TaxTMI 
TaxTMI 
2014 (10) TMI 212
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.... Ground No.2 above, the learned DRP-1 has grossly erred in ignoring the settled position that news reporting is beyond the purview of copyright as stipulated in Section 52 of the Copyright Act. 4. Without prejudice to Grounds 2 and 3 above, the learned DRP-1 is not correct in law and in facts in holding that news reporting is covered under section 13 of the Copyright Act. 5. That the learned DRP-1 has erred in law in upholding the action of the Assessing Officer in charging interest under section 234B of the Act of Rs. 36,67,329/- by stating that the charge of interest is consequential even though the provisions of section 234B of the Act do not apply as the payer is liable to deduct the full tax at source and accordingly the appellant (non resident) was not liable to pay advance tax on the said amount.' 3. The principal issue arising in the instant appeal is whether any copyright subsists in the news reports & photographs distributed/ circulated by the assessee within India in terms of relevant provisions of Copyright Act, 1957, and accordingly, such impugned copyright qualify as "royalties' within meaning ascribed under Paragraph 3 of Article 13 of DTAA between India and Franc....
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....ation of worldwide news, textual as well as visual which are essential for the conduct of an international News Agency for wide circulation of news 8. In the Assessee's viewpoint, News per-se are not property hence, are not copyrightable. Therefore, as per terms of agreements between AFP and IANS& PTI, the predominant or primary intention between the contracting parties involves consideration for transmission of photos, reporting of current events etc. and does not secure any copyright in the expression of such news reports. Accordingly, the payments made under the above said agreements did not partake the nature of "royalty' in the context of the meaning of the term royalty in common parlance as well as the definition contained in Explanation 2 of Section 9 (1) (vi) of the Income Tax Act or Article 13 (3)of the Indo-French Treaty. The Assessee had filed a NIL return for A.Y. 2006-07. 9. The A.O. as well as the Ld. CIT(A), were of the view that various terms under the agreement entered into between assessee and Indian news agencies inasmuch as IANS&PTI and consideration of pleadings and contentions clearly pointed out that copyright subsisted in news-reports as well as photograph....
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....qualitatively are the most important elements of the individual news stories (i.e.) the photographs headlines and story leads). Paragraphs 41); Details of AFP owning all title and interest in the numerous copyrights of the photographs (paragraphs 49, 50); Headlines (paragraph 58); story leads (paragraphs 65 and 66); copyrights management information (paragraph 73) and details of claims for information of copyrights pages 16 and 17 of the PB). The Information pertaining to another complaint filed by AFP against Star that reiterates AFP's position that its products are copyrighted and its publication/reproduction without authorization leads to infringement of copyrights. These documents, prepared and submitted by AFP to the courts, are filed as additional evidence. By the Revenue (iii). It was further submitted that, Deptt. had sought information on its case with Google Inc. but information was never provided to the Department. Further, a copy of news item with a credit "AFP" published by Times of India in its edition dated April 28, 2014 with headlines, " N Korea calls South's prez 'prostitute' " and" Glad Mandela isn't alive today: Tutu" were submitted as illustra....
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.... between News Aggregators and News Agencies regarding the hot news doctrine and also the imperative need to amend the copyright law so as to protect the rights of news agencies. Most of the litigation in America on the issue of hot news doctrine has ended in compromise between the litigating parties. (iii). The Ld. AR Shri. T.N. Chopra argued that DR has misquoted Appellant's Counsel by stating that information provided by AFP under the agreements with PTI, IANS and web subscribers is intellectual property; and that he subsequently modified his argument to say that the payments received by AFP were for transmission of information regarding current events and not for transfer of any copyright. This is incorrect. According to the ld AR Shri T.N. ChopraIt is the consistent stand of the assessee before the Revenue that the true intention of the parties is transmission of information about current events. (And referred - Synopsis of arguments filed before us at pages 1 to 9 of paper Book 3 whereby the stand of the Appellant on basic issues involved has been clearly indicated which is based on the detailed submissions made earlier before the Assessing Officer, CIT (Appeals) as well ....
