International Law

Important ruling on the taxation of foreign companies carrying calls abroad

By Apar Gupta

The authority for advance rulings in an application filed under section 245Q(1) of the income tax act, 1961 by the Cable & Wireless Networks India Private Limited has held that since, (a) the payments made by the applicant to its foriegn partner are in the nature of business profits; (b) in the absence of there being any permanent establishment of the its foriegn partner in India this kind of income is not taxable here.  The case concerned the supply of international long distance and domestic long ditsnace telecommunication servics, wehre the applicant would provide the Indian leg of the service by using its own network and equipments and netowkr of other domestic operators and the international leg of the servce would be provided by its foriegn partner using its foriegn architechture.  The voice data is carried by teh applicant in India on its own network and delivered to its foriegn partner at Marseilles in France from where the latter carries it to Alpharetta, USA. In India leg of the service there is no involvement of the network or equipment of C&W Uk. TCS pays one time charge for the installation and recurring charges for the connectivity charges.

Full post as published by India Law & Tech on July 11, 2009 (boomark / email).