TaxTMI 
TaxTMI 
2018 (11) TMI 591
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..... CIT(A) erred in law and facts in upholding that the payment for use of transponder space as Royalty under the provisions of section 9(1){vi) of the Act as well as Article 12 of the India US DTAA without considering the fact that the assessee has claimed benefit of DTAA of section 90(2) of the Act and there is no change in the DTAA with USA. The reasons given by him for doing so are wrong, contrary to the facts of the case and against the provisions of law. Hi) The Ld. CIT(A) erred in laws and facts in applying retrospective amendment made by Finance Act, 2012 to Section 9 and treating the fees for use of transponder space as Royalty without considering the fact that the assessee has claimed benefit of DTAA of section 90(2) of the Act. The reasons given by him for doing so are wrong, contrary to the facts of the case and against the provisions of law. iv) The Ld. CIT(A) erred in law and facts in not appreciating the fact that CA Certificate as per Rule 37BB and appellate authorities decisions in earlier years in assessee's own case that payment made for use of transponder space to Intelsat Corporation is not liable to be taxed in India, hence the assessee can....
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....se a process and has held that the assessee was liable to deduct TDS on this amount and has accordingly, held the assessee as assessee in default passing suitable orders under section 201 (1) and 201 (IA) of the Act. 4. Before the Assessing Officer, the assessee has relied on the ITAT judgment in the case of same remittee M/s Intelsat Corporation (ITA No. 4662/Del/2011) for AY 2006- 07 dated 16.1.2012 and the decision in the case of B4U International Holdings, 21 taxmann.com 529 (Mum). In the judgment in the case of Intelsat, the ITAT held that the service rendered by the non-resident did not fall under the category of term 'process' as contemplated under section 9(l)(vi) of the Act and hence the payment did not constitute royalty under this section. The Assessing officer has gone into the facts of the case elaborately, has noted that in the case of M/s Intelsat Corporation, the ITAT decided that the case did not fall under the definition of 'royalty' as defined in section 9(l)(vi) of the Income Tax Act and hence there was no need to analyse the transaction with lect to India- US DTAA. He has also observed that the main issue related to whether the service of the....
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....to it. The transponder was an active transponder where amplification of the signal took place. The AO held that a process means a series of action or steps taken in order to achieve a particular end and in the present case, that particular end i.e. viewership by public at large was achieved only through a series of steps taken by receiving the uplinked signals, amplifying them and relaying them after changing the frequency in the footprint area. He held that such an action constituted a process and hence the payment represented royalty in the hands of Intelsat. 7. The A.O. held that the remitted amount constituted an income liable to tax under the Income Tax Act. The AO also held that the assessee had a statutory responsibility to deduct tax on this amount and he had no mandate under the Act to decide suo moto, on the basis of a CA certificate, not to deduct TDS on this amount. For this he relied on the Supreme Court decision in the case of Associated Cement Co Ltd vs CIT (201 ITR 435) and Transmission Corporation of AP vs CIT (239 ITR 587). Accordingly, he treated ZEE as a defaulter under section 201 of the Act. 8. Upon the assessee's appeal, the ld. CIT(A) elaborately dealt....
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....pient, the sum paid is not chargeable under the Act, there is no liability on the payer to deduct tax at source. Now we note that the Hon'ble Delhi High Court in the case of DIT(International Taxation) vs. Intelsat Corporation (in ITA No. 977/2011 dated 19.08.2011) considering the issue of chargeability of tax of similar payments received by Intelsat Corporation, USA has held as under: The respondent assessee is a tax resident company of the United States of America with its registered office located in Washington D.C. The assessee owns and operates global network of telecommunication satellites in outer space. It is engaged in the business of transmitting telecommunication signals to and fro from the earth station(s). Its customers are various TV Channels, NICNET and Internet Service providers. For this purpose, the assessee enters into contracts with various parties around the world. The assessee leased its transponder capacity and bandwidth to various customers in India and outside India, who used the transponders for their business in India. According to the assessee, for the aforesaid activities no income accrued or attributed to India and t....
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....ellant in the taxation net. The Tribunal has glossed over an important fact that the money, which is received from the cable operators by the telecast operators, is treated as income by the telecast operators, which has accrued in India, and they have offered and paid tax. Thus, the income, which is generated in India, has been subjected to tax. It is the payment, which is made by the telecast operators who are situated abroad to the appellant, which is also a non-resident, i.e., sought to be brought within the tax net. It is concluded that it is difficult to accept such far-fetched reasoning with no causal connection. It may be mentioned here that the assessee has received revenues from Indian residents also, as can be seen from the table mentioned in the assessment order and reproduced by us while summarizing the order. 3.3 Thereafter he drew our attention towards paragraph No.79 of the judgment, in which it has been held that the Court is unable to subscribe to the view taken by the Tribunal in the impugned judgment on the interpretation of section 9(1)(vi) of the Act. Thus question No.3 was answered in favour of the assessee which is ? whether, on the facts an....
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....previous order of the Tribunal dated 4th March, 2011 (ITA 5443/Del/2010), for AY 2007-08 that was subsequently followed by the Tribunal in its own decision for AY 2006-07 (ITA No.4662/Del/2011). This Court by its judgment and order dated 19th August, 2011 in ITA No.977/2011, affirmed the findings of the Tribunal by a reasoned order. In view of these developments, no substantial question of law can be said to arise; there is no infirmity in the finding of the Tribunal with regard to the taxability of the assessee for the assessment years in question i.e. 2006-07 and 2008-2009. The appeals are accordingly dismissed. 10. From the above case laws it is evident that similar payments received by the Intelsat Corporation USA have been held to be not chargeable to income tax in the hands of the same recipient. When this point is considered in light of the Hon'ble Apex Court decision in the case of G. E. Technology Centre Pvt. Ltd. (supra) it emerges that no liability fasten on the assessee to deduct tax at source on payments made to Intelsat Corporation USA. Hence, the additional grounds of the assessee deserve to be allowed. Accordingly, we hold that since the Hon'ble Hi....