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....or and that it possesses at least some minimal degree of originality. The first person to find and report a particular fact has not created the fact he has merely discovered it. One who discovers a fact is not its maker or originator. News of the day has been specifically held to be covered in this category in Feist's case. (Refer para 15 at page 100 of PB 3) and strongly opposed the admission of the additional evidences. 12. We have heard both the parties at length and perused the material on record on the issue of allowability of fresh/ additional evidence in terms of Rule 29 of the ITAT Rules, 1963. 13. On perusal of Application field on 13.06.2014 requesting the admission of additional evidence we note that the information adduced by the Revenue Department particularly that of case details pertaining to assessee's case against Google Inc. before U.S. District Court, Colombia were time and again solicited from the Assessee/ Appellant at different stages of litigation i.e. both by AO as well as Ld. CIT(A). In this regard, it is imperative for us to note that the assessee was provided with sufficient opportunities to submit relevant details/ documents pertaining to Google In....
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....nvited our attention and discussed the relevance of each of the paragraph of the complaint that contains information on the business, products of the assessee, copyrights owned by it and its allegations regarding infringement of copyrights of Google Inc. And the stand adopted by the assessee before the US District Court of Colombia on the issue of copyright infringement, which in the present case has a bearing on deciding the central issue in the present case. 16. We observe that the copy of complaint which could not be considered at any prior stage of proceedings in the instant case and could only be brought to light from the internet domain before us hence, the same needs to be considered. Therefore, it would be prudent for us to state that in absence of any direct evidence to the contrary with respect to case-details/ complaint by the assessee, we are left with no option than to consider the next best evidence, which in the instant case happens to be case-details as obtained from the internet. In this regard, it is important to point out that, admission of the same shall cause no prejudice to the assessee as the same pertains to assessee's own case and even none of its contents....
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....photo materially and is required to mention the source along with the print in the newspaper/ magazine. Without accepting, if it could be assumed that the content of information is raw material then the user should be at liberty to use & process as per his will, secondly, the finished product must be a distinguishable & new product (in comparison to raw material) and thirdly the user in that case need not be required to mention "AFP" as their source. - The consideration paid by subscribers to AFP is not for their personal consumption, but for commercial exploitation and such rights are inbuilt within the agreement. - The subscriber copies the news & photos from the wires of the assessee. - Such content is only available to the subscribers. - The subscriber puts them on its website. - The website of the assessee is a news website. The target of the subscriber is to attract more & more visitors to its website. The more the number of visitors on his website, the more he gets in the advertisement revenues. - The content of various subscribers displayed on there has to mention the source /credit line. Such use of content helps the subscriber to earn more & more advertisement reven....
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.... possessed by him in examination papers prepared by him for the University shall be vested in the University ......." Later on the University entered into an agreement with the University of London Press Ltd (hereinafter referred to as the plaintiff) by which it was agreed to assign and make over to the plaintiff company all each copyright and rights of publication as the University might have in such respective papers. The plaintiff company proceeded to publish the examination papers *in 1916. The Court decided that copyright in the question paper were vested in the professors jointly with the London University and the plaintiff company. Hence there is no bar for joint ownership in the copy right as decided in the land mark case. 24. Further reliance was placed upon the case of Zee Entertainment Enterprises Ltd v Gazendra Singh 2008 (36) PTC 53 (Bom), the HC has reiterated that although there is no copyright in concept but copyright does exists, as a general proposition in a concept note and the same is entitled to be protected under the Copy Right Act. If it contains copyrightable work, the author/owner thereof would be entitled to the protection accorded under CRA, 1957. 25. H....
