Transponder fees treated as royalty, with tax withholding upheld under the Income-tax Act and treaty framework.

Transponder fees paid to a non-resident satellite operator were treated as royalty under the expanded meaning of "process" in section 9(1)(vi) of the Income-tax Act, and were therefore taxable in India. The Tribunal applied judicial consistency, noting that the identical issue had already been decided against the assessee in earlier years and that no binding jurisdictional High Court ruling had overruled that view. On that basis, the withholding obligation under section 195 was upheld, and tax deduction at source on the transponder payments remained applicable.

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Issues: Whether transponder fees paid to a non-resident satellite operator were taxable as royalty under the Income-tax Act, 1961 and the India-USA tax treaty, and consequently subject to withholding tax under section 195.

Analysis: The Tribunal noted that the identical issue had already been decided against the assessee in its own case for earlier assessment years, where the payment for transponder capacity was held to fall within the expanded meaning of "process" in section 9(1)(vi). It further held that, in the absence of any binding jurisdictional High Court decision overruling that view, judicial consistency required following the earlier co-ordinate bench decisions, notwithstanding later contrary decisions from other High Courts relied upon by the assessee.

Conclusion: The transponder fees were held to be royalty chargeable to tax in India, and the withholding obligation under section 195 was upheld; the issue was decided against the assessee.

Final Conclusion: The Tribunal affirmed the Revenue's stand on taxability of the transponder payments and maintained the demand to deduct tax at source on those payments.

Ratio Decidendi: Where an identical issue has been consistently decided in the assessee's own case and no contrary jurisdictional High Court ruling exists, the Tribunal will follow its earlier binding co-ordinate bench view and treat transponder payments covered by the statutory definition of royalty as taxable in India.

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