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TMI Blog2022 (2) TMI 1200X X X X Extracts X X X X X X X X Extracts X X X X ..... t time for different television channels, and distribution of these channels. The assessee has made payment for transponder service fees to three entities namely (1) intelsat Corporation, USA, (2) Intelsat global sales and marketing, UK and (3) MEAST satellite system, Malaysia. Assessee applied for an order u/s 195 (2) for Nil withholding tax certificates for payment of transponder services fees payable to the service providers. 04. The learned assessing officer rejected it holding that these payments are chargeable to tax as royalty on the basis of the order of coordinate bench in the case of the assessee wherein the case of Intelsat it was held that the payments are royalty on the basis of explanation to Section 9 (1) (vi) of the act. Subsequently on the basis of the decision of the honourable Delhi High Court Asia satellite communication Co Ltd (2011) 332 ITR 340, it was held that the income of Intelsat is not taxable in India and these payments are not subject to tax deduction at source. 05. On appeal before the learned CIT - A, he considered article 12 of India US Double Taxation Avoidance Agreement, article 13 of India United Kingdom Double Taxation Avoidance Agreement and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that as the word process has not been defined, in terms of article 3 [2] of DTAA definition needs to be incorporated from The Income tax Act as per Explanation [6] of section 9 (1) (vi) of the Act. 08. The learned authorised representative submitted that this issue is squarely covered in favour of the assessee by the decision of the coordinate bench in assessee"s own case on identical facts and circumstances in [TS-66-ITAT-2022(Mum)]. 09. Countering the arguments of the LD DR, LD AR submitted that New Sky satellites decision. He further submitted that the Royalty has already been defined in Article 12 (3) of the DTAA therefore, there is no reason to look at Article 3 [2} of the DTAA. 010. We have carefully considered rival contention and perused the orders of lower authority. Recently on 20/1/2022 coordinate bench in assessee"s own case for AY 2015-16 , 16-17 and 2020-21 in [TS-66-ITAT-2022(Mum)] has considered the order of the ld CIT (A) in that case which is also identically the order in all these appeals passed by the ld CIT (A), the order of the ld CIT (A) held that :- "5. FINDINGS The assessee is engaged in the business of marketing advertising air time of different te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble ITAT in the case of Intelsat initially confirmed the finding of Assessing Officer however 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 Honourable ITAT held that TDS is deductable in India. Before me, the assessee submitted that subsequent to the above honourable jurisdictional High Court i.e. Bombay High Court in the case of Neo Sports Broadcast Pvt Ltd (ITA no. 1487 of 2018) held that transponder charges paid to non-resident is not taxable as royalty. While doing so the honourable Bombay High Court has relied on Delhi High Court order in the case of Asia Satellite Communication Company Ltd (2011) 332 ITR 340 a nd Skies Satellites BV(2016) 382 ITR 114. It was also submitted that the facts of assessee's case are similar to the above case and in the view of binding decision of jurisdictional High Court transponder charges cannot be held as royalty and therefore the assessee cannot be asked to deduct TDS on the same. Therefore, to decide the issue in the present case, we have to decide following tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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' for short). The Court by a detailed judgment held that the payments were not in the nature of royalty charges. The Court made a distinction between transfer of rights in respect of property and transfer of rights in the property. 4. Later on similar issue once again came before Delhi High Court in the case of Directorate of Income tax Vs. New Skies Satellite BV, reported in (2016) 382 ITR 114 The Court followed the earlier decision in case of Asia Satellite Telecommunication (supra) and dismissed the revenue's Appeal. It was held that the explanations added below section 9(1) of the Act were not merely clarificatory in nature. Respectfully agreeing with the said decisions of the Delhi High Court, this question is not considered." While doing so, the honourable Bombay High Court relied on the judgement of honourable Delhi High Court mentioned above. The honourable Delhi High Court has considered the amendment to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aph 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 radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; 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 income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic. Indo UK DTAA ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties and fees for technical services may also be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the gross amount of the royalties. 3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of. or the right to use. any copyright of literary, artistic or scientific work eluding cinematograph films or films ot tapes used for television or radio broadcasting, any tent, trade mark, design or model, plan, secret formula or process, or for the use of. or the right assessee cannot be asked to withhold tax on the payments of transponder charges paid to these entities. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 5. Royalties shall be deemed to arise in a Contracting Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation, USA to highlight the services of transponding [sic transponder] facility provided by 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 Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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