TMI Blog2018 (7) TMI 2305X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit can be said to be attributable to the assessee in India from its PE, since Taj India is being remunerated at arm s length price. Accordingly, we direct the AO to delete additions made towards computation of income attributable to the assessee in India. TDS u/s 195 - programming cost paid to various non residents and also payments made to M/s PanAM Sat International System Inc. and other non residents towards transponder charges u/s 40(a)(i) for failure to deduct tax - HELD THAT:- In this view of the matter and consistent with the view taken by the co-ordinate bench in assessee s own case for earlier years [ 2016 (12) TMI 1291 - ITAT MUMBAI ] we direct the AO to delete addition made towards disallowance of programming cost and transponder charges u/s 40(a)(i) - Decided in favour of assessee. - I.T.A No. 6326/Mum/2016 & I.T.A No. 6327/Mum/2016, I.T.A No.6367/Mum/2016, I.T.A No.6366/Mum/2016 - - - Dated:- 20-7-2018 - Shri Mahavir Singh(Judicial Member And Shri G Manjunatha (Accountant Member For the Assessee : Shri Madhur Agarwal. For the Revenue : Shri Samuel Darse. ORDER PER G MANJUNATHA, AM : These cross appeals filed by the revenue, as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the assessee which is a dependent agent and carried out various services for its principal like facilitating arrangement with advertising agencies, sales representatives, conducting market status promoting awareness regarding channel and other services incidental to acting as dependent for booking advertisements. Accordingly, he concluded that Taj India constituted dependent agent PE with respect to activity of advertisement revenue and accordingly assessed income attributable in India. The AO, also disallowed programming cost and transponder fees paid to PanAM Sat International System Inc for rendering services, satellite launch outside India in telecasting the sports channel to various countries u/s 40(a)(i) of the Act, for failure to deduct tax at source from said payments as according to him it is in the nature of royalty and falls under clause (iva) of Explanation 2 to section 9(1)(vi) of the Act. 4. The assessee carried the matter in appeal before the CIT(A). Before the CIT(A), the assessee has filed elaborate written submissions to argue that the assessee does not have any permanent establishment in India and hence, no part of its income is liable to tax in India, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound No 1 On the facts and in circumstances of the case and in law, the Commissioner (Appeals) erred in concluding that Appellant has a Permanent Establishment in India in respect of advertisement revenue. Without prejudice to above, even if the Appellant has a Permanent Establishment in India, the Commissioner (Appeals) erred in concluding that income is attributable to the Permanent Establishment without rebutting the fact that it has remunerated its agent at the arm's length price in respect of advertising revenue. 6. The Ld.AR for the assessee, at the time of hearing submitted that the issue involved in these appeals is squarely covered in favour of the assessee by the decision of ITAT, L Bench in assessee s own case for AY 2006-07 in ITA No. 9097/Mum/2010, wherein under similar set of facts, the ITAT held that Taj India does not constitute agency PE in terms of India Mauritius DTAA. Insofar as advertisement revenue income, the ITAT held that since Taj India is being remunerated at arm s length, so no further income or profit can be said to be attributable to the assessee in India from its PE. It is an undisputed fact that the TPO has accepted the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of ITAT, Mumbai Bench in the case of Satellite Television Asian Region Ltd. in ITA No.5066/Mum/2004 dated 18.01.2006. Thus, it was submitted by the assessee that, subscription/distribution revenue earned does not fall in the nature of royalty as defined in section 9(l)(vi). The Ld. CIT(A) after examining the definition of royalty as given in nation 2 to section 9(l)(vi) held that, the distribution income even up to 12th July, 2002 cannot to be taxed as a royalty under section 9(l)(vi) of the Act, as copyright over the programs belong to the Assessee Company, whereas the Distributors or cable operators only transmit the signals received from the Assessee Company. They do not modify, alter, or replace the content of the telecast but broadcast the content as it is received by them from the Assessee Company. Therefore, it does not amount to transfer of any right over the copyright or granting any license over the copyright to the cable operators. Therefore, the AO has erred in taxing distribution income as 'Royalty' under the Act. 8. In this view of the matter and consistent with the view taken by the co-ordinate bench, we are of the view that Taj Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not for use of any equipment, therefore, it did not amount to 'Royalty'. The HonTDle Tribunal also held that fees paid for Transponder facility does not amount to 'Royalty* as it is not for a secret process; or 'Fees for Included Services' as it does not make available technical knowledge as per Article -12 of India-US DTAA. The Id. CIT(A) also held that the payment of 'transponder fees' was not borne by the PE in India, hence, even if payment is held to be 'Royalty', it is still not taxable as it is not borne by PE of US company in India therefore, there was no obligation to deduct tax at source in view of Article J2(7). In respect of allowance of payment of US $ 305,347, to PanAmSat and various other non-residents as Up charges which has been disallowed under section by the AO, the Id, CIT(A) held that Up linking charges paid by the assessee company are in connection with the events taking place outside India for sending the signal from the venue of the event to the Satellite. The payment is made for rendering services by PanAmSat to uplink the signal from the venue of the event to the Satellite therefore, it is not in the nature of 'Roya ..... X X X X Extracts X X X X X X X X Extracts X X X X
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