TV Today Network Ltd., New Delhi V. ACIT, New Delhi

ITA 1376