Transponder fee payments treated as royalty and taxable in India, triggering tax deduction at source obligations.

Transponder lease payments made to a Malaysian satellite operator were treated as royalty under the Income-tax Act and the India-Malaysia DTAA, following the Tribunal's earlier orders in the assessee's own case and the post-amendment scope of section 9(1)(vi). The Tribunal did not depart from its consistent prior view, noting the absence of any binding jurisdictional High Court ruling to the contrary. On that basis, the payments were held taxable in India and the payer was required to deduct tax at source under section 195 because taxability had already been concluded against the assessee.

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Issues: Whether transponder fees paid to the Malaysian satellite operator were taxable as royalty under the Income-tax Act, 1961 and the India-Malaysia DTAA, and whether tax was deductible at source under section 195.

Analysis: The Tribunal followed its earlier orders in the assessee's own case for prior years, where the same transponder lease payments were held to fall within the definition of royalty after the amendment to section 9(1)(vi), and the Delhi High Court view relied on by the assessee was not accepted as a reason to depart from the consistent line of Tribunal decisions. It was also noted that there was no binding jurisdictional High Court ruling taking a contrary view and that the payer's obligation to deduct tax at source depended on the chargeability analysis already concluded against the assessee in earlier proceedings.

Conclusion: The transponder fees were held to be royalty and taxable in India, and the assessee was held liable to deduct tax at source under section 195; the issue was decided against the assessee and in favour of the Revenue.

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