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....ts in the instant case, we now proceed to consider the arguments/ submissions made by respective parties before us for determination of the principle issue under consideration. At first, the arguments put forth before us by the Ld. AR have been summarised below: (i). Shifting of stand by the Revenue: The basic stand of the Assessee before the Revenue Department has been that the news reports as well as photographs provided by the assessee under the AFP news wire containing reports of current events lack originality and are devoid of modicum of creativity. This basic contention has not been controverted by the Ld. DRP and the Panel has observed at page 17 of its order for assessment year 2008-09 that "nowhere has the AO invoked the provisions of Section 13(l)(a) and even otherwise originality is not a condition and the word 'original' has not be prefixed before the word 'literary' either in the Act or in the Treaty". A similar observation has been made vide para 8.1.5.1 at page 19 of its order. Thus, the consistent stand of the AO, the learned CIT (A) and the learned DR has been that originality is not required for qualifying as literary work. It was on this basis t....
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.... by both the parties on the basis of the prevailing facts and issues involved. It is legally incorrect to say that such litigation in the USA would automatically conclude the issue involved in the present appeals. (A) The example of current news given in para 12 by the Ld. CIT DR in his submission does not help the Revenue. The agreements with PTI, etc. merely envisage providing current news containing reports of current events. There is no indication of any articles on various subjects being provided under the newswire by AFP. As indicated above, this position has been accepted by the Department earlier and shifting of stand by the Department at this belated stage is factually and legally unsustainable. (iv) The Ld. CIT DR has referred in para 8 of his submissions to the statement by AFP in the complaint against Google regarding "infringing the heart of AFP's stories what qualitatively the most important elements of the individual news stories (i.e. the photograph, headlines and story leads)." This statement has been relied upon by the Revenue in support of its stand that news items of AFP are copyrightable. This is clearly at variance with the stand of the DRP that there is....
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....out of the agreement entered into by AFP. Since the information has been gathered by AFP and is not in public domain, it is being provided under the agreement to the parties on payment of consideration. Had the information been in public domain and available to the consumers, section 52 would have enabled the consumers to use the information for news reporting purposes. This is the rationale and not what the learned DR has claimed in para 16 of his submissions. (vi) With regard to the additional evidence concerning Daniel Morel, it is stated above that the same may not be admitted being incomplete, unverified and filed at the belated stage. Without prejudice to the objection against admission, it is submitted that in a case where photographs taken by a professional photographer of outstanding stature has unique aesthetic merit eloquently depicting human suffering, such a photograph has intrinsic value in a non-news context. If it is used for non-news context and not for reporting contemporaneous news and further acknowledgement of the source is deliberately removed such a case would obviously be outside the purview of Section 52. (vii) An array of judicial authorities have been c....
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....ed is attributable towards sale of information is factually incorrect and overlooks explicit provisions under the said agreements and are contrary to their line arguments. Reference is made to article 17 on page 47 (IANS), article 5 on page 49 (HT Media), article 6 on page 28 article 16(a) on page 29 of the PB-1 filed by the assessee. Further, the payments are received for allowing the use of licensed information. These provisions are explicitly stated in the agreements (page 34- and 35 (PTI), pages 45 to 48 (IANS) and pages 56 and 57 (HT Media Services). (C) Nature of Information: As regards the claim of the Ld. AR to the effect that, only information pertaining to current events/ current news has been provided is not true. Three agreements filed by the assessee in the PB-1 provides for the person to receive AFP's information as clearly defined in the agreement. Schedule A of agreement with PTI defines the information as material derived from the AFP services (page 33, PB-1). In the IANS agreement the definition of information is available on page 44 of the PB-1 and read as: "AFP International news Picture Service covering political, economic, business, corporate, orts and ot....
