9911796707
TMI Blog2016 (11) TMI 1528X X X X Extracts X X X X X X X X Extracts X X X X ..... United Home Entertainment Private Limited (' Appellant') respectfully craves leave to prefer an appeal under Section 253 of the lncome-tax Act, 1961 ('Act') against the order passed by the learned Commissioner of Income-tax (Appeals) - 11 ['CIT(A)']. On the facts and circumstances of the case and in law the learned CIT(A): General 1. erred in not condoning the delay in filing the appeal before him and accordingly dismissing the appeal as not maintainable; 2. erred in holding that tax is required to be deducted at source on the amount payable by the Appellant to Intelsat Global Sales and Marketing Limited ('Intelsat') [mentioned by the CIT(A) as PanAmSat Corporation] under the Transponder Service Agreement (' Agreement') ; Treating the impugned service charges as royalty 3. erred in holding that the transponder service charges paid by the Appellant to Intelsat under the Agreement are in the nature of royalty under the provisions of the Double Taxation Avoidance Agreement between India and United Kingdom [mentioned by the CIT(A) as India - USA Tax Treaty] and the Act; Taxability of the service charges 4. erred in holding that I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee for telecasting / broadcasting programmes involved transmission by satellite including uplinking, amplication, conversion by downlinking of signals and is covered within the definition of 'process' and payments made for use / right to use of 'process' is 'royalty' in terms of India USA DTAA as well as the Act. It was also held that definition of 'royalty' in Article 12(3)(4) includes payments for process and since term 'process' is not defined in India US DTAA, its definition in the Income-tax Act, 1961 should be applied. 5. In the rejoinder, the Ld. Counsel submitted that the Tribunal had delivered the judgment of co-ordinate bench of Mumbai Tribunal in the case of ADIT vs Taj TV Ltd dated 05-07-2016 wherein the bench had considered the judgment relied upon by the Ld. DR in the case of Viacom 18 Media Pvt Ltd and held that the impugned payment shall not amount to 'royalty'. Under these circumstances, he requested for following the judgment of the Tribunal rendered in assessee's own case in earlier years. 6. We have gone through the facts and circumstances of the case. As far as, prayer for condonation of delay in filing the appeal before Ld.CIT(A) is concerned, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the listed entity UTV Software Communications Limited ('UTV') (which additionally had 9 operating Indian subsidiaries. UTV was subsequently delisted from the stock exchanges in March 2012. A copy of the letter filed with the stock exchanges in this regard is enclosed as Annexure 1. 7. It is submitted that the Appellant does not have its own independent tax personnel and relies on the centralized tax function of the Disney India Group. Upto February 2012 and thereafter till September 2012, Disney India Group's centralized tax function was handled by a single personnel and he was entrusted with additional responsibility on account of the above acquisition of UTV. Further, post the acquisition, all tax matters of UTV and its subsidiaries were also transitioned to the existing personnel. Given this significant work load there was an inadvertent lapse in filing the appeals before the CIT(A) within the prescribed time. 8. The Disney India Group recruited an additional personnel, Manoj Sharma in October 2012 (a copy of his appointment letter is enclosed as Annexure 2) and given the significant ground that was required to be covered, the lapse in filing the appeals was di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apse, I took measures to rectify the situation and arranged to file the appeals under Section 248 of the Act on 7 March 2013 along with an application requesting for condonation of delay in filing the appeals. 6. THAT whatever stated above is true and correct to the best of my knowledge and belief-.- Solemnly stated in Mumbai on 16th November 2016 Sd/- Manoj Sharma" 8. We have considered the entire matrix of the facts and circumstances as was brought before us. It is noted that it was not a case of filing of ordinary appeal u/s 246A before the CIT(A). These appeals were filed in terms of section 248 of the Act under which separate appeal was required for every transaction / payment. It has been stated that there has been restructuring in the organization of the assessee, multiple appeals were required to be filed. On earlier occasions, appeals were filed on time and relief was granted to the assessee. Under these circumstances, it cannot be said that there was a conscious or intentional decision on the part of the assessee for not filing appeal or for filing the appeal belatedly. It is apparently a case of inadvertent delay that occurred due to peculiar circumstances a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coming to the issue of disallowance of various expenses under section 40(a)(i) like,'transponder charges" and 'up linking charges' as raised in ground No.2(i) and 2 (ii), it is seen that these, payments has been paid to PanAmSat International Systems Inc. USA for providing facility of transponder for telecasting 'Ten Sports' channel in various countries including India. The assessee entered into an agreement with PanAmSat to utilize the transponder facility providing by the said US based company for telecasting its sports channel which