Transponder lease receipts not taxable as royalty where binding prior decision remains operative without stay.

Receipt from lease of transponder facility was not taxable as royalty under section 9(1)(vi) of the Income-tax Act read with Article 12(3) of the India-USA DTAA, because the issue was already covered by the Court's prior binding decision in the assessee's own case on transponder-related receipts. The pendency of a challenge to those earlier decisions before the Supreme Court did not dilute their binding force in the absence of any stay. Applying the principle that an operative judgment continues to govern until stayed, the Court held that the controversy had already been answered against the Revenue and no substantial question of law arose.

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Issues: Whether the amount received for lease of transponder facility was chargeable to tax as royalty under section 9(1)(vi) of the Income-tax Act, 1961 read with Article 12(3) of the India-USA DTAA, and whether any substantial question of law arose in view of the earlier binding decision on the same issue.

Analysis: The issue raised was held to be covered by the Court's earlier decision in the assessee's own case for a prior assessment year, which had followed the existing judicial view on transponder-related receipts. The pending challenge to those earlier decisions before the Supreme Court did not alter their binding effect in the absence of any stay. Applying the principle that a judgment continues to operate unless stayed, the Court found that the controversy was already answered against the Revenue.

Conclusion: The receipt from lease of transponder facility was not to be taxed as royalty on the basis urged by the Revenue, and no substantial question of law arose for consideration.

Ratio Decidendi: Where the legal issue in a tax appeal is already concluded by a binding prior decision and that decision has not been stayed, the appeal gives rise to no substantial question of law and is liable to be dismissed.

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