TaxTMI 
TaxTMI 
TaxTMI 
2011 (3) TMI 466
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....e conclusion that the appellant's activities were in the nature of "process" and as such payments for the same were covered within the meaning of the term 'royalty' as defined under section 9(1)(vi) of the Act. 4. That the Ld. CIT(A) gravely erred in law while concluding that for a payment to qualify as 'royalty' under the provisions of section 9(1)(vi) of the Act it was not necessary that the 'process' for which such payment is made must be used by the customer. 5. That the Ld. CIT(A) also erred on facts while concluding that changing of frequencies and/or amplification of signals from the satellite, jointly or separately, amounts to a 'process' so as to fall within the ambit of the term 'royalty' as defined in section 9(1)(vi) of the Act. 6. That the Ld. CIT(A) erred in law in concluding that mere availability of an intellectual property would be sufficient to constitute the payment as 'royalty' within the meaning of section 9(1)(vi) of the Act. 7. That the Ld. CIT(A) erred in law in concluding that the expression 'secret' did not qualify 'process' and is restricted to 'formula' only as contained in s....
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.... assessment order, the AO summarized the entire process and has referred to the decision of Delhi Bench of ITAT in the case of Asia Satellite Telecommunications Co. Ltd. v. Dy. CIT [2003] 85 ITD 478 by observing that word 'secret' in Explanation 2 to section 9(1)(vi) does not qualify the word 'process' and is restricted to 'formula' only. In Para 6.3 of the assessment order, the AO further relied upon the finding of the ITAT, Delhi Bench in the case of Asia Satellite Telecommunications Co. Ltd. (supra) to establish that the customers of the assessee were also using the process performed within the satellite i.e. other than those performed in the transponder. The AO's view has been upheld by the learned CIT(A). The CIT(A) in Para 7 at page 8 of the order has stated that the assessee's case is quite similar to the case of Asia Satellite Telecommunications Co. Ltd. (supra), which was decided by the jurisdictional ITAT Delhi Bench. The CIT(A) referred to the findings of the Tribunal in the case of Asia Satellite Telecommunications Co. Ltd. (supra) to decide the issue against the assessee. In conclusion at page 11 of the order, the learned CIT(A) has relied upon the decision of the Trib....
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....sessee, namely, Asia Satellite Telecommunications Co. Ltd. (supra) has been discussed by the Hon'ble Delhi High Court in Paras 5 to 9 of their order as under:- "5. The appellant/assessee, viz., Asia Satellite Telecommunications Co. Ltd., is a company incorporated in Hong Kong and carries on business of private satellite communications and broadcasting facilities. This company was formed in 1988 and it claims that it had no office in India. Appeals pertains to the assessment year 1997-98 and it is also claimed that during the relevant previous assessment year, i.e., 1996-97, the assessee had no customers, who are residents of India. During the previous year, relevant to the assessment year under appeal, the appellant was the lessee of a satellite called Asia Sat I which was launched in April 1990 and was the owner of a satellite called Asia Sat 2 which was launched in November 1995. These satellites were launched by the appellant and were placed in a geostationary orbit in orbital slots, which initially were allotted by the International Telecommunication Union to UK, and subsequently handed over the China. These satellites neither use Indi....
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.... part of the income generated by it from the customers to whom the aforesaid services are provided was chargeable to tax in India and for this reason no return income was filed in India. However, Deputy Commissioner of Income-tax (Non-resident Circle), New Delhi as Assessing Officer issued a letter notice, dated 20-10-1999 under section 142(1) stating that the assessee had entered into agreements with various companies for lease of transponders for downlinking programmes to various countries including India and therefore, income of the assessee was chargeable in India. The appellant was accordingly called upon to file its return. The assessee responded by the questioning the authority of the AO and explaining as to why its income was not chargeable to tax in India. It also sought some time to file its return of income. Ultimately, the return was filed on 30-12-1999, reiterating that no income earned by the appellant was chargeable to tax in India. 9. The AO, however, went ahead with the assessment proceedings. The assessment order dated 29-3-2000 was passed assessing the income of the assessee at Rs. 160,28,03,316. According to the AO, the appellant had a business connection in In....