are on the footprint of transponder of PanAmSat. The Revenue's case beforeus is that, firstly, it is taxable under section 9(1)(vi) as 'royalty]' and also under Article 12(3){b) of Indo- US-DTAA. Similarly, the up linking charges paid for up linking the channels to PanAmSat Satellite for delay intransmission and for up linking signals for live events from the venue of the events to the satellite have been treated to be 'royalty'. Since, the assessee had not deducted 'FDS under section 195, disallowance under section 40(a){i) has been made. The assessee's case before us is that, firstly, PanAmSat is a US ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the productivity, use, or disposition thereof; and b) payments of any kind received as consideration for the use of or the right to use, any industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of Article 8 (Shipping and Air Transport)from activities described in paragraph 2(c) or 3 of Article 8". The article gives exhaustive definition of the term 'royalty' and therefore, the definition and scope of 'royalty' is to be seen from the Article alone and no definition under the domestic Act or law is required to be considered or seen or any amendment made in such definition whether retrospective or prospective which can be read in a manner so as to extend any operation to the terms as defined or understood in the Treaty. The Legislature or Parliament while carrying out amendment to interpret or define a given provision under the domestic Law of the country cannot supersede or control the meaning of the word which has been expressly defined in a Treaty negotiated between executives of two foreign nations. The payment of transponder charges to PanAmSat and up linking cannot be treated as a consideration f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singapore Pte Lld. V.The Income Tax Officer, International Taxation 1,[2014j 361 ITR 575 (Mad), the Court held the Explanations to be applicable to not only the domestic definition but also carried them to influence the meaning of royalty under Article 12. Notably, in both cases.the clarificatory nature of the amendment ioo s not questioned, but was instead applied squarely to assessment years predating the amendment. The crucial difference between the judgments however lies in the application of the amendments to the DTAA. Thus, respectfully following the ratio laid down by the Hon'ble Delhi High Court, we hold that, the definition of royalty as enlarged by Finance Act, 2012 with retrospective effect will not have any affect in Article 12 of DTAA". In the aforesaid decision, the Tribunal has taken note of the ratio and law upheld by the Hon'ble Delhi High Court in the latest case of New Skies Satellite (supra) and Asia Satellite Telecommunications and has held that the payment made for transponder charges will not fall in the nature of 'royalty' and also the scope of enlarged definition of 'royalty' given in section 9(l)(vi) will not apply in DTAA. 8. Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is in fact a 'definition of the word royalty under Article 12 of both DTAA, thus dispensing with the need for recourse to Article 3. 50. There are therefore two sets of circumstances. First, where there exists no definition of a word in issue within the DTAA itself, regard is to be had to the laws in force in the jurisdiction of the State called upon to interpret the word. The Bombay High Court seems to accept the ambulatory approach in such a situation, thus allowing for successive amendments into the realm of laws in force". We express no opinion in this regard since it is not in issue before this Court. This Court's finding is in the context of the second situation, where there does exist a definition of a term within the DTAA. When that is the case, there is no need to refer to the laws in force in the Contracting States, especially to deduce the meaning of the definition under the DTAA and the ultimate taxability of the income under the agreement. That is not to say that the Court may be inconsistent in its interpretation of similar definitions. What that does imply however, .is that just because there is a domestic definition similar to the one under the DTAA, am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the same we hold that assessee is not liable to deduct TDS." 10. It is noted from the above that the bench relied upon various judgments including the judgment of Taj TV Ltd wherein decision relied upon by the Ld. DR in the case of Viacom.18 has been considered in detail. Apart from that the main point to be noted here is that the bench took note of a vital fact that Hon'ble Delhi High Court in the case of payee, viz. M/s Intelsat Corporation, USA has categorically held that payment received by Intelsat Corporation is not taxable in India under the provisions of Indo US DTAA. Thus, in the case of payee, it has been categorically held that said payment is not taxable, then the assessee is not obliged to deduct TDS, therefore, the impugned proceedings u/s 195 deserves to be quashed. Thus, after taking into account all the facts and circumstances of the case, we find that the issue stands squarely covered by the decision of the Mumbai Bench of the Tribunal in assessee's own case and, therefore, the issue raised in the appeal before us stands allowed in terms of earlier order of the Tribunal which shall apply mutatis mutandis on the issue raised in this appeal before us. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
