TaxTMI 
TaxTMI 
2017 (10) TMI 929
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....616/Del/2012 2. First we take up the appeal having ITA No. 5616/Del/2012 for assessment year 2009-10. The grounds raised by the assessee are as under: 1. That on the facts and in the circumstances of the case and in law, the Ld. Dispute Resolution Panel ('the Panel') erred in not directing the Assistant Director of Income Tax, Circle 2(1), International Taxation, New Delhi ('Ld. AO') to pass appropriate orders holding that the Appellant is not liable to be assessed to tax in India. 2. That on the facts and in the circumstances of the case and in law, the Panel erred in not directing the Ld. AO to follow the order passed by the Hon'ble Delhi High Court (in ITA 1167/2009 and ITA 1122 to 1129/2011) and the Hon'ble Income Tax Appellate Tribunal, New Delhi ('the Tribunal') (in ITA nos. 5385- 5387/Del/2004, 2623-2624/Del/2008, 735-736/Del/2010, 4176- 4177/Del/2011) in Appellant's own case holding that the Appellant is not liable to be assessed to tax in India, when there was no change of facts recorded by the Ld. AO from the preceding years. 3. That on facts and circumstances of the case and in law, the Ld. AO erred in holding that the payments received by t....
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....and, therefore, the satellites as well as operating facilities are maintained and controlled outside India and the customers have no control on physical possession over the satellite nor any rights to use the satellite, are granted to the customers. The customers use the uplink facilities to send the encoded signals to the satellite. The signals are then amplified by the transponder and down-linked over the area covered by the satellite beam. 3.1 For the assessment year under consideration, the assessee filed its return of income on 29/09/2009 declaring nil income. The assessee explained that its profit from business are not taxable in India as no permanent establishment (PE) was maintained by the assessee in India. In the draft assessment order, the Assessing Officer proposed to tax the income of the assessee from satellite transmission operations as royalty/fee for technical services. The Ld. DRP also upheld the decision of the Assessing Officer stating that the SLP filed by the Department against the decision of the Hon'ble Delhi High Court in the case of Asia Satellite Telecommunications Co. Ltd. Vs. DIT (2011) 332 ITR 340 was pending for adjudication before the Hon'ble Supr....
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....ce we have held that the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word "royalty" in Asia Satellite, when the definitions were in fact pari materia (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both parties to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner that such income automatically becomes royalty. It is reiterated that the Court has not returned a finding on whether the amendment is in fact retrospective and applicable to cases preceding the Finance Act of 2012 where there exists no Double Tax Avoidance Agreement. 61. For the above reasons, it is held that the interpretation advanced by the Revenue cannot be accepted. The question of law framed is accordingly answered against the Revenue. The appeals fail and are dismissed, without any order as to costs." 5.4 In view of binding prece....
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.... does not constitute royalty within the meaning of section 9(1) (vi) of the Act. In doing so, the Hon'ble High Court has conclusively held that while providing transmission services to its customers, the control of the satellite or the transponder always remains with the satellite operator and the customers are merely given access to the transponder capacity. Accordingly, since the customer does not utilize the process or equipment involved in its operations, the charges paid to the satellite operators are not covered within the meaning of royalty as provided under Explanation 2 to section 9 (I) (vi) and, therefore, the same cannot be treated as royalty. In this case, the revenue also raised the question regarding applicability of section 9(l)(vii) for the first time before the Tribunal. Although, this ground was admitted, it was not decided as the receipt was held to be assessable under sec. 9(l)(vi) of the Act by the Tribunal. No argument was advanced by the learned counsel for the revenue before the Hon'ble High Court in this manner. Therefore, the submission of the revenue regarding applicability of section 9(l)(vi) was not accepted. The result of the decision of the Hon....
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.... falling on the beam covering India either fully or partially and not apportioning receipts which were India specific." 7.4 The Tribunal (supra) rejected the above grounds that in view of the grounds in respect of characterization of income as royalty or fee for technical services already decided in favour of the assessee and therefore ground Nos. 5, 6, and 8 no longer survived. 7.5 As above grounds raised in ITA No. 4176/Del/2011 are identical to the grounds No. 5, 6 and 8 respectively raised in the present appeal, respectfully, following the decision of the Tribunal (supra), the grounds No. 5, 6 and 8 are dismissed as infructuous. 7.6 In the result, appeal of the assessee is partly allowed. ITA Nos.1061/Del/2014; 680/Del/2015; 281/Del/2016 & 5840/Del/2016 8. Now, we take up the appeals having ITA No.1061/Del/2014 for assessment year 2010-11, ITA No. 680/Del/2015 for assessment year 2011-12, ITA No. 281/Del/2016 for assessment year 2012-13 and ITA No. 5840/Del/2016 for assessment year 2013-14. 9. The grounds of the appeal raised in the above appeals are reproduced as under: Grounds raised in ITA No. 1061/Del/2014 1. That on the facts and in the circum....
