Case nº A.A.R. No. 939 of 2010 of Authority for Advance Rulings, August 27, 2012 (case Dishnet Wireless Limited, 5th floor, Spencer Plaza, 769, Anna Salai, Chennai-600002 Vs Commissioner of Income-tax-I, Chennai)

President:Mr. P.K. Balasubramanyan, (Chairman)
Defense:Income Tax Act, 1961 - Sections 195, 245Q, 245R(2), 245R(4), 9(1)
Resolution Date:August 27, 2012
 
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Judgment:

Mr. P.K. Balasubramanyan, (Chairman)

  1. The applicant, a company incorporated in India seeks advance rulings on the questions raised by it in this application under section 245Q of the Income-tax Act. The application was allowed under section 245R(2) of the Act to give rulings on the following questions:

  2. Whether on the facts and circumstances of the case, the amounts payable by the applicant to Sri Lanka Telecom PLC (SLT) under the terms of the SEA-ME- WE 4 Capacity Sales (IRU) Agreement ('the Agreement') would be in the nature of 'fees for technical services 9FTS) within the meaning of the term in Explanation 2 to clause (vii) of section 9(1) of the Act?

  3. Whether on the facts and circumstances of the case, the amounts payable by the applicant to SLT under the terms of the Agreement would be in the nature of 'royalty' as per the definition of the terms in (a) Explanation 2 clause (vi) of section9(1) of the Act or (b) Article 12 of the Treaty, and for determination thereof whether the clause relating to 'process royalty' is relevant or whether only the clause relating to 'equipment royalty' of the definition (s) is relevant?

  4. Whether on the facts and circumstances of the case, SLT can be said to have a permanent establishment in India?

  5. If the permanent establishment is so said to exist, whether there would be any income attributable thereto so as to be liable to be taxed in India? If so, whether the income that could be taxed in India as being attributable to such permanent establishment would only be limited to the payment due to SLT in relation to IRU capacity provided in Indian territorial waters and not extend to IRU capacity provided in International waters?

  6. Whether on the facts and circumstances of the case and in the light of the declaration obtained from SLT that it does not have a permanent establishment in India in terms of Article5 of the Treaty, whether the income received by SLT will be chargeable to tax in India?

  7. If the answer to question 1, 2 and 5 are in the negative and/ or question 3 is affirmative, would such payments by the applicant suffer withholding tax under section 195 of the Income Tax Act, 1961 and if yes, at what rate?

    Even while allowing the application on 15.2.2012 under section 245R(2) of the act, the application was posted for hearing under section 245R(4) of the Act to 16.7.2012. On 16.7.2012, at the request of the applicant, it was adjourned to 6.8.2012. On that day, at the request of...

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