Treaty between India and US – Indian ruling that monthly payments for bandwidth charges treated as business profits, not royalty or fees for included services

The Indian Authority for Advance Rulings (AAR) delivered a ruling dated 18 July 2008 in the case of Dell International Services (India) Pvt. Ltd., Bangalore on whether payment to a non-resident entity for provision of telecom bandwidth services was taxable in India as royalty or fees for included services (FIS) under the India-United States tax treaty (the Treaty).

(a) Facts. The Applicant (i.e. Dell International Services (India) Pvt. Ltd.) was part of the Dell group of companies a…