INCOME TAX ACT, 1961

Section 90

Double taxation relief - Agreement between India and Singapore - Royalty - IDC charges received by non-resident

Assessee based at Singapore entered into Infrastructure and Hosting Data Centre (IDC) agreements with its Indian group companies and received revenues from them under said IDC agreement assessee essentially provided IT infrastructure management and mail box/website hosting services to its Indian group companies and these IDC services were performed by assessee's personnel in Singapore. AO held that IDC charges received by assessee were in the nature of royalty and, therefore, taxable in India. Held: As evident from IDC agreement, assessee had an infrastructure data centre, not information centre at Singapore. Indian group companies neither accessed nor used CPU of assessee no CDN system was provided under IDC agreement. Assessee did not maintain any such central data IDC was not capable of inforamtion analytics, data management, and assessee only provided IDC was not capable of information analytics, data management and assessee only provided IDC service by using its hardware/security devices/personnel. ALl that the Indian group companies received were standard IDC services and not use of any software. Bandwith and networking infrastructure was used by assessee to render IDC services and Indian companies only output of usages of such bandwith and network and not its use. Consideration was for IDC services and not any specific program no embedded/secret software was developed by assessee. Accordingly, IDC charge received by assessee could not be treated as royalty under article 12.3 of DTAA between India and Singapore.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

INCOME TAX ACT, 1961

Section 90

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