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2023 (2) TMI 921 - AT - Income TaxIncome deemed to accrue or arise in India - Royalty receipt - payment received by the Assessee from the customers is on account of use of process involved in the transponders and its amounts to royalty within the meaning of section 9(l)(vi) and also amounts to royalty within the meaning of respective articles of DTAA - income earned by the assessee from providing digital broadcasting services through its transponders to customers in India was not taxable in India under the relevant DTAA - HELD THAT:- The issue with regard to functions performed by transponders could not be categorized as "process" stands settled. As in case of Director of Income Tax Vs. New Skies Satellite [2016 (2) TMI 415 - DELHI HIGH COURT] settled the controversy holding that all that the customers gets through the agreement with the Assessee is mere access to a broadband width available in the transponder. The control over the parts of the satellite and naturally transponder remains with the Assessee. At no point does the Assessee cede control over the satellite to the customers. Logically therefore, since the transponder is a part of satellite that cannot be severed from it, there can be no independent control of the transponders without control of the satellite itself. As concluded by HC that the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word "royalty" in Asia Satellite [2011 (1) TMI 47 - DELHI HIGH COURT], when the definitions were in fact pari materia (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both parties to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner so that such income automatically becomes royalty. Appeal of the revenue is dismissed.
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