Transponder fee payments treated as royalty for use of process, making the foreign payment subject to withholding tax.

Transponder fee payments to a foreign satellite operator were treated as royalty because the amounts were paid for the use of, or right to use, a process under both the Income-tax Act and the India-USA Tax Treaty. The Tribunal followed its earlier co-ordinate bench ruling in the assessee's own case and found no distinguishing facts or contrary authority to depart from that view. On that basis, the payments were held taxable as royalty and subject to withholding under section 195.

---

---

Issues: Whether transponder fee payments made to the foreign satellite operator were royalty and therefore subject to tax withholding under section 195.

Analysis: The Tribunal followed its earlier co-ordinate bench decision in the assessee's own case and held that payments made for use or right to use of a process fall within the ambit of royalty under both the Income-tax Act and the India-USA Tax Treaty. No distinguishing facts or contrary decision was shown to depart from that view.

Conclusion: The issue was decided against the assessee and in favour of the Revenue; the transponder fee payments were held taxable as royalty and liable for withholding under section 195.

---