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Showing contexts for: link charges in Dcit, Circle- 1(1)(1), International ... vs Convergys Customer Management Group ... on 30 September, 2025Matching Fragments
7. All appeals shall stand revived on the board of the concerned Tribunal to be considered and examined afresh. All rights and contentions of respective parties on merit are kept open."
2.1 After revival of the above captioned appeals, we have been tasked to decider the following issues:
S. No. ITA No. Issues
1. 7727/Del./2017 i. Fixed Place PE
ii. Attribution of Profits
2. 7924/Del./2018 i. Fixed Place PE
ii. Attribution of Profits
3. 1086/Del./2022 i. Fixed Place PE
ii. Attribution of Profits
4. 667/ Del./2023 i. Fixed Place PE
ii. Attribution of Profits
5. 668/ Del./2023 i. Fixed Place PE
ii. Attribution of Profits
6. 3512/Del./2023 i. Grounds related to DIN issue
ii. Fixed Place PE
iii. Dependent Agent PE
iv. Attribution of profits
v. Interest under section 234A
and 234B of the Income Tax
Act, 1961 ('Act')
vi. Penalty under section 270A of
the Act
7. 1892/Del/2025 i. Fixed Place PE
ii. Dependent Agent PE
iii. Attribution of profits
iv. Interest under section 234A
and 234B of the Income Tax
Act, 1961 ('Act')
v. Penalty under section 270A of
the Act
8. 130/ Del./2018 i. Dependent Agent PE
ii. Service PE
Conc entrix CV G ...
iii. Attribution of Profits
iv. IPLC/ Link Charges
9. 1281/Del./2022 i. Dependent Agent PE
ii. Service PE
iii. Attribution of Profits
iv. IPLC/ Link Charges
10. 723/ Del./2023 i. Dependent Agent PE
ii. Service PE
iii. Attribution of Profits
iv. IPLC/ Link Charges
11. 724/ Del./2023 i. Dependent Agent PE
ii. Service PE
iii. Attribution of Profits
iv. IPLC/ Link Charges
7. The Ld. AO also held Link charges as equipment royalty. However, the Ld. CIT(A) held it otherwise and allowed relief to the assessee.
8. In first round of appeal, the Tribunal upheld the finding of the Ld. CIT(A) that the assessee had a fixed place of PE in India in terms of Article 5(1) of the DTAA. However, the Tribunal attributed the profit on account of assets provided by the assessee to CIS and followed the methodology provided in the order of the Tribunal in AY 2006-07 for arriving at the profit attributable to PE in India. Further, the Tribunal upheld the finding of the Ld. CIT(A) that the assessee had neither service PE nor dependent agent PE in terms of Article 5(2)(1) and Article 5(4) of the DTAA. The Tribunal also Conc entrix CV G ...
Taxability of link charges/IPLC charges as royalty:
16. The next issue raised by the Revenue is the taxability of payment of link charges/IPLC charges as royalty. We have taken note of finding of the Tribunal, in first round of appeal, with respect to this issue as under:
Conc entrix CV G ...
"4.3 Arguing against the grounds raised by the department on the issue of payment of link charges/IPLC being taxable under 'equipment royalty' and 'process royalty', the Ld. AR submitted that during the year under consideration, an amount of INR 37,279,929 (USD 684,072) was paid/ payable by CIS to the Assessee pertaining to link charges. The link charges pertain to International Private Leased Circuits ('IPLC') that provide a point-to-point private line used by an organization for communication. An IPLC can be used for Internet access, business data exchange, video conferencing, and any other form of telecommunication. IPLC is one of the basic requirements for Information Technology enabled services like Business Process Outsourcing. In the instant case, IPLCs allow a dedicated capacity for a private, secure communication link from India to the US over the Internet which enables CIS to communicate with the customer. It was submitted that CVG makes payment for such link charges to telecom service providers in the USA and cross charges the portion of the cost incurred by it in connection with the India half link to CIS, which is accordingly reimbursed by CIS to CVG. The Ld. AR submitted that the AO has made an addition on account of such link charges by stating that they are taxable as 'Equipment Royalty' in terms of Article 12(2) read with Article 12(3)(b) of the DTAA and accordingly taxed it @ 10% on gross basis. In addition to the finding of the AO that link charges are taxable as 'Equipment Royalty', the AO also held that the payments pertaining to link charges are taxable as 'Process Royalty' both under the Act as well as DTAA. It was submitted that the link charges do not qualify as Equipment Royalty. The Indian judiciary has made it clear that it is important to see whether there was any intention to transfer the right to use or not. It was submitted that it cannot be controverted that CVG/CIS have any control or possession over the equipment i.e. the network facilities are under the control of and maintained and operated by the service providers. CVG/CIS merely avail a service. With regard to Equipment Royalty, it was submitted that the Tribunal for AY 2006-07 held the issue in favour of CVG and the Ld. CIT (A) has followed the order of the ITAT in the year under consideration and has allowed assessee's ground.
Conc entrix CV G ...
v. Total payment for the service does not substantially exceed the rental value of the computer equipment for the contact period.
18. In the present case the Revenue has not established that the CIS exercises a certain degree of possession and control over the equipment and the fulfilment of make available clause. Further, the Ld. CIT-DR failed to bring any material on the record to contradict the above finding of the Tribunal on the issue of taxability of payment of link charges/IPLC charges as royalty. Thus, in view of the above and the reasoning mentioned in the appellate order of the Tribunal in first round, we do not find any infirmity in the finding of the Ld. CIT(A) in this regard. We therefore, decline to interfere with the finding of the Ld. CIT(A) on the issue of the taxability of payment of link charges/IPLC charges as royalty. Accordingly, this issue; taxability of payment of link charges/IPLC charges as royalty is decided against the Revenue.