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2018 (7) TMI 2248 - AT - Income TaxTDS u/s 195 - tax withholding on payments of transponder fees by the Appellant to Intelsat Corporation, USA, ('Intelsat'), are taxable as 'royalty' - India- USA Tax Treaty - HELD THAT:- We note that the Hon’ble Apex Court in the case of G. E. Technology Centre Pvt. Ltd. [2010 (9) TMI 7 - SUPREME COURT] has held that where an amount is payable to a non-resident, the payer’s obligations to deduct tax at source arises only when such remittances is a sum chargeable under the Act, i.e., chargeable u/s. 4, 5, 9 of the Act in the hands of the recipient. It has further been expounded that section 195(2) of the Act is not merely a provision to provide information to the ITO(TDS), so that the department can keep track of the remittances being made to non residents outside India, rather it gets attracted to the case where payment made in a composite manner which has an element of income chargeable to tax in India and the payer seeks determination of the "appropriate proportion of such sum so chargeable". From the above case law it emerges that when in the hands of the nonresident recipient, the sum paid is not chargeable under the Act, there is no liability on the payer to deduct tax at source. Also in INTELSAT CORPORATION [2011 (8) TMI 1248 - DELHI HIGH COURT] held income received from the activities undertaken by the respondent/assessee would not be exigible to tax in India. Similar payments received by the Intelsat Corporation USA have been held to be not chargeable to income tax in the hands of the same recipient - no liability fasten on the assessee to deduct tax at source on payments made to Intelsat Corporation USA. Hence, the additional grounds of the assessee deserve to be allowed. Accordingly, we hold that since the Hon’ble High Court has held that the payment was not income chargeable to tax in the hands of the same recipient, there was as a corollary no liability on the part of the assessee (the payer) to deduct tax at source on the similar payment made to the same payee. Hence, the assessee succeeds on the additional ground.
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