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2019 (6) TMI 532 - AT - Income TaxCharacterization of income - TDS u/s 195 - amount received by RJIPL from the assessee for providing standard bandwith services - royalty or business income - India-Singapore DTAA - PE in India - HELD THAT:-There is substantial force in the contention advanced by the ld. A.R that though the term “royalty” as used in Article 12 of India-Hungary DTAA takes within its sweep “ transmission by satellite, cable, optic fibre or similar technology”, however, the definition of ‘royalty’ in the India-Singapore tax treaty with which we are concerned has a narrow meaning. Despite the fact that the India-Singapore tax treaty was amended by Notification No. SO 935(E), dated 23.03.2017, however, the definition of ‘royalty’ therein envisaged had not been tinkered with and remains as such. The amount received by RJIPL from the assessee for providing standard bandwith services could not be characterised as ‘royalty’ as per the India- Singapore DTAA, and as rightly observed by the CIT(A), was in fact the “business profits” of RJIPL. Insofar the taxability of the aforesaid “business profits” is concerned, we find that as RJIPL did not have any business connection or a PE in India, therefore, the same as per Article 7 of the India-Singapore DTAA could not have been brought to tax in India. The order of the CIT(A) that amount received by RJIPL from the assessee for providing standard bandwith services was its ‘business profits’, which in the absence of its business connection or PE in India could not be brought to tax in India is upheld in terms of our aforesaid observations and the appeal of the revenue is dismissed.
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