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.... are a news item, "AFP news agency sues the Star newspaper over unauthorized use of its stories". The news item reads that, "The new agency is accusing the Star, owned by Radio Africa, of infringing its copyright by reproducing and authorizing the reproduction of substantial portion of its literary work without seeking prior written authority". (C) The Ld. DR contends that, whether the Assessee could now turnaround and claim (as Ld. AR has being claiming repeatedly) that there does not exist any creativity, copyright in its information and the same is not in the nature of literary work in absence of any originality solely for the purposes of avoiding taxation in India. How will it deal with its own admission and averment in the complaint against Google Inc., which has led to a settlement with Google Inc. entered into licensing agreement and consequent withdrawal of complaint by AFP? (D) The Ld. AR has placed reliance upon the Handbook of Copyright Law in India as appearing in pages 52 to 72 of the PB submitted by the Revenue. It is contended by the Ld. DR that this is an important government document on Copyright. At Page 59, in response to a question whether a photograph is an a....
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....ies of the work to public and make translation of the work and adaptation of the work. Without grant of such licensing rights which are otherwise exclusive right of the information owner (AFP), any usage would lead to infringement of copyright. (A) The Ld. AR argues that, even if the argument of the revenue is accepted that information provided is a literary work, Section 52(b) of the Copyright Act, 1957 would apply to current events and fair dealing with the current event (literary work) will not lead to infringement of Copyright Act, 1957. The Ld. AR claims that provisions of Section 52 override Sections 13 and 14. Ld. AR claims that AFP is allowing the user to deal with the current event and such use does not lead to infringement of its right. In this regard, the Revenue submits that the position adopted by the assessee is contrary to the provisions under different agreements and also run contradictory to its assertion in complaint against Google Inc. and Star. (B) Section 52(b) of the Copyright Act, 1957 provides the purposes of fair dealing. These are situations in which the law allows use of a work without permission of the owner of Copyright. (Refer page 26 of the PB-1 of ....
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....he statutes are not pari- materia. While, on the other hand, Ld. AR seeks protection under the Copyright Act, 1957 by invoking Section 52 (b) of Copyright Act. As mentioned above, the licensing of information and use of the 'same by the subscribers is not covered by the fair deal clause in Section 52 of the Copyright Act. (A) The terms of Copyright, literary work, artistic work or scientific work is not defined in the tax treaty between India and France (DTAA). Article 3(2) of the DTAA reads as: "As regards the application of the Convention by a Contracting State, any term not defined therein, shall unless the context otherwise requires, have meaning which it has under the law of that Contracting State concerning the taxes to which Convention Applies". The Convention in India applies to income tax (Article 2, DTAA). It is apparent that these terms are also not defined in the Income Tax Act. In view of explicit provisions of the DTTA, the meaning of undefined terms cannot be sought from other sources including other laws of India. The Revenue submits that the term copyright has been used in the agreements of assessee with Indian news agencies and these agreements have given mea....
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....the USA. Section 101 of title 17 of the United States Code is available on pages 76 to 82 of the revenue's Paper Book. Literary work, is de fined as: "Literary works" are work, other than audio-visual work, expressed in words, numbers, or verbal or numerical symbols or indicia, regardless of the nature of material objects, such as books, periodicals, manuscripts, phone records, tapes, disks, or cards, in which they are embodied. The news items/ news stories of the assessee are expressed in words. The assessee has itself registered copyright in its works in the USA and must have been registered as literary works. Its complaint against Star mentions its work is literary work (refer page 20 of the revenue's PB). Similarly, photographs are artistic work is and also subject to copyright protection. In this regard the Revenue referred to a case wherein AFP was asked to pay USD 1.22 million for infringing the copyright over the photographs of Photojournalist Daniel Morel. Photographs captured the devastation after the 2010 earthquake that struck Haiti. AFP had lifted photographs from the internet and transmitted the images to large network of subscribers, which included news organ....
