2014 (4) TMI 737 - ITAT MUMBAI

Fee payable to be treated as Royalty or not – Scope of section 9(1)(vi) of the Act – Article 12 of Indo-US DTAA - Whether the fee payable by the assessee to Intelsat Corporation, a tax resident of USA is in the nature of "Royalty" in the light of amended provisions of section 9(1)(vi) as well as under Article 12 of Indo-US DTAA – Held that:- The payments were made to the Intelsat is for user of transponder capacity by the assessee for telecasting/broadcasting of its various programmes on television channels including marketing and advertising airtime etc.

Relying upon Asia Satellite Telecommunications Co. Ltd. Versus Director of Income-tax [2011 (1) TMI 47 - DELHI HIGH COURT] - the application of the term 'royalty' to the transaction on the premise of territorial jurisdiction in-as-much as the said 'process' was not being used in India - Without doubt, the rights in or for the use of the process vesting in the assessee are located in India, where at the signals are downlinked as also uplinked from – it has to be read in conjunction with Explanation below section 9(2), inserted on the statute by Finance Act, 2007 w.r.e.f 01.06.1976 - The use of transponder by the assessee for telecasting/broadcasting the programme involves the transmission by the satellite including uplinking, amplification, conversion for downlinking of signals which falls in the expression "Process" as per Explanation 6 of section 9(1)(vi) - the payments made for use/ right to use of process falls in the ambit of expression "royalty" as per DTAA as well as provisions of Income Tax Act – there was no reason to interfere in the decision of CIT(A) – Decided against Assessee.