TMI Blog2018 (11) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the order of the learned Commissioner of Income Tax (Appeals)-58, Mumbai ( ld.CIT(A) for short) dated 29.03.2016 and pertains to the assessment year (A.Y.) 2013-14. 2. The grounds of appeal read as under: 1. Transponder Charges i) The Ld. CIT(A) erred in law and facts in upholding that the payment for use of 'transponder space' as Royalty under section 9(1)(vi) and applying provisions of section 195 of the Act treated the assessee in default for u/s 201 (1) of the Act and charged interest on amount u/s 201(1 A). The reasons given by him for doing so are wrong, contrary to the facts of the case and against the provisions of law. ii) The Ld. CIT(A) erred in law and facts in upholding that the payment for use of transponder space as Royalty under the provisions of section 9(1){vi) of the Act as well as Article 12 of the India US DTAA without considering the fact that the assessee has claimed benefit of DTAA of section 90(2) of the Act and there is no change in the DTAA with USA. The reasons given by him for doing so are wrong, contrary to the facts of the case and against the provisions of law. Hi) The Ld. CIT(A) erred in laws and facts in applying re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransmission of uplinked programs to be seen over the footprint of the satellite (mainly India) and paid ₹ 26,576,716 as user charges for the period January to March 2013. The A.O. noted that the assessee has not deducted any tax from the remittance at source relying on a certificate issued by a CA in form 15CB. It has made a declaration in form 15CA before making the remittance and based on this declaration, the assessing officer has initiated proceedings under section 201(1) (1A) of the Act. He arrived at a conclusion that the remittance represents income of the nonresident in the nature of royalty, being payment for use or right to use a process and has held that the assessee was liable to deduct TDS on this amount and has accordingly, held the assessee as assessee in default passing suitable orders under section 201 (1) and 201 (IA) of the Act. 4. Before the Assessing Officer, the assessee has relied on the ITAT judgment in the case of same remittee M/s Intelsat Corporation (ITA No. 4662/Del/2011) for AY 2006- 07 dated 16.1.2012 and the decision in the case of B4U International Holdings , 21 taxmann.com 529 (Mum). In the judgment in the case of Intelsat, the ITAT h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished by the assessee. 6. The AO has held that the business of M/s Intelsat Corporation was to help ZEE relay its programmes from the satellites in the footprint including India. ZEE has uplinking facility in India from where the programs are uplinked to the satellite. These programmes are subjected to various processes and subsequently signals were made available in the footprint of the transponders including India. The AO concluded that although the control of the satellite was with M/s Intelsat, it was the control of the transponder with was important. Zee had the effective control and use of the transponder to the extent of capacity assigned to it. The transponder was an active transponder where amplification of the signal took place. The AO held that a process means a series of action or steps taken in order to achieve a particular end and in the present case, that particular end i.e. viewership by public at large was achieved only through a series of steps taken by receiving the uplinked signals, amplifying them and relaying them after changing the frequency in the footprint area. He held that such an action constituted a process and hence the payment represented royalty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen such remittances is a sum chargeable under the Act, i.e., chargeable u/s. 4, 5, 9 of the Act in the hands of the recipient. It has further been expounded that section 195(2) of the Act is not merely a provision to provide information to the ITO(TDS), so that the department can keep track of the remittances being made to non residents outside India, rather it gets attracted to the case where payment made in a composite manner which has an element of income chargeable to tax in India and the payer seeks determination of the appropriate proportion of such sum so chargeable . From the above case law it emerges that when in the hands of the nonresident recipient, the sum paid is not chargeable under the Act, there is no liability on the payer to deduct tax at source. Now we note that the Hon ble Delhi High Court in the case of DIT(International Taxation) vs. Intelsat Corporation (in ITA No. 977/2011 dated 19.08.2011) considering the issue of chargeability of tax of similar payments received by Intelsat Corporation, USA has held as under: The respondent assessee is a tax resident company of the United States of America with its registered office located in Washington D.C. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Tribunal stating the manner in which the judgment of this Court in Asia Satellite?s case (supra) was relied upon, reads as under:- 3.2 Thereafter he drew our attention towards paragraph Nos.72 to 81 of the judgment. In paragraph No.72, it is mentioned that the Tribunal has made an attempt to trace the fund flow and observed that since the end customers being persons watching televisions in India are paying the amounts to cable operators who in turn are paying the same to TV Channels, the flow of fund is traced to India. This is a far-fetched ground to rope in payment received by the appellant in the taxation net. The Tribunal has glossed over an important fact that the money, which is received from the cable operators by the telecast operators, is treated as income by the telecast operators, which has accrued in India, and they have offered and paid tax. Thus, the income, which is generated in India, has been subjected to tax. It is the payment, which is made by the telecast operators who are situated abroad to the appellant, which is also a non-resident, i.e., sought to be brought within the tax net. It is concluded that it is difficult to accept such far-fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxation) vs. Intelsat Corporation (in ITA No.530 545/2012 dated 28.09.2012), wherein the Hon ble High Court has held as under: The Revenue claims to be aggrieved by the orders dated 2.2.2012 and 16.01.2012, whereby its appeals before the Tribunal were dismissed. The substantial question of law sought to be urged is whether the Tribunal fell into error in holding that the assessee did not incur any tax liability under provisions of the Income Tax Act? An elaborate discussion on the merits is not warranted since the impugned orderand notices are based upon a previous order of the Tribunal dated 4th March, 2011 (ITA 5443/Del/2010), for AY 2007-08 that was subsequently followed by the Tribunal in its own decision for AY 2006-07 (ITA No.4662/Del/2011). This Court by its judgment and order dated 19th August, 2011 in ITA No.977/2011, affirmed the findings of the Tribunal by a reasoned order. In view of these developments, no substantial question of law can be said to arise; there is no infirmity in the finding of the Tribunal with regard to the taxability of the assessee for the assessment years in question i.e. 2006-07 and 2008-2009. The appeals are accordingly dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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