BroadBand and Bandwidth Charges Not a Royalty: ITAT Dismisses TDS claim of Revenue [Read Order]
The Tribunal upheld the CIT(A)’s decision to delete the disallowance of Rs. 7,65,58,000/- and ruled that payments for broadband and bandwidth charges do not constitute royalty. The tribunal dismissed the Revenue’s claim for TDS deduction.
![BroadBand and Bandwidth Charges Not a Royalty: ITAT Dismisses TDS claim of Revenue [Read Order]](https://images.taxscan.in/h-upload/2025/07/12/2062975-tds-claim-taxscan.webp "BroadBand and Bandwidth Charges Not a Royalty: ITAT Dismisses TDS claim of Revenue [Read Order]")
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Revenue’s appeals and upheld the Commissioner of Income Tax (Appeals) [CIT(A)] order that deleted disallowances related to payments for broadband and bandwidth charges rejecting TDS claim. Hinduja Global Solutions Ltd. (assessee), a company engaged in providing information technology and IT-enabled...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Revenue’s appeals and upheld the Commissioner of Income Tax (Appeals) [CIT(A)] order that deleted disallowances related to payments for broadband and bandwidth charges rejecting TDS claim.
Hinduja Global Solutions Ltd. (assessee), a company engaged in providing information technology and IT-enabled services, faced scrutiny for the assessment years 2012-13 and 2020-21.
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The Assessing Officer (AO) disallowed Rs. 7,65,58,000/- under Section 40(a)(ia) of the Income Tax Act, 1961, for non-deduction of Tax Deduction at Source (TDS) under Section 195 on payments made for internet, broadband, and bandwidth charges.
The AO claimed that these payments fall under the definition of Royalty by attracting TDS Provisions. Aggrieved by the AO’s order, the assessee filed an appeal to the Commissioner of Income Tax (Appeals) [CIT(A)].
The CIT(A) deleted the disallowance of Rs. 7,65,58,000/- relying on the Bombay High Court’s decision in UTV Entertainment Television, which held that payments for bandwidth charges are standard fees and not royalty.
Aggrieved by order of the CIT(A), the Revenue filed an appeal before the ITAT. The Revenue argued that the CIT(A) erred in deleting the disallowances, but failed to present any distinguishing decisions or point out errors in the CIT(A)’s findings.
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The two-member bench, comprising Saktijit Dey (Vice President) and Narendra Kumar Billaiya (Accountant Member), heard the appeals ex-parte as no representative appeared for the assessee despite notices.
The tribunal observed that the Revenue failed to present any distinguishing decision in favour of the Revenue and also failed to point out errors in the finding of the CIT(A).
The tribunal upheld the CIT(A)’s findings, observing that the decisions were grounded in precedents from the Bombay High Court in UTV Entertainment Television and Madras High court in Skycell communications services for the bandwidth charges.
The tribunal affirmed that broadband and bandwidth charges do not attract TDS as royalty under section 195 of the Income Tax Act. The appeal of the Revenue was dismissed.
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