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....ongly supports these orders. 32. We have heard both the parties at considerable length and gone through case records and relevant case-laws cited by them. We are not reiterating the complete set of facts at this stage for the sake of brevity. The issue hotly debated by the parties before us is whether news reports and photographs could be subject matter of copyright in terms of Section 13 of the Copyright Act, 1957 and whether the consideration received by the assessee under the distribution agreements qualify as "royalties' in terms of Article 13 of Indo-French DTAA and also Section 9(1)(iv) of the Income Tax Act, 1961. The relevant portion of Art 13 is reproduced below: "Article 13: Royalties and fees for technical services and payments for the use of equipment 1. Royalties, fees for technical services and payments for the use of equipment arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other contracting state. 2. However, such royalties, fees and payments may also be taxed in the contracting State in which they arise and according to the laws of that Contracting State, in which they arise and according to the laws of ....
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....ontracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the contract under which the royalties, fees for technical services or the payments for the use of equipment are paid was concluded, and such royalties, fees for technical services or payments for the use of equipment are borne by such permanent establishment or fixed base, then such royalties.' 33. On a perusal of Article 13 extracted above, it could be seen that, the word "royalties' is being defined to include payments received for the use of, or the right to use, any copyright of literary, artistic or scientific work etc. It is evident from a reading of the said Article 13 that, "royalties' covers within its fold payments pertaining to copyright of literary, artistic work etc. and since, the above terms i.e. copyright of literary, artistic work etc. has neither been defined or illustrated under Income-tax Act nor under present Double Taxation Avoidance Agreement between India and France, we need to place reliance from relevant provisions of Indian Copyright Act, 1957 in order to understand the true meaning and context for usage of the expression copyright of l....
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.... test of de minimis. The Principle of de minimis is generally used to courts to determine infringement or Copyright violation disputes. To put it simply, the expression de minimis means that law will not resolve petty or unimportant disputes. 35. The jurisdictional High Court in the case of India TV Independent News Service Pvt. Ltd. & Ors V Yashraj Films reported in 192 (2012) DLT 502 has observed that "de minimis' could be translated as (i) The law does not concern itself with trifles (ii) the law does not regard trifles and (iii) the law cares not for small things. Further, the world trifle is being understood by the Courts as unimportant or unsufficient. In view of the above guidelines, it requires to be ascertained whether in the instant case the news stories/ current news distributed by the assessee satisfy the de minimis rule. 36. "Copy-right' is referred to (in Salmond's jurisprudence, 11th edition, p. 462) as an immaterial form of property recognised by law, being the product of human skill and labour or of a man's brains. In all the English text books and which it is unnecessary to refer at length, copyright has been regarded as incorporeal movable property and ....
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....f original or inventive thought, for Copyright Acts are not concerned with the originality of ideas, but with the expression of thought, and, in the case of a literary work, with the expression of thought in print or writing.... There is copyright in original dramatic works and adaptations thereof, and such copyright subsists not only in the actual words of the work but in the dramatic incidents created, so that if these are taken there may be an infringement although no words are actually copies. There cannot be copyright in mere science effects or stage situations which are not reduced into some permanent form.' 40. Similarly, it was pointed out by Copinger in his book on Copyright 11th Edition that what is protected is not the original thought but expression of thought in a concrete form. In this connection, the author makes the following observations based on the case law: "What is protected is not original thought or information, but the original expression of thought or information in some concrete form. Consequently, it is only an infringement if the defendant has made an unlawful use of the form in which the thought or information is expressed. The defendant must to be li....
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....I for Indian Territory 6. Scope of the agreement PTI acknowledges that AFP is the owner of all Information provided to it, and that PTI under this agreement is authorised to use the information only for the term of this Agreement. AII rights with respect to the Information, not, explicitly granted to PTI are reserved to AFP. Continued use of the information after termination or expiration of this Agreement is forbidden. 8. Distribution Restrictions AFP has reserved the exclusive right to determine who receives its information and to restrict the retransmission, distribution or method of distribution of its information. These restrictions are set forth in Schedule B. Schedule B Licensed Uses of the information 1. Only the specific uses enumerated in this Schedule are granted. This license shall be strictly construed. It is understood that any use that exceeds the license granted herein shall violate AFP rights. 2. A licence for the purpose specified in Schedule B 3 only allowing PTI to distribute the AFP Information described in Schedule A 1. 3.a. PTI may distribute as part of its services in English and Hindi (Bhasha) for resale within the Republic of India any part of the....
