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2016 (9) TMI 215 - CALCUTTA HIGH COURT

2016 (9) TMI 215 - CALCUTTA HIGH COURT - TMI - Royalty payment - whether the payments made by the assessee to the foreign company, Shin Satellite Company of Thailand, are in the nature of the royalty within the meaning of Article 12(3) of the DTTA between India and Thailand? - Held that:- What is important is the permission to take the benefit of a copyright either in the film or in the television broadcasting. In case, the assessee had paid any amount in consideration of exploitation of any cop .....

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gh its satellite and in lieu of such broadcasting, foreign party was paid various sums from time to time. We are, as such, unable to agree with Mr.Agarwal that the payment made by the assessee partakes the character of royalty. - Decided in favour of assessee - ITA NO.734 OF 2008 - Dated:- 29-7-2016 - GIRISH CHANDRA GUPTA AND ARINDAM SINHA, JJ. FOR THE APPELLANT : Mr.M.P.Agarwal,Advocate, Mrs.Anwara Quereshi,Advocate FOR THE RESPONDENT : Mr.J.P.Khaitan,Sr.Advocate, Mr.Pranit Bag,Advocate, Mr.M.S .....

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why the appeal should not be pressed. In a case where there is a dispute as regards the tax effect involved in an appeal and the dispute cannot be resolved except through a process of complex reasoning, we think, it would not be proper on our part to decide the question as to whether the tax effect is more or less than the sum of ₹ 20 lakhs because the circular does not create any corresponding right in the assessee to have the appeal dismissed. We expressed that view at the beginning and .....

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e revenue. Since the appeals themselves were dismissed, there was no occasion for the learned Tribunal to deal with the Cross-objection. They were also dismissed. The aggrieved revenue has come up in appeal. On 31st October, 2008 when the appeal was admitted, the following questions were formulated : 1. Whether on the facts and in the circumstances of the case the ld. Income Tax Appellate Tribunal was justified in holding that the payments made by the assessee to the foreign company, Shin Satell .....

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in the agreement between the assessee and the foreign company ? 3. Whether on the facts and in the circumstances of the case the ld. Income Tax Appellate Tribunal failed to consider that the Satellite Transponder for the use of which the assessee paid hire charges to the foreign company was also an Industrial, Commercial or scientific equipment and therefore the payments assume the character of royalty under the treaty law? Mr.Agarwal, learned advocate appearing for the revenue submitted that t .....

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ite Company of Thailand, did not constitute royalty within the meaning of Article 12(3) of the Double Taxation Agreement between India and Thailand ? The facts and circumstances of the case were summarised by the CIT (A) in disposing of the appeal preferred by the assessee, as follows . The brief facts of the case are that the appellant a Public Ltd. Company is engaged in the operation of Satellite T. V. Channel namely ATN which is a Free to Air Channel. It has entered into an agreement with Tha .....

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is a free to Air Channel. The A.O. has held that payment made to non resident company was from the source in India. Therefore, income deemed to have accrued or arisen in India and same is taxed as a Royalty within the meaning of sub clause (b) of section 9(1)9vi) read with clause (iii) of explanation 2 of the said section. The appellant s main contention is that payment made to the non resident company will not term as a royalty hence same will not be liable for tax in India as per the DTAA agr .....

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TAT (Delhi), the assessee entitles for the relief. Further, Hon ble Supreme Court in the case reported 239 ITR 587 has held that if income of the foreign concern is not taxable in India then no TDS is liable to be made. Under the circumstances the order passed by the ADIT (TT) -I, Kolkata is cancelled. As regard to other ground relating to legality of combined order for three years same is not considered as appellant has been allowed relief on merit. In an appeal by the revenue, the learned Trib .....

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B which defines Digital Broadcast Service to be rendered to the assessee company, all equipments used for the Digital Broadcast Service shall be the equipment already installed at the telepoint facilities and used at the discretion of SSA only and that the customer shall be responsible to provide only the source signal from a tapeplay system. Further, the service description has been provided in Appendix B which is given below :- SSA shall provide one digital channel including video and audio si .....

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ended by the ld. DR. We are fortified in our view by the decision of the Mumbai Bench in the case of Kotak Mahindra Primus Ltd. vs. Dy.DIT 11 SOT 578. In view of the discussions made hereinabove, we find no merit in the appeal filed by the revenue. Mr.Agarwal, learned advocate appearing for the revenue drew our attention to the Clause 3 of Article 12 of the agreement for avoidance of double taxation of income and the prevention of fiscal evasion between Republic of India and the Government of th .....

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mercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. Mr.Agarwal laid stress to the words including cinematograph films …….or television broadcasting . He submitted that any payment made with respect to the cinematograph films or with respect to television broadcasting is covered within the definition of royalties provided in Clause 3 of Article 12 of the aforesaid agreement. We have not been impressed by this submission bec .....

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