TaxTMI 
TaxTMI 
2022 (5) TMI 1339
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....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(1)(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(1)(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(1)(vi) of the Act was inserted by the Legislature by way of Finance Act, 2012 as a declaratory and clarificatory amendment with retrospective effect from the day the source rule on royalty came into effect to specify the intent of the law as it was always meant and understood? ....
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....efore the ld. CIT(A). The ld. CIT(A) has deleted the addition after following the decision of Hon'ble Bombay High Court in the case of Neo Sports Broadcast Pvt. Ltd. (ITA No. 1487 of 2018) and the decision of Hon'ble Delhi High Court in the case of Asia Satellite Communication Company Ltd. (2011) 332 ITR 340 & Skies Satellite BV (2016) 382 ITR 114, the relevant part of decision of CIT(A) is reproduced as under: "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 order u/s 195 (2) for nil withholding tax certificate for payment of transponder service fees to the above service providers. The Assessing Officer rejected the assessee's application observing a....
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....ransponder 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 IDS 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 Tax Appellate Tribunal. Following questions are presented for our consideration; (a) Whether, on the facts and in the circumsta....
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....ty. 5. 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 instrument effected between two sovereign states prior to subjec....
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....ideration for the use of, or the right to use, any copyright or 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 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. Indo-UKDTAA ARTICLE 13 -Royalties and fees for technical services - 1. Royalties and fees for technical services 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 and fees for technical services may also be taxed in the C....
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....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 including cinematograph films or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information (know-how) concerning industrial, commercial or scientific experience. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be....
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....d ITA Nos. 1177 & 1178/Mum/2021 vide order dated, 28.02.2022 for A.Y.2017-18 and ITA Nos.1067,1087 to 1097/Mum/2021, 1127 to 1138/Mum/2021, 1098, 1099, 1162/Mum/2021, 1100 to 1117/Mum/2021, 1118 to 1120/Mum/2021 1121 to 1126/Mum/2021, 1151 to 1153/Mum/2021 & 1154 to 1161/Mum/2021. 6. With the assistance of ld. Representative, we have perused the decision of coordinate benches of the ITAT as referred supra. The relevant part of the decision of the ITAT vide ITA Nos. 1177 & 1178/Mum/2021 is reproduced as under: 7. We have heard rival submission of the parties on the issue in dispute and perused the relevant materials on record. The issue in dispute in these both appeal is whether the transponder charges paid by the assessee to three entities listed above is in the nature of the 'royalty' and liable for withholding tax. In respect of the three above listed entities, the Tribunal (supra) has held as under: "9. We have heard the rival submissions of the parties on the issue in dispute and perused the relevant material on record. In the appeal for assessment year 2015- 16, the Ld. CIT(A) has considered the facts of one of the parties in whose case, the assessee sough....