TMI Blog2022 (1) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... sue in dispute relevant to the orders of Assessing Officer u/s 195(2) of the Act. Accordingly, we uphold the finding of the Ld. CIT(A) in impugned orders - Decided in favour of assessee. - I.T.A. No. 523/Mum/2021, I.T.A. No. 1068/Mum/2021, I.T.A. No. 1072/Mum/2021, I.T.A. No.1063/Mum/2021, I.T.A. No. 1064/Mum/2021 - - - Dated:- 20-1-2022 - Shri Om Prakash Kant (Accountant Member) And Shri Pavan Kumar Gadale (Judicial Member) For the Revenue : Shri S.N. Kabra For the Assessee : Shri Nimish Vora ORDER PER BENCH : These appeals by the Revenue are directed against separate orders of even date passed by the learned Commissioner of Income-tax (Appeals)-58, Mumbai [in short, the Ld.CIT(A)] for assessment years 2015-16, 2016-17 2020-21 arising from the order passed by the learned Assessing Officer under section 195(2) of the Income-tax Act, 1961 (in short, the Act) directing the assessee to withhold tax on payments to non resident Companies. 2. The issue in dispute involved in these appeals being identical, permeating from same set of facts and circumstances and, therefore, we have heard these appeals together and disposed off by way of this consolidated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer for determining the portion of sum towards service fee as not taxable in India, hence not liable for deduction of tax at source. The assessing officer, in all the relevant orders held the payment made to those parties in India as royalty as per the Double Taxation Avoidance Agreement (DTAA between India and the respective country) and accordingly, held the assessee as liable for withholding the tax at source. According to the Assessing Officer, the definition of the royalty as per India USA DTAA includes, the payment made for any process and as the term process is not defined in the DTAA, he imported the term from the Act. He observed that as per new Explanation 6 (inserted by the Finance Act , 2012) to section 9(1)(vi) of the Act, the term process include transmission of satellite (including uplinking, amplification, conversion for downlinking of any signal). The learned Assessing Officer has noted that identical issue of withholding of tax on transponder facility services has been allowed in favour of the assessee in the case of Asia Satellite Telecommunication Co Ltd 197 Taxman 263 (Del HC). However, he did not follow the decision because the Special Leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per Article 12 of the India - USA Tax Treaty includes the payment made for use of any 'process'. The terms 'process' is not defined in the India-USA Tax Treaty. Therefore, the definition of the term process has to be imposed from the Act. Thus, the payment made for transmission by satellite is a royalty even under the lax treaty. The reference to decision of the Hon'ble Delhi High Court made by the applicant has not been accepted by the department and the SLP has been preferred in this case. Also, the orders passed earlier, in the case of the applicant treating the transponder services fee as ' royalty income' has been upheld by the id. CIT(A) and IT AT. Basically, the Assessing Officerheld these payments as royalty on the basis of Honourable ITAT order and on the basis of explanation to section 9 (1J(vi) of the IT Act. Hon'ble ITAT in the case of Intelsat initially confirmed the finding of Assessing Officerhowever subsequently on the basis of Delhi High Court wherein the honourable High Court has held that the income of Intelsat is not taxable in India, held that these payments are not subject to TDS. In the case of IGSM and MEASAT H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yalty payments. From the perusal of the impugned judgment of Income Tax Tribunal {'Tribunal' for short) we notice that the revenue's main thrust before the Tribunal was that the charges paid were capital expenditure and not revenue expenditure. However, in this context, the Tribunal did observe fleetingly on the question of charges being royalty payments. We have therefore heard the learned Counsel for the parties on merits on this issue raised by the revenue. 3. We notice that an identical issue came up for consideration before Delhi High Court in case of Asia Satellite Telecommunications Co. Ltd. Vs. DIT, reported in (2011) 332 ITR 340 . It was the case in which the assessee a non-resident was engaged in safe/We communication, having control of satellites. The assesses would provide use of transponder facility on satellite to the television companies outside India, which in turn would be routed to the operators in India, who would pass them on to the customers. The question was whether the payments made to the non-resident were in the nature of royalty and therefore come within the scope of section 9(1) of the Income Tax Act, 1961 ('the Act' fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and fees for technical services within paragraphs 4(a) and (c) of this Article,- (i) during the first five years for which this Convention has effect ; (aa) 15 per cent of the gross amount of such royalties or fees for technical services when the payer of the royalties or fees for technical services is the Government of the first mentioned Contracting State or a political sub-division of that State, and (bb) 20 per cent of the gross amount of such royalties or fees for technical services in alt other cases; and (ii) during subsequent years, 15 per cent of the gross amount of such royalties or fees for technical services, and (b) in the case of royalties within paragraph 3(b) of this Article and fees for technical services defined in paragraph 4(b) of this Article, 10 per cent of the gross amount of such royalties and fees for technical services. 3. For the purposes of this Article, the term royalties means : (a) payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic or scientific work, including cinematography films or work on films, tape or other means of reproduction for use in connection with rad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the party. The Ld.CIT(A) has noted that while passing the order dated 28/03/2014, 04/02/2015 and 10/02/2015 in assessee s own case, the Tribunal was not having any benefit of the decision of the Hon ble Bombay High Court in the case of New Sports Broadcast Pvt Ltd (ITA 1487 of 2018) and, therefore, transponder payments were held to be royalty, taxable under the Act / Treaty. However, subsequently, in ITA Nos. 599 to 614/Mum/2016 for assessment year 2013-14 to 2015-16 in order dated 09/07/2018 following the decision of GE Technology Centre Pvt Ltd (supra) held that since no income was chargeable in the hands of the recipient, there was no liability on the part of the assessee to deduct tax at source on the similar payments for transponder facility. Further, the Ld.CIT(A) has followed binding precedents of jurisdictional High Court in the case of New Sports Broadcast Pvt Ltd (supra), wherein it is held that transponder charges are not in the nature of Royalty income in the hands of recipients despite amendment to section 9(1)(vi of the Act. 10. In view of binding precedent of the Tribunal and Hon ble High Court followed by the Ld.CIT(A) in respective impugned orders, we do not f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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