Satellite transponder payments for television broadcasting are not royalty under the India-Thailand treaty.

Payments for digital broadcasting of television content through a foreign satellite transponder were not royalty under Article 12(3) of the India-Thailand tax treaty because the foreign party provided broadcasting services using equipment under its control, while the assessee only supplied the programme source signal. The arrangement did not involve exploitation of copyright in a film or television broadcast, nor did it give the payer the use of, or right to use, industrial, commercial or scientific equipment. On that interpretation, the payment fell outside the treaty definition of royalty and was not taxable as such.

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Issues: Whether payments made for digital broadcasting of television programmes through a foreign satellite transponder constituted royalty under Article 12(3) of the Double Taxation Agreement between India and Thailand.

Analysis: The payment was made for broadcasting the assessee's television content through the foreign party's satellite facilities, not for the exploitation of any copyright in a film or television broadcast. The agreement showed that the foreign party rendered broadcasting services using equipment under its control, while the assessee supplied the programme source signal. The arrangement therefore did not amount to use of, or right to use, industrial, commercial or scientific equipment, nor did it fall within royalty as defined in the treaty. The interpretation adopted was consistent with the view taken by the Delhi High Court on the same subject.

Conclusion: The payment did not constitute royalty under Article 12(3) of the Double Taxation Agreement between India and Thailand and the assessee succeeded.

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