TaxTMI 
TaxTMI 
2025 (12) TMI 1176
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....for provision of content for in-flight entertainment system amounting to Rs. 2,68,43,526 as royalty under section 9(1)(vi) of the Act and under Article 13 of the India-UK Double Taxation Avoidance Agreement (DTAA). The interconnected issue involved therein is as to whether the Learned AO was justified in treating the fees for provision of content for in-flight entertainment system amounting to Rs. 2,68,43,526 could be brought to tax as fee for technical services under section 9(1)(vii) of the Act and under Article 13 of the India-UK DTAA. 4. We have heard the rival submissions and perused the materials available on record. At the outset, we find that the Learned AO relied on the findings given in assessee's own case for assessment year 2021-22 and made an addition in the assessment. Even the Learned DRP followed its earlier directions given for assessment year 2021-22. Both the parties agreed that this Tribunal for assessment year 2021-22 in assessee's own case had already decided this issue in ITA No. 3338 /Del /2023 dated 3-9-2025. Since the facts are identical to assessment year 2021-22 and earlier years, we deem it fit to reproduce the relevant operative portion of the order....
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....The CSP shall supply Valid & Licensed Video and Audio IFE Content which includes selection, negotiation and contracting with distributors and other third parties, securing licensing, commission of post-production (as required from time to time) and managing the labeling and duplication of Cassettes, DVD's, VHS, Hi-8's, Encoding of Video IFE Content and relevant copyright clearance of Video and Audio titles and content for exhibition license, as well as the production of audio content in the correct format for each aircraft type/system and quality control of all content. d. CSP shall provide Copies of all IFE Content as played on the IFE System for office records in digital format, except Hollywood movies. xxxxxxx 4. PPL/IPRS licensing Content & Licensing fess All subject IFE Content shall be offered by the CSP as governed under the Licensing of Content by PPL / IPRS. Any PPL/IPRS fees, shall be paid directly by Air India to PPL/IPRS. xxxxxxx 6. Cost and Rights Excluded If the Integration of the IFE Content is carried out by Thales at Irvine or by Panasonic at its facilities in the US then the applicable terms an....
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....deliverables. All intellectual property Rights in such IFE content shall remain vested in Air India its licensors and suppliers, as applicable." A perusal of the agreement reveals that the assessee is required to provide IFE content and services to Air India Ltd. that includes Hollywood movies, Indian movies, Indian regional movies, International and Indian music videos, documentaries, reality shows, etc. as per the choice and prerogative of Air India Ltd. The responsibility of procuring exhibiting rights of the content is on the assessee. Further, for screening of content in aircrafts, the assessee was required to perform the process of encoding, duplicating, integrating with IFE system. The license fee for exhibiting contents i.e. audio/video on IFE is to be paid by Air India directly to the concerned agencies. As per clause 6 of the agreement, Air India Ltd. has entered into a separate triparty agreement with the assessee and Thales/Panasonic for integration of content for screening on IFE system. 9. For integration of content with hardware used in aircraft, the assessee utilized the services of 3rd party viz. Thales or Panasonic. The final product tha....
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...., in terms of provisions of section 90(2) of the Act, the provisions which are more beneficial i.e. provisions of Act or DTAA, shall apply. Once it is accepted by the Revenue that assessee is eligible for India- UK DTAA benefit, the definition of royalty as per Article 13(3) of the DTAA would prevail as it is more beneficial to the assessee. 12. IFE System stream audio/video content viz. movies, songs, TV serial episodes, games, etc. that are licensed. The copyrights in the aforesaid contents are not transferred to the airlines. The owners of the license holders merely grant access or usage rights to stream the content. The assessee's role is limited to procure exhibition rights and perform the process of encoding, integrating etc. so that the content is available for screening on IFE system. Even the process of integration is carried out by third party for which airlines have entered into separate contract. The assessee is merely providing copyrighted content. Hence, the payments received by the assessee for performing the task of procuring processing of content for screening the same on IFE system of airlines does not fall within the meaning of royalty as defined in ....