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.... to pass appropriate orders holding that the Appellant is not liable to be assessed to tax in India. 1.1.That on the facts and circumstances of the case and in law, the Panel erred in not directing the Ld. AO to follow the order passed by the Hon'ble Delhi High Court (in ITA 1167/2009 and ITA1122 to 1129/2011) and the Hon'ble Income Tax Appellate Tribunal, New Delhi ('the Tribunal') (in ITA nos. 5385-5387/Del/2004, 2623- 2624/Del/2008, 735-736/Del/2010, 5160/2010, 4176- 4177/Del/2011) in Appellant's own case holding that the Appellant is not liable to be assessed to tax in India, when there was no change of facts recorded by the Ld. AO from the preceding years. 1.2.That on the facts and in the circumstances of the case and in law, the Ld. AO erred in not holding that the payments received by the Appellant from providing data transmission services via Space Segment Capacity are not assessable as business profits in India and in the absence of a Permanent Establishment under Article 5 of the India-Netherlands Double Taxation Avoidance Agreement between India and Netherlands ("the DTAA"), the receipts earned by the Appellant are not taxable in India. 2. That....
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....er education cess) on the rate of tax as provided under the Article 12 of the India- Netherlands DTAA. 8. That the Ld. AO has erred in levying interest under section 234B of the Act, by not appreciating the fact that the Appellant is not under any obligation to pay advance tax since the entire revenues earned by the Appellant were subject to tax deduction at source under section 195 of the Act. The Ld. AO further erred in levying Interest u/s 234D of the Act. 9. Without prejudice to above, on facts and circumstances of the case and in law, the Ld. AO erred in not granting the credit of taxes deducted at source as claimed in the return of income filed by the Appellant. 10. The Ld. AO erred in initiating penalty proceedings under section 271(1 )(c) of the Act. Grounds raised in ITA No. 281/Del/2016 1. That on the facts and in the circumstances of the case and in law, the Ld. Dispute Resolution Panel ('the Panel') erred in not directing the Learned Assessing Officer ('Ld. AO') to pass appropriate orders holding that the Appellant is not liable to be assessed to tax in India. 1.1.That on the facts and circumstances of the case and in law,....
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....5 of the Act. The Ld. AO erred in further levying Interest u/s 234D of the Act. 6. Without prejudice to above, while computing the tax payable, the Ld. AO erred in law in levying surcharge and education cess (including secondary and higher education cess) on the rate of tax as provided under the Article 12 of the India- Netherlands DTAA. 7. Without prejudice to above, on facts and circumstances of the case, the Ld. AO erred in not granting the entire credit of taxes deducted at source as claimed in the return of income filed by the Appellant. 8. The Ld. AO erred in initiating penalty proceedings under section 271(1 )(c) of the Act. Grounds raised in ITA No. 5840/Del/2016 1. That on the facts and in the circumstances of the case and in law, the Ld. Dispute Resolution Panel ('the Panel') erred in not directing the Learned Assessing Officer ('Ld. AO') to pass appropriate orders holding that the Appellant is not liable to be assessed to tax in India. 1.1.That on the facts and circumstances of the case and in law, the Panel and the Ld. AO erred in not following the orders passed by the Hon'ble High Court of Delhi for the Assessment years 2....
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....in initiating penalty proceedings under section 271 (1 )(c) of the Act. 10. The Ld. counsel submitted that ground Nos. 1, 1.1 and 1.2 raised in all the four appeals having ITA No. 1061/Del/2014, 680/Del/2015 281/Del/2016 and ITA No. 5840/Del/2016 are general in nature and not required to be adjudicated upon specifically. In view of the submission of the learned counsel, we dismiss these grounds in all the four appeals holding as infructuous. 11. We find that Ground Nos. 2 & 3 in ITA No. 1061/Del/2014; Ground Nos. 2 & 3 of ITA No. 680/Del/2015; Ground Nos. 2 & 3 of ITA No. 281; and Ground Nos. 2, 2.1 and 2.2 of ITA No. 5840/Del/2016 are related to the issue of characterization of revenue earned by the assessee in the nature of royalties under the Act and India Netherlands DTAA. As the issue in dispute is identical to ground No. 3 adjudicated by us in appeal having ITA No. 5616/Del/2012 for assessment year 2009-10, following our findings in para 5.4 of this order, we allow the grounds raised in respective appeals. 12. Further, Ground No. 6 of ITA No. 1061/Del/2014, Ground No. 6 of ITA No. 680/Del/2015, Ground No. 4 of ITA No. 281/Del/2016 and Ground No. 3 of ITA No. 5840/Del....