TaxTMI 
TaxTMI 
2018 (7) TMI 2248
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.... ('the Act'), and under the India- USA Tax Treaty ('the Treaty'), and consequently, subject to tax withholding under Section 195 of the Act. 2. On the facts, and in the circumstances of the case, and in law, the learned CIT(A) ought to have held that the transponder fees payable by the Appellant to Intelsat are not taxable in India and consequently, not subject to tax withholding under Section 195 of the Act. 3. The assessee has also raised the common additional ground which reads as under: 3. On the facts and in the circumstances of the case, and in law, since the Hon'ble Delhi High Court {ITA No. 530 & 545 of 2012 and ITA No. 977 of 2011} has held that the transponder fees are not taxable in the hands of the recipient (Intelsat Corporation), there cannot be any liability on the Appellant (as a payer) to deduct tax at source under Section 195 of the Income Tax Act, 1961 ('the Act'). 4. On the facts and in the circumstances of the case, and in law, the transponder fees payable by the Appellant to Intelsat Corporation ought not to be taxable in India and consequently, not subject to withholding of tax under Section 195 of the Act, in light of the f....
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.... transponder service fee to Intelsat on a monthly basis @ USS 100,000. As per para 3.5 of this agreement, the taxes, if any, payable on the transponder service fee, are to be borne by the assessee. The assessee has made various transponder fee payments to Intelsat. It has approached the assessing officer for a certificate under section 195(2) of the Act allowing it not to deduct any taxes from the remittances made to Intelsat. The assessing officer has passed an order under section 195(2) of the Income Tax Act holding the assessee liable to deduct tax on this amount treating the same as royalty and hence subject to TDS. He also directed grossing up of the amount as well as payment of surcharge on the remitted amount. The action of the Assessing Officer was upheld by the ld. Commissioner of Income Tax (Appeals) following the earlier orders of ITAT. Additional ground: 7. By way of additional ground, the assessee has raised an issue that since the Hon'ble Delhi High Court has held that the transponder fee are not taxable in the hands of the recipient Intelsat Corporation, USA, there cannot be any liability on the assessee to deduct tax at source u/s. 195 of the Act. Further, the as....
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....rious 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 therefore, the assessee was not liable to be taxed in India. For this reason, in respect of assessment year in question, i.e., Assessment Year 2007-08 it filed ?Nil? income return. The A.O., however, going by the past history of the assessments in the case of assessee in the years 1996-97 to 2004-05 held that certain percentage of the income of the assessee was exigible to tax in India as it was attributed to the receipts from the customers in India. The matter was referred to the Disputes Resolution Panel (DRP). Objections preferred by the assessee were dismissed by the DRP and the DRP directed the A.O. to compute the income as per the draft order prepared by it. In arriving at the conclusion that revenue receipts on account of providing transmission services to its identifi....
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....he 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 and in the circumstances of the case, the Tribunal was justified in holding that the amount paid to the appellant by its customers represented income by way of royalty as defined in Explanation 2 to Section 9(1)(vi) of the Act? In arriving at this decision, the Hon?ble Court inter alia referred to OECD convention, commentary thereon, commentary written by Klaus Vogel, decision in the case of Union of India and Another Vs. Azadi Bachao Aandolan and Another, (2003) ITR 706, CIT Vs. Ahamdabad Manufacturing and Calico Printing Company 139 ITR 806 (Gujarat), and CIT vs. Vishakhapatnam Port Trust, (1983) 144 ITR 146 (AP). 3.4 The revenue had also raised the question regarding applicability of section 9(1)(vii) for the first time before the Tribunal. Although this ground was admitted, it was not decided as the income was held to be ass....