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....greement shall be deemed a copyright infringement in addition to a breach of contract, and AFP shall be entitled to avail itself to the full remedies at law provided for both copyright infringement and breach of contract without limitation. Schedule B - Clause 8 8. Credit a. In any display or republication or redistribution of any of the Information received by Subscriber from AFP, Subscriber shall ensure that AFP's copyright notice or credit line "(AFP)' shall appear on AFP's Information. Copyright notice shall read as follows: "(c) AFP 2004 "or in the alternative, "Copyright AFP, 2004.' The credit line for photos shall read "AFP' or "AFP Photo' and the name of the photographer except as otherwise indicated by AFP. AFP shall notify Subscriber which method of credit acknowledgement is to be used. b. In the event of publication AFP material in electronic form, the AFP credit line and copyright notice must appear with each story. The copyright notice shall be hypertext link to the AFP end-user language as set forth in Schedule E. Additionally, where headlines link to AFP stories, an AFP credit line or logo must appear in conjunction with the headline. Schedule E- Clause 3 3. Su....
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....ct hereto and are in lieu of all other warranties, expressed, implied or statutory, including implied warranties or merchantability and fitness for particular purpose. Add Agreement with IANS Schedule C (Clause 5, Clause 6) 5. This license is non-exclusive 6. AFP's Information is provided to IANS as direct news coy from its real-time newswires. As such, the information within the normal context of a newswire will comprise contemporaneous news coverage that by the nature of developing events may contain errors including sequence, completeness, accuracy and/ or reliability. In providing the Information to IANS for publishing. AFP expects that the Information may require editorial intervention by the IANS on a timely basis when notified by AFP, and that IAMS will be solely responsible for the technical implementation and presentation of the Information both on an automated or editorial basis. Clause 9 9. Credit In any display or republication or redistribution of any of the Information received by IANS from AFP, IANS shall ensure that AFP's copyright notice or credit line "(AFP)' shall appear on AFP's Information. Copyright notice shall read as follows: (C) AFP 2005/6 "or in th....
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.... different sources including AFP's own personnel, domestic as well as international news correspondents, and other agencies etc. who have a good amount of experience in news reporting. Such news stories as obtained by AFP is further evaluated and processed by its editorial team which comprises of a network of senior journalists who are the best journalistic minds in news business possessing specialized skills and are capable of coming out with news-stories having a distinct feature and innate quality. It is for this very distinct feature and innate quality that AFP news is preferred and is revered to as one of the most reliable news agencies in the world since its year of inception i.e. 1835. 48. On a perusal of clause of the agreement we understand that AFP invests substantial amount of its capital in its personnel's, correspondent, editors' etc. and create its own unique quality in news reporting. This understanding could be explicated on the premise of two main points i.e. (a) the news story supplied by it cannot be altered by the Indian news agencies or other distributors and any change in the news reports can only be carried out by AFP itself; (b) the volume of news-stories s....
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....rther it would be prudent for us to take notice regarding a serious debate going on in America between News Aggregations and News Agencies on the doctrine of "not news' which has been brought to our attention by the ld AR however we do not wish to express any views with regard to its applicability leave it open. (b) Second Category-News story including archived news: Since it is established above that news per se does cannot be copyrighted it could be stated that, "There is no copyright over news. However, there is copyright over the way in which a news item is reported." In continuation to the example put forth by the ld DR in the first category above, if a news item or a story is published by anyone, indicating the background of ongoing heat wave, records of temperature, and historical records of rain in the first week of June and also respite from power shortage or progress of monsoon, then this news item/ story cannot be reproduced or used by anyone without proper authorization. 52. Further, so as to appreciate the distinction between mere reporting of facts from news stories which constitutes a form of expression, it would be worthwhile to analyse the recent reporting about....
