TaxTMI 
TaxTMI 
2018 (2) TMI 971
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....ely, assessment years 2013-14 to 2016-17 and the grievance is against the similarly worded multiple orders of the CIT(A), which in turn arise from the separate orders passed by the Assessing Officer under section 195(2) of the Income tax Act, 1961 (' the Act') of different dates. In all the appeals, the sum and substance of the dispute relates to the nature of the payment made by the assessee to M/s.Intelsat Global Sales and Marketing Ltd., UK and/or to M/s. Intelsat Corporation, USA (Intelsat) for transponder services. In order to appreciate the controversy in its proper perspective, we may refer to the facts in ITA No.1289/Mum/2016, which is an appeal directed against the order of CIT(A) -58, Mumbai dated 29/12/2015, which in turn arises out of an order passed by the Assessing Officer under section 195(2)of the Act dated 26/03/2012. 3. The assessee, United Home Entertainment Private Limited, is a company incorporated under the provisions of the Companies Act, 1956 and is inter-alia, engaged in the business of entertainment, inasmuch as, it owns and manages the TV channel "Hungama". This channel is canvassed to be the first Indian Entertainment channel for kids in Hindi with mu....
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....de by the assessee to Intelsat corresponding to assessment years 2012-13 and 2013-14 also came up before the Tribunal and the Tribunal vide its order in ITA Nos.5171 to 5181/Mum/2013 dated 28/11/2016 reiterated its earlier order dated 25/10/2016(supra); and, in coming to such a decision, the Tribunal has considered the contrary view in the case of Viacom 18 Media Pvt. Ltd. (supra). Our attention was drawn to the following discussion in para 10 of the order dated 28/11/2006(supra) in this regard:- "10. It is noted from the above that the bench relied upon various judgments including the judgment of Taj TV Ltd wherein decision relied upon by the Ld. DR in the case of Viacom.18 has been considered in detail. Apart from that the main point to be noted here is that the bench took note of a vital fact that Hon'ble Delhi High Court in the case of payee, viz. M/s Intelsat Corporation, USA has categorically held that payment received by Intelsat Corporation is not taxable in India under the provisions of Indo US DTAA. Thus, in the case of payee, it has been categorically held that said payment is not taxable, then the assessee is not obliged to deduct TDS, therefore, the impugned p....
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....o. 530 & 545/2012, following the order of its own court in Asia Satellite Communications Ltd (ITA 131/2003 decided on 31.01.2011), have categorically held that payment received by Intelsat is not taxable in India under the provisions of Indo-US-DTAA. Once in the case of the payee it has been categorically held that the said amount is not taxable, then assessee is not obliged to deduct TDS and, therefore, the impugned proceedings under section 195 deserves to be quashed. Otherwise also, this issue of payment of transponder charges made to Panamsat (later on name was changed to Intelsat Corporation) has been subject matter of issue before various Courts including that of the ITAT, Mumbai Bench in the case of Taj TV Ltd. In the said case, the Tribunal has observed and held as under:- "18. Now, coming to the issue of disallowance of various expenses under section 40(a)(i) like, 'transponder charges' and 'up linking charges' as raised in ground No.2(i) and 2(ii), it is seen that these, payments has been paid to PanAmSat International Systems Inc. USA for providing facility of transponder for telecasting 'Ten Sports' channel in various countries including India. The assessee ent....
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....us examine the definition of "royalty" as been defined under Article 12 of the Indo- US-DTAA, which has been defined in the following manner: "3. The term "royalties" as used in this Article means: a) payments of any kind received as a consideration for the use of or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof; and b) payments of any kind received as consideration for the use of or the right to use, any industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of Article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 of Article 8". The article gives exhaustive definition of the term 'royal....
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....rom data transmission services as partaking of the nature of royalty, or amend the definition in a manner so 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". The aforesaid decision takes care of all the arguments relied upon by the ld. DR including that of the Verizon Communications Singapore Pte Ltd's. The Hon'ble High Court has specifically clarified as to why the said decision of Madras High Court cannot be applied in such cases after observing as under:- "31. In a judgment by the Madras High Court in Verizon Communications Singapore Pte Ltd. V. The Income Tax Officer, International Taxation I, [2014] 361 ITR 575 (Mad), the Court held the Explanations to be applicable to not only the domestic definition but also carried them to influence the meaning of royalty under Article 12. Notably, in both cases, the clarificatory nature of the amendment was not questioned, but was instead applied squarely to assessment years predating the amendment. The c....
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....on urged on behalf of the assessee that the law would be the law as applicable or as define when the Double Tax Avoidance Agreement was entered into." 49. It is essential to note the context in which this judgment was delivered. There, the Court was confronted with a situation where the word royalty was not defined in the German DTAA. Following from our previous discussion on the bifurcation of terms within the treaty, in situations where words remain undefined, assistance is to be drawn from the definition and import of the words as they exist in the domestic "laws in force". It was in this context that the Bombay High Court held that they were unable to accept the assessee's contention that the law applicable would be the law as it existed at the time the Double Tax Avoidance Agreement was entered into. This is the context in which the ambulatory approach to tax treaty interpretation was not rejected. The situation before this Court however is materially different as there is in fact a definition of the word royalty under Article 12 of both DTAA, thus dispensing with the need for recourse to Article 3. 50. There are therefore two sets of circumstances. First, where there exists n....
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....8/11/2016(supra) and, therefore, the said argument of the Ld. Departmental Representative is not potent so as to depart from the precedent in assessee's own case. Thus, we hereby set-aside the order of the CIT(A) and hold that the assessee is not obligated to deduct tax at source on payments made for transponder services. Thus, on this aspect assessee succeeds. 7.1 The only other aspect raised by the assessee is by way of Additional Ground, which relates to the allowability of interest under section 244A of the Act on refund arising due to extra deposit of TDS under section 195 of the Act. It was a common point between the parties that the said issue was also before the Tribunal in the past, and vide order dated 25/10/2016(supra), the same has been sent back to the file of Assessing Officer to decide in the light of the CBDT Circular No.11 of 2016 dated 26/04/2016. Following the aforesaid precedent, in this year too, we direct the Assessing Officer to follow the earlier order of the Tribunal dated 25/10/2016(supra) on this aspect and decide the matter afresh and as per law. Thus, on this aspect assessee succeeds for statistical purposes. 7.2 Resultantly, the appeal of the ass....