Tax Vs. New Skies Satellite BV[25]. Re: Question No. 4 as follows: 21 the NTOs have not denuded themselves of utilising the process. The payment made by assessee to the NTOs is not the payment for the use or the right to use process or the equipment as alleged by the Revenue, as held by the judgment of the Delhi High Court in Asia Satellite Telecommunications Company Limited Vs. Director of Income Tax[24]and Director of Income Tax Vs. New Skies Satellite BV[25]. utilising the process. The payment made by assessee to the NTOs is not the payment for the use or the right to use process or the equipment as alleged by the Revenue, as held by the judgment of the Delhi High Court in Asia Satellite Telecommunications Company Limited Vs. Director of Income Tax[24]and Director of Income Tax Vs. New Skies Satellite BV[25]. Re: Question No. 4 as follows: the NTOs have no presence of any nature in India. The AO has observed that no part of the telecom network of the NTOs is located in India. Hence in the absence of any permanent establishment of NTOs in the country, the income is not taxable in India. the NTOs have no presence of any nature in India. The AO has observed that no part of the telecom network of the NTOs is located in India. Hence in the absence of any permanent establishment of NTOs in the country, the income is not taxable in India. 24 [2011] 238 CTR 0233 25 [2016] 133 DTR 0185 (Del) 25 [2016] 133 DTR 0185 (Del) ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 22 Re: Question No. 5 as follows: that this issue is covered by CIT v/s. Wipro Limited[26] followed in the Appellant's own case in CIT vs. Vodafone India Ltd[27];that this issue is covered by CIT v/s. Wipro Limited[26] followed in the Appellant's own case in CIT vs. Vodafone India Ltd[27]; Re: Question No. 6 as follows: in Engineering Analysis, the Apex Court has answered the question of law in favour of the assessee affirming the view taken by the Bombay High Court in CIT Vs. NGC Networks (India) Private Limited[28]wherein it is held that Explanation 6 to Section 9(1)(vi) to the Act could not have been invoked by the Revenue while passing an order under the Section 201 of the Act treating the assessee in default of its obligation to deduct TDS under Section 194C of the Act; answered the question of law in favour of the assessee affirming the view taken by the Bombay High Court in CIT Vs. NGC Networks (India) Private Limited[28]wherein it is held that Explanation 6 to Section 9(1)(vi) to the Act could not have been invoked by the Revenue while passing an order under the Section 201 of the Act treating the assessee in default of its obligation to deduct TDS under Section 194C of the Act; 26 ITA No. 181/2019 dated 29 November 2022 27 ITA No. 120/2020 dated January 17, 2023 28 ITA No. 397 of 2015 ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 23 the burden is always on the Revenue to establish the burden is always on the Revenue to establish that a receipt falls within the taxing provision of the Act; the Act; there is a difference between 'grant of rights' and 'transfer of rights'. What is provided to assessee is ‘grant of right’ and not ‘transfer of right’; as assessee merely avails these services; there is a difference between 'grant of rights' and 'transfer of rights'. What is provided to assessee is ‘grant of right’ and not ‘transfer of right’; as assessee merely avails these services; 26 ITA No. 181/2019 dated 29 November 2022 27 ITA No. 120/2020 dated January 17, 2023 28 ITA No. 397 of 2015 ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 23 the burden is always on the Revenue to establish the burden is always on the Revenue to establish that a receipt falls within the taxing provision of the Act; the Act; there is a difference between 'grant of rights' and 'transfer of rights'. What is provided to assessee is ‘grant of right’ and not ‘transfer of right’; as assessee merely avails these services; there is a difference between 'grant of rights' and 'transfer of rights'. What is provided to assessee is ‘grant of right’ and not ‘transfer of right’; as assessee merely avails these services; the term used in Article 12 of the DTAA is ‘Royalty’. This term is defined both in the Act (in Explanation 2) and in the DTAA (in para 3 of Article 12). In order to determine whether a particular payment can be characterised as royalty, it has to be first determined whether it falls within the scope and ambit of the definition of the term in the DTAA. ‘Royalty’. This term is defined both in the Act (in Explanation 2) and in the DTAA (in para 3 of Article 12). In order to determine whether a particular payment can be characterised as royalty, it has to be first determined whether it falls within the scope and ambit of the definition of the term in the DTAA. ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 24 10. Opposing the appeal, Shri. Shrivastsava, for the Revenue, submitted: Re: Question No. 1as follows; Section 195 of the Act mandates that the tax has to be deducted at source if the payment represents a sum chargeable to tax. If the payer does not think that tax is deductible or requires to be deducted at a lower rate, he could approach the AO under Sections 195(2), has to be deducted at source if the payment represents a sum chargeable to tax. If the payer does not think that tax is deductible or requires to be deducted at a lower rate, he could approach the AO under Sections 195(2), 195(3), 197 of the Act, for a nil deduction/lower deduction certificate; deduction certificate; if the payer chooses not to deduct tax without obtaining certificates under Sections 195(2), 195(3), 197, the onus would lie upon him to establish. If he fails to do so, the consequences of Section 201(1)/201(1A) or Section 40(a)(i) of the Act would follow; if the payer chooses not to deduct tax without obtaining certificates under Sections 195(2), 195(3), 197, the onus would lie upon him to establish. If he fails to do so, the consequences of Section 201(1)/201(1A) or Section 40(a)(i) of the Act would follow; ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 25 the ITAT has rightly examined the question of the ITAT has rightly examined the question of onus and held that assessee had failed to establish that tax was not deducted at source; establish that tax was not deducted at source; the agreements between the payee and assessee do not disclose or establish that the assessee do not disclose or establish that the income is not chargeable to tax; the characterisation of a certain receipt, whether it is in the nature of Royalty or not, is a whether it is in the nature of Royalty or not, is a mixed question of law and fact and the onus in this regard cannot be discharged by placing reliance on authorities. reliance on authorities. Re:Question No. 2: C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 25 the ITAT has rightly examined the question of the ITAT has rightly examined the question of onus and held that assessee had failed to establish that tax was not deducted at source; establish that tax was not deducted at source; the agreements between the payee and assessee do not disclose or establish that the assessee do not disclose or establish that the income is not chargeable to tax; the characterisation of a certain receipt, whether it is in the nature of Royalty or not, is a whether it is in the nature of Royalty or not, is a mixed question of law and fact and the onus in this regard cannot be discharged by placing reliance on authorities. reliance on authorities. Re:Question No. 2: the payments made by assessee to the NTOs for international carriage and connectivity as well as to Belgacom for utilization of under-sea cable system, qualify as royalty under Clauses (i), (ii) and (iii) of Explanation 2 to Section 9(i)(vi) of the Act. This proposition gets the payments made by assessee to the NTOs for international carriage and connectivity as well as to Belgacom for utilization of under-sea cable system, qualify as royalty under Clauses (i), (ii) and (iii) of Explanation 2 to Section 9(i)(vi) of the Act. This proposition gets ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 26 reinforced by the clarificatory amendment made retrospectively by insertion of Explanation 6 to Section 9(1)(vi)of the Act. However, with or without this amendment, the payments of this nature are always qualified as Royalty; the authorities below have recorded a concurrent finding that the payments were chargeable to tax in India as Royalty. This finding is based on agreements between assessee and payees, opinion of experts in the field of telecommunication and provisions governing Royalty in the Act and the DTAA; concurrent finding that the payments were chargeable to tax in India as Royalty. This finding is based on agreements between assessee and payees, opinion of experts in the field of telecommunication and provisions governing Royalty in the Act and the DTAA; the definition of royalty under the DTAA entered into with various countries is in consonance with the Act; the definition of royalty under the DTAA entered into with various countries is in consonance with the Act; assessee’s contention that in Belgium DTAA, the definition of ‘equipment royalty’ is missing, is untenable because in this proceeding, the issue assessee’s contention that in Belgium DTAA, the definition of ‘equipment royalty’ is missing, is untenable because in this proceeding, the issue ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 27 involved is not ‘equipment royalty’ but ‘process royalty’; the agreements between assessee and the NTOs are with regard to complex process involving several steps for the transmission of voice data from one end to the other. It involves the NTOs giving access to assessee’s transmission system and allowing assessee to use their system seamlessly for transmission of data; the agreements between assessee and the NTOs are with regard to complex process involving several steps for the transmission of voice data from one end to the other. It involves the NTOs giving access to assessee’s transmission system and allowing assessee to use their system seamlessly for transmission of data; the agreements that assessee has with the NTOs, have a confidentiality clause wherein the receiving party has to use confidential information including the know-how, ideas, concept, technology drawings, discussions, papers etc; the agreements that assessee has with the NTOs, have a confidentiality clause wherein the receiving party has to use confidential information including the know-how, ideas, concept, technology drawings, discussions, papers etc; the agreements that assessee has with the NTOs, have a confidentiality clause wherein the receiving party has to use confidential information including the know-how, ideas, concept, technology drawings, discussions, papers etc; the agreements that assessee has with the NTOs, have a confidentiality clause wherein the receiving party has to use confidential information including the know-how, ideas, concept, technology drawings, discussions, papers etc; the agreements between assessee and the NTOs grant access to assessee to the network the agreements between assessee and the NTOs grant access to assessee to the network ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 28 and process running on those telecom networks belonging to NTOs. Therefore, this interconnect constitutes an activity which can be carried out only by the use of the systems comprising highly complex technical 'process'. Re: Question No. 3: the AO has recorded the statement of a telecommunication Expert as per the direction of the Hon'ble Supreme Court[29]. He has stated that this is not a standard facility and there is no material on record to justify any departure from the views of the Expert;telecommunication Expert as per the direction of the Hon'ble Supreme Court[29]. He has stated that this is not a standard facility and there is no material on record to justify any departure from the views of the Expert; where a consideration is paid for the transfer of all or any rights in respect of a process or for the use of process, such consideration is brought within the ambit and scope of definition of ‘Royalty’ provided under the Act and the where a consideration is paid for the transfer of all or any rights in respect of a process or for the use of process, such consideration is brought within the ambit and scope of definition of ‘Royalty’ provided under the Act and the 29 CIT, Delhi v. Bharti Cellular, C.A. No. 6691/2010 ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 29 DTAA. Therefore, when a right to use a process is given, there should be no doubt that the consideration paid would tantamount to royalty. This proposition is applicable even without the amended Explanation 6; notwithstanding the amendment, the consideration in a transaction of this nature must be construed as having been paid for the use or right to use the process; Explanation 6 does not enlarge the scope of the Explanation 6 does not enlarge the scope of the definition of Royalty either under the Act or under the DTAA. It only clarifies what was already embedded in the definition; under the DTAA. It only clarifies what was already embedded in the definition; the decision in Engineering Analysis is under review in the Hon'ble Supreme Court in CIT Vs. ZTE Corporation[30]. The reasoning of the case would not apply to the case on hand because would not apply to the case on hand because ITA No.160/2015 C/W ITA Nos. 161/2015, 162/2015, 163/2015, 164/2015, 64/2020, 65/2020, 66/2020 30 retrospective amendments to Section 9 of the Act by insertion of Explanation 6 does not affect the definition of Royalty; Engineering Analysis was rendered in the context of Section 14 of the Copyright Act, 1957 whereas the submarine cable system and the telecom network falls under the Patents Act, 1970; context of Section 14 of the Copyright Act, 1957 whereas the submarine cable system and the telecom network falls under the Patents Act, 1970; the decision in Engineering Analysis is under review in the Hon'ble Supreme Court in CIT Vs. ZTE Corporation[30]. T