AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 939
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....ts. 3. In these appeals, identical grounds have been raised; therefore, for brevity, the grounds of appeal in ITA No.523/Mum/2021 for assessment year 2015-16 are only reproduced below:- "1. "Whether on the facts and circumstances of the case and in law, the CIT (A) has erred in holding that the assessee was not liable to deduct tax at source u/s 195 of the Act on payments made to Intelsat Corporation, USA/IGSM, UK/MEASAT, Malaysia for transponder charges on the ground that payment did not constitute royalty u/s 9(l)(vi) of the Act or under the relevant DTAA?" 2. "Whether on the facts and circumstances of the case and in law, the CIT (A) has erred in not taking into account that the payments made by the assessee to Intelsat for transponder charges are specifically covered by Explanation 6 to section 9(l)(vi) as being included in the expression 'process' and hence fall under definition of royalty as per Explanation 2 to section 9(l)(vi) of the Act?" 3. "Whether on the facts and circumstances of the case and in law, the CIT (A) has erred in not taking into account that Explanation 6 to section 9(l)(vi) of the Act was inserted by the Legislature by way of Finance Act, 20....
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....ourt. The learned Assessing Officer further observed that in the orders passed by the Ld.CIT(A) in earlier years, the transponder service fee has been held as 'royalty' income. 6. In view of above, the learned Assessing Officer held the payment for transponder service fee made to various parties as listed above as "royalty" in terms of DTAA as well as under Explanation to section 9(1)(vi) of the Act. On appeal by the assessee before the Ld.CIT(A), the assessee has been allowed for not withholding the tax on payment of said sum. The relevant finding of the Ld.CIT(A) in appeal for assessment year 2015-16 in order dated 16/09/2020 is reproduced below:- 5. FINDINGS The assessee is engaged in the business of marketing advertising air time of different television channels, distribution of these channels etc The assessee has made payment for transponder service fees paid to three entities namely: 1) Intelsat Corporation, USA (Intelsat) 2) Intelsat Global Sales and Marketing, UK (IGSM) 3) MEAST Satellite System, Malaysia (MEASAT) The payment to the above three recipients is involved in a number of cases, therefore the same is divided together. The assessee applied for an o....
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....equent to the above honourable jurisdictional High Court i.e. Bombay High Court in the case of Neo Sports Broadcast Pvt Ltd (ITA no. 1487 of 2018) held that transponder charges paid to non-resident is not taxable as royalty. While doing so the honourable Bombay High Court has relied on Delhi High Court order in the case of Asia Satellite Communication Company Ltd (2011) 332 ITR 340 and Skies Satellites BV(2016) 382 ITR 114. It was also submitted that the facts of assessee's case are similar to the above case and in the view of binding decision of jurisdictional High Court transponder charges cannot be held as royalty and therefore the assessee cannot be asked to deduct TDS on the same. Therefore, to decide the issue in the present case, we have to decide following two points - 1) Weather the issue is covered by the decision of Bombay High Court in the case of Neo Sports. 2.) Weather the honourable High Court has considered explanation to section 9(1)(vi) wherein the royalty is defined. For ready references, the finding in the case of the Neo Sports is reproduced below. "1. This Appeal is filed by the revenue to challenge the judgment of Income 7~ax Appellate Tribuna....
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....etween transfer of rights in respect of property and transfer of rights in the property. 4. Later on similar issue once again came before Delhi High Court in the case of Directorate of Income tax Vs. New Skies Satellite BV, reported in (2016) 382 ITR 114 The Court followed the earlier decision in case of Asia Satellite Telecommunication (supra) and dismissed the revenue's Appeal. It was held that the explanations added below section 9(1) of the Act were not merely clarificatory in nature. Respectfully agreeing with the said decisions of the Delhi High Court, this question is not considered." While doing so, the honourable Bombay High Court relied on the judgement of honourable Delhi High Court mentioned above. The honourable Delhi High Court has considered the amendment to section 9(1)(vi) and has held that no amendment to the Act, whether retrospective and prospective can be read in a manner so as to extent in operation to the terms of an international treaty- in other words clarificatory or declaratory amendment, much less one which may seek to overcome an unwelcome judicial interpretation of law, cannot be allowed to have same retrospective effect on an international i....
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.... scientific experience; 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 income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic Indo-Malaysia DTAA ARTICLE 12 ROYALTIES 1 Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State 2. However, such royalties may also be faxed in the Contracting State in which they arise, and according to the laws of that State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. 3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of. or the right to use. any copyright of literary, artistic or scientific work eluding cinematograph films or films ot tapes used for television or radio broadcasting, any tent, trade mark, design or model, plan, secret formula or process, or for the use of. or the right assessee cannot be asked to withhold tax on the ....