Case Notes

Abstract

The author provides three case notes on recent significant international tax decisions released by the Supreme Court of India and the Delhi High Court. The first note explains the Supreme Court’s February 2017 decision in Director of Income Tax v. AP Moller Maersk AS, which confirmed the decisions of the Income Tax Appellate Tribunal and the High Court that payments made to the AP Moller Maersk AS international shipping line by its agents located in India for the use of a shared global telecommunication facility were not fees for technical services, which would have been liable for tax in India. Rather, the Supreme Court held that the payments were cost reimbursements, which did not have an income character and, therefore, were not liable to tax in India. The second case addresses the Supreme Court’s decision in Formula One World Championship Limited v. Commissioner of Income Tax, International, which upheld the Delhi High Court’s decision that the taxpayer carried on a business in India through a permanent establishment and was liable to tax in India in respect of the profits attributable to that permanent establishment. The third note outlines the judgment of the Delhi High Court in Commissioner of Income-tax, International-2 v. ZTE Corporation, which held that payments for software embedded in mobile telephone equipment were not royalties, but were part of the purchase price of the equipment itself. Therefore, India could not impose tax on the software component of the purchase price as a tax on a royalty.