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....tances involved in the instant case it could be concluded that copyright subsists in such news item/ news story under consideration. (c) Third Category-Photographs: The Ld. DR has brought to our notice that, AFP and Getty Images were ordered to pay compensation to freelance photojournalist Daniel Morel for using his images posted on Twitter related to the 2010 Haiti earthquake without his permission, in violation of copyright and Twitter's terms of service. In light of the above factual context, it could be noted that where photographs taken by a professional photographer of outstanding stature has unique aesthetic merit eloquently depicting human suffering, such a photograph has intrinsic value. Similarly, in the present case the photographs as distributed by the assessee is taken by a professional photographer of high levels of competence thus, on a reading of the subscription agreement, it emerges that the images or photographs as uploaded in the assesse's website cannot be altered with except minor fading effect and resizing. The credit line for assessee's photographs is required to display a specific credit line i.e. AFP. 56. In the light, taking cue from Section 2(c)(i)....
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....as well as the various models of Copyright laws prevailing in common law countries like UK as well as USA. In this regard, we note that Section 52 of the Copyright Act stipulates "Certain acts not to be infringement of copyright'. Further, clause b of Section 52 stipulates as under: (b) a fair dealing with a literary, dramatic, musical or artistic work for the purpose of reporting current events- (i) in a newspaper, magazine or similar periodical, or (ii) by [broadcast] or in a cinematograph film or by means of photographs. 61. From a reading of the above outlined clauses, it could be noted that the above clause is being built into the Copyright scheme in order to protects rights of user of copyrigtable work. In other words, fair dealing is the rights of user and not of an author or owner of copyright. The whole premise of the assessee's argument in the present context by drawing the contours of copyrightability over its news-reports or current events in contradistinction to nature of rights possessed by its user's i.e. Indian News Agencies is misplaced. 62. The assessee has in the instant case by way of grant of licence to its users obtained a commercial value for distributio....
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....orks Asia LLC 222 CTR 86 (Bombay). 66. The ld CIT DR on the other hand submitted that the case laws cited by the assessee are distinguishable on facts as the assessee had denied its liability to pay tax in India and under those circumstances it cannot be claimed that the payer should have deducted tax at source. He relied on the decision of the jurisdictional High Court in the case of DIT-I, International Taxation Vs. Alcatel Lucent USA, Inc. In ITA No. 327/2012, ITA No.330/2012, ITA 338/2012 & ITA No.339/2012 and others, judgement dated 07.11.2013. 67. After hearing rival contentions we find that the assessee's case is similar to the facts of the case of M/s Alcatel Lucent USA, Inc (supra). In this case also the assessee did not admit to any income in its returns. The contention of the assessee before us is that, no part of its income is taxable in India. 68. When the assessee denies its liability to pay tax on an income in question then the inference would be that the payer did not deduct tax at source because of its request made to the the payer, not to deduct which is consistant with its stand that the income is not liable to tax. 69. The Hon'ble Delhi High court in the cas....
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....e revenue, to hold that even though the assessee did not admit any tax liability in India while filing the return and even up to the stage of first appeal, and correspondingly the payers were also not liable to deduct tax under Section 195(1), still it can take credit for the tax "deductible", though not deducted, by the Indian payers from the remittance made to the assessee. In our opinion this factual position makes a crucial difference to the legal position also and, therefore, the benefit of the decision of this Court in Jacabs (supra) cannot be extended to the assessee. 21. We are unable to uphold this part of the decision of the Tribunal. It must be remembered that in the note appended to the return the assessee was quite categorical in denying its liability to be assessed in India. It relied on the double taxation avoidance agreement between India and USA and pointed out that there was no permanent establishment in India. It further stated that the telecom equipments were sold outside India and the payments were also received outside India and thus the assessee did not have any taxable presence in India so as to be liable for tax on its Indian income. If this was the stand ....