TMI Blog2018 (2) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... spect and decide the matter afresh and as per law. Thus, on this aspect assessee succeeds for statistical purposes. - ITA No. 1289/MUM/2016, ITA Nos.1290 to 1302, 1303 to 1308/MUM/2016, ITA Nos. 7303 to 7306/MUM/2016, ITA Nos. 264,266,269,270,272&273/MUM/2017 And ITA Nos.262,263, 265,267,268&271/MUM/2017 - - - Dated:- 9-2-2018 - SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER For The Appellant : Shri Madhur Agarwal And Jeegar Modi For The Respondent : Shri M.V.Rajguru ORDER PER G.S.PANNU, A.M: The captioned are 36 appeals pertaining to two different assessees but involving a common issue, therefore, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 2. The first set of 30 appeals vide ITA Nos.1289 to 1308/Mum/2016, ITA Nos. 7303 to 7606/MUM/2016, ITA Nos. 264 266/MUM/2017, ITA Nos. 269 270/MUM/2017 ITA Nos. 272 273/MUM/2017 pertains to four different assessment years namely, assessment years 2013-14 to 2016-17 and the grievance is against the similarly worded multiple orders of the CIT(A), which in turn arise from the separate orders passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld the assessee s point of view that the fee for transponder service paid by the assessee to Intelsat was not in the nature of royalty and that the same was not taxable in India, and thus the remittance did not warrant any deduction of tax at source. At the time of hearing, the Ld. Representative for the assessee has taken us through the decision of the Tribunal dated 25/10/2016(supra) and pointed out that the entire matrix has been fully dealt with, and, therefore, canvassed that the issue in the captioned proceedings is fully covered by the said precedent. 5. The Ld. Departmental Representative, on the other hand, did not controvert the factual matrix brought out by the Ld. Representative for the assessee, but pointed out that the CIT(A) has decided the issue by referring to a contrary view of the Tribunal in the case of Viacom 18 Media Pvt. Ltd. vs. ADT, 153 ITD 384(Mum) and he relied on the same. 6. In reply the Ld. Representative for the assessee pointed out that the subsequent payment made by the assessee to Intelsat corresponding to assessment years 2012-13 and 2013-14 also came up before the Tribunal and the Tribunal vide its order in ITA Nos.5171 to 5181/Mum/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier judgment of the Hon ble Delhi High Court itself in the case of Asia Satellite Communication Ltd., in ITA No.131/2003 dated 31/01/2011. As per the Tribunal, once it has been held in the case of Intelsat Corporation US, the payee itself, that the payments are not taxable in India; therefore, payer of such income i.e. assessee before us, was not obligated to deduct tax at source. For the said reason, the Tribunal quashed the proceedings under section 195 of the Act. In order to impart completeness, we hereby reproduce the relevant portion of the order of the Tribunal dated 25/10/2016(supra) as under:- 7. We have carefully considered the rival submissions, perused the relevant finding given in the impugned orders as well as various decisions as relied upon by the parties before us. At the threshold it is noticed that, in the case of the payee, i.e., Intelsat Corporation US, the Hon ble Delhi High Court vide order dated 19.08.2011 and then again reaffirmed vide order dated 28.09.2012 in ITA No. 530 545/2012, following the order of its own court in Asia Satellite Communications Ltd (ITA 131/2003 decided on 31.01.2011), have categorically held that payment received by Intelsa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and does not amount to use of any copyright effecting work, secret formula, process etc or any other term described in para 3 of Article 12. The Ld. CIT(A) has held that it is not a royalty and secondly, even otherwise also by virtue of Article 12(7) such a royalty cannot be taxed in India, because it is not borne by PE or fixed place of the US company in India. The Ld. DR has strongly relied upon amended definition of the royalty under the Act, wherein, the scope and definition of royalty has been enlarged by the newly inserted Explanation (vi) and (vi) by the Finance Act, 2012 with retrospective effect from 01.06.1976 and has contended that the said definition is to be read into DTAA also, that is, the definition of royalty has to be taken from the Domestic Law. In support, Ld. DR has strongly relied upon the decision of Madras High Court in the case of Verizon Communications Singapore Pte Ltd. (supra) and the ITAT decision in the case of Viacom 18 Media Pvt. Ltd. 19. First of all, let us examine the definition of royalty as been defined under Article 12 of the Indo- US-DTAA, which has been defined in the following manner: 3. The term royalties as used in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. So far as the reading of amended definition of royalty as given in section 9(1)(vi) into treaty, Hon ble Delhi High Court in its latest judgment in the case of DIT vs. New Skies Satellite(supra), wherein it has considered Hon ble Madras High Court decision in the case of Verizon Communications Singapore Pte Ltd. (supra) also, have discussed the issue threadbare and came to the conclusion in the following manner:- 60. Consequently, since we have held 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, supra note 1, when the definitions were in fact pari material (in the absence of any contouring explanations), will continue to hold the filed 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 partners 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. It is reiterated that the Court has not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sellschaft (supra). The relevant observation of the Hon ble Delhi High Court in the said case reads as under:- 48. In Commissioner of Income Tax v. Seimens Aktiongessellschaft, [2009] 310 ITR 320 (Bom), the Bombay High Court citing R v. Melford Developments Inc. held that The ratio of the judgment, in our opinion, would mean that by a unilateral amendment it is not possible for one nation which is party to an agreement to tax income which otherwise was not subject to tax. Such income would not be subject to tax under the expression laws in force . ********** ********* ********* While considering the Double Tax Avoidance Agreement the expression laws in force would not only include a tax already covered by the treaty but would also include any other tax as taxes of a substantially similar character subsequent to the date of the agreement as set out in article I(2). Considering the express language of article I(2) it is not possible to accept the broad proposition urged on behalf of the assessee that the law would be the law as applicable or as define when the Double Tax Avoidance Agreement was entered into. 49. It is essential to note the context in which this judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to look into domestic law or any amendment made therein. In view of the aforesaid decisions, we hold that the payment made by the assessee to Intelsat is not taxable as royalty in India and, therefore, assessee was not required to deduct TDS or withhold any tax on such payments. This proposition has been upheld by Hon ble Supreme Court in the case of GE Technology Centre, 327 ITR 456 Following the aforesaid precedent and considering that the same has been rendered after relying on the judgment of the Hon ble Delhi High Court in the case of one of the payee, i.e. Intelsat Corporation US, we find no reason to distract from the same in the instant year, since the facts and circumstances remain identical. In so far as reliance placed by the Ld. Departmental Representative on the decision of the Tribunal in the case of Viacom 18 Media Pvt. Ltd. (supra), the same has been appropriately dealt with by our Co-ordinate Bench in the assessee s own case in its order dated 28/11/2016(supra) and, therefore, the said argument of the Ld. Departmental Representative is not potent so as to depart from the precedent in assessee s own case. Thus, we hereby set-aside the order of the CIT(A) a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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