TMI Blog2012 (2) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... , JUDICIAL MEMBER For the Petitioner : Shri R. Vijayaraghavan And Shri S.P. Chidambaram, Advocates For the Respondent : Shri K.E.B Rengarajan, Jr. Standing Counsel ORDER PER N.S. SAINI, ACCOUNTANT MEMBER : These are appeals filed by the revenue against the consolidated order dated 28.03.2008 of Commissioner of Income Tax -XI, Chennai passed in A.Ys. 2002-03 and 2003-04. 2. The Revenue has taken nine grounds of appeal and the sole grievance of the Revenue projected in these grounds of appeal is that the ld. CIT(A) erred in holding that the transactions in respect of which the impugned payments were made to six non-resident entities were purely on account of services and not in the nature of royalty. 3. At t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges without deduction of tax at source. The Assessing Officer examined the matter and found that the equipments used by the appellant company through which connectivity was provided are used by the assessee. Therefore, it treated the payment as royalty for the use of the equipments. Consequently, the Assessing Officer held that the appellant committed default u/s 195 in so far as it had not deducted tax at source. He therefore, worked out short deduction of tax u/s. 201(1) at ₹ 3,45,99,751/- and ₹ 3,33,39,659/- for A.Ys. 2002-03 and 2003-04 respectively. The Assessing Officer also charged interest u/s. 201(1A) amounting to ₹ 1,99,6S,927/- and ₹ 1,52,71,474/- for A.Ys. 2002-03 and 2003-04 respectively. The Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided either by way of undersea cables or by satellite earth stations and the appellant does not have any control over the equipments as it has only leased a part of the transponder capacity and not leased the transponder. Therefore, the right of' use of the equipment is not exclusively with the appellant. Further, the right to use equipment mainly arises if there is physical equipment and since the equipments used by the appellant are not under its control. Therefore, the payments made do not have the character of royalty. 6.3 On the above facts and in the circumstances of the case, only one question arises for decision whether the remittances made by the appellant company to the foreign parties would fall within the purview of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that any payment made to database owners outside India for accessing such databases and the services provided by such telecom operator to the customers do not amount to technical services or royalty u/s 9(1)(vii) of the IT Act. Accordingly, it was held that no TDS is to be made. The Hon'ble Tribunal also held that payments for accessing data is like reading a book in a library which could not be passed on to anyone else. Since the copyright was not for literary, artistic or scientific work, the payment is not to be treated as royalty and it was held that no TDS was required to be made. The Hon'ble ITAT, Bangalore Bench in the case of ITO Vs. Madhura Coats Pvt. Ltd., in ITA No. 1711 and 1712jBang/2005 for AYs. 2005-06 and 2006-07 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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