TMI Blog2022 (5) TMI 1339X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by the Ld. CIT(A) on the issue in dispute relevant to the orders of Assessing Officer u/s 195(2) of the Act. Accordingly, we uphold the finding of the Ld. CIT(A) in impugned orders. Grounds raised by the Revenue in these appeals are accordingly dismissed - ITA Nos.1065,1066, 1069, 1070, 1071 & 1073/Mum/2021 - - - Dated:- 17-5-2022 - Shri Amit Shukla, Judicial Member And Shri Amarjit Singh, Accountant Member For the Assessee : Nimesh Vora For the Revenue : Milind Chavan ORDER PER BENCH: These appeals by the revenue directed against the separate order of even dates passed by the ld. Commissioner of Income Tax (Appeals)-58, Mumbai [in short ld. CIT(A)] for A.Ys. 2016-17 2020-21, arising from the order of A.O u/s 195(2) of the Income Tax Act, directing the assessee to withhold tax on payment to non-resident companies. Identical grounds have been raised in same set of facts and circumstances, therefore, we have heard these appeals together and disposed off by way of this consolidated order for the sake of convenience. 2. In these appeals, identical grounds have been raised, therefore, for brevity the grounds of appeal in ITA No. 1069/Mum/2021 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia relevant country, therefore, payment are liable for withholding of tax. The A.O vide order u/s 195 held that payment made to those parties are liable to tax in India as royalty as per the Double Taxation Avoidane Agreement (DTAA between and respective country) and accordingly the assessee is liable to withhold the tax at source. The A.O was of the view that a royalty as per treaty includes the payment made for any process and the term process is not defined in the treaty and hence the same shall be imported from the Act. The A.O has also stated that as per new Explanation 6 (inserted by Finance Act, 2012) to Sec. 9(1)(v) of the Act, the term process includes transmission by satellite (including uplinking amplification, conversion for downlinking of any signal). It is also mentioned that the new explanation also states that process (which includes transmission by satellite) shall be royalty under the I.T. Act whether or not such process is secret. Therefore, the A.O held that payment of transponder service fee to Intelsat by assessee is a process and it is in the nature of royalty income taxable in India in terms of the provision of Section 9(1)(vi) of the Act as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment made for transmission by satellite is a royalty even under the tax treaty. The reference to decision of the Hon'ble Delhi High Court made by the applicant has not been accepted by the department and the SLP has been preferred in this case. Also, the orders passed earlier, in the case of the applicant treating the transponder services fee as ' royalty income' has been upheld by the Ld. CIT(A) and ITAT. Basically, the Assessing Officer held these payments as royalty on the basis of Honourable ITAT order and on the basis of explanation to section 9(1)(vi) of the IT Act. Hon'ble ITAT in the case of Intelsat initially confirmed the finding of Assessing Officer however subsequently on the basis of Delhi High Court wherein the honourable High Court has held that the income of Intelsat is not taxable in India, held that these payments are not subject to TDS. In the case of IGSM and MEASAT Honourable ITAT held that TDS is deductable in India. Before me, the assessee submitted that subsequent 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 transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, in this context, the Tribunal did observe fleetingly on the question of charges being royalty payments. We have therefore heard the learned Counsel for the parties on merits on this issue raised by the revenue. 4. We notice that an identical issue came up for consideration before Delhi High Court in case of Asia Satellite Telecommunications Co. Ltd. Vs. DIT, reported in (2011) 332 ITR 340. It was the case in which the assessee a non-resident was engaged in satellite communication, having control of satellites. The assessee would provide use of transponder facility on satellite to the television companies outside India, which in turn would be routed to the operators in India, who would pass them on to the customers. The question was whether the payments made to the non-resident were in the nature of royalty and therefore come within the scope of section 9(1) of the Income Tax Act, 1961 ('the Act' for short). The Court by a detailed judgment held that the payments were not in the nature of royalty charges. The Court made a distinction between transfer of rights in respect of property and transfer of rights in the property. 5. Later on similar issue once again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined in this Article [other than services described in subparagraph (b) of this paragraph] : (I) during the first five taxable years for which this Convention has effect, (a) 15 per cent of the gross amount of the royalties or fees for included services as defined in this Article, where the payer of the royalties or fees is the Government of that Contracting State, a political sub-division or a public sector company; and (b) 20 per cent of the gross amount of the royalties or fees for included services in all other cases; and (ii) during the subsequent years, 15 per cent of the gross amount of royalties or fees for included services ; and (b) in the case of royalties referred to in sub-paragraph (b) of paragraph 3 and fees for included services as defined in this Article that are ancillary and subsidiary to the enjoyment of the property for which payment is received under paragraph 3(b) of this Article, 10 per cent of the gross amount of the royalties or fees for included services. 3. The term royalties as used in this Article means: (A) payments of any kind received as a consideration for the use of, or the right to use, any copyright or a literary, artistic, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the use of, or the right to use, any copyright of a literary, artistic or scientific work, including cinematography films or work on films, 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; 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 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 taxed 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secret Formula or Process The Assessing Officer imported the definition of process from explanation to section 9(1)(vi). The hon'ble High Court after considering the same in the case of Intelsat and case referred above has held that the income of non-resident from transponder charges is not taxable in India. In view of the above detailed discussion, 1 am of the opinion that payment of transponder charges paid by.assessee to above referred three entities was not taxable in India and, therefore the assessee cannot be asked to withhold tax on the payments of transponder charges paid to these entities. 5. During the course of appellate proceedings before us the ld. D.R. supported the order of lower authorities. On the other hand, the ld. Counsel has submitted that identical issue on the similar fact has been adjudicated by the coordinate bench of the ITAT in the case of the assessee itself vide ITA No. 523, 1068 ,1072, 1063 1064/Mum/2021 for AYs. 2015-16, 2016-17 2020-21 vide order dated 24.01.2022 and 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, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
