Tax Treaty Case Law around the Globe 2014
1. Aufl. 2015
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S. 201Chapter 20 India: Verizon Communications: Broadband Charges Paid from India Taxable as Royalty
D.P. Sengupta
20.1. Introduction
Cross-border provision of satellite, bandwidth and telecom services has been a matter of litigation in India for a long time now. The OECD considers these as rendition of services, pure and simple, and consequently the income therefrom not taxable in the absence of a permanent establishment (PE) in the source state. In India, courts and tribunals have, by and large, followed the OECD line so far, although there have been occasional dissenting views. The recent Madras High Court decision in the Verizon case in the context of broadband services, however, has taken a different view and created some controversies.
To put the subject in proper context, it will be interesting to examine a few earlier cases. A ruling by the Indian Authority for Advance Rulings (AAR) in the case of Dell India is of particular interest since the facts therein were almost identical with the facts in the present case.
In that case, Dell India entered into an agreement with BT America (BTA) in terms of which BTA provided Dell with a two-way transmission of voice and data through telecom ba...