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2019 (6) TMI 250 - HC - Income TaxAddition towards Satellite Space Fees/transponder charges - royalty payments - capital expenditure OR revenue expenditure - whether the payments made to the non-resident were in the nature of royalty and therefore come within the scope of section 9(1) - HELD THAT:- Identical issue came up for consideration ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. VERSUS DIRECTOR OF INCOME-TAX [2011 (1) TMI 47 - DELHI HIGH COURT] wherein as 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. Also see NEW SKIES SATELLITE BV, SHIN SATELLITE PUBLIC CO. LTD. [2016 (2) TMI 415 - DELHI HIGH COURT] held that the explanations added below section 9(1) of the Act were not merely clarificatory in nature. Respectfully agreeing with the said decisions of the Delhi High Court, this question is not considered. Addition u/s 40A(2) - amount receivable considering the expost facto agreement between the assessee and the Nimbus - HELD THAT:- It is undisputed that the assessee and Nimbus are persons referred to in clause (b) of subsection (2) of Section 40A. However, in order to invoke subsection (2) of Section 40A, the Assessing Officer has to come to the conclusion that such expenditure incurred by the assessee being a payment to a person referred to in clause (b), the expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities, for which the payment is made or the legitimate needs of business or profession of the assessee or the benefit delivered by or accruing to him. In the present case, the Tribunal records that the AO did not doubt the existence of agreement between the assessee and BCCI. Even independently we find that the entire transaction was in the nature of fresh business transaction under revised circumstances. On one hand, one of the matches which, the assessee had right to exhibit was cancelled. As against this, additional match of another series was played. The assessee and Nimbus in negotiations with BCCI agreed neither to refund the amount for the cancelled match nor to charge for the additional match. It may be that the match which was cancelled was priced higher than the match which was added. That still did not prevent the parties from agreeing to fresh contract as to how to adjust the revenue proceeds. - Decided against revenue
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