Satellite transponder receipts are not royalty in India; treaty definition is not expanded by retrospective amendment.

Satellite transponder and bandwidth capacity receipts were held not to constitute royalty in India under section 9(1)(vi) of the Income-tax Act or Article 12 of the India-USA DTAA, because the retrospective amendment to section 9(1)(vi) could not be read to expand the treaty definition. The Tribunal followed its earlier order in the same matter and the jurisdictional High Court's binding view, including later authority on the same line. Consequential interest under section 234B did not survive independently once the taxability issue failed.

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Issues: Whether the receipts from satellite transponder and bandwidth capacity were taxable in India as royalty under section 9(1)(vi) of the Income-tax Act, 1961 and Article 12 of the India-USA Double Taxation Avoidance Agreement, and whether the assessee was liable to consequential interest under section 234B of the Income-tax Act, 1961.

Analysis: The dispute was already covered by the Tribunal's earlier order in the assessee's own case and by the jurisdictional High Court. The binding view was that satellite transmission receipts do not become royalty merely because of the retrospective amendment to section 9(1)(vi) of the Income-tax Act, 1961, and that such amendment cannot be read so as to expand the scope of the treaty definition under Article 12 of the India-USA Double Taxation Avoidance Agreement. The later High Court decision following the same line of authority was also relied upon. The claim for interest was only consequential to the taxability issue.

Conclusion: The receipts were not taxable as royalty in India under the Act or the treaty, and the consequential interest issue did not survive independently. The issue was decided in favour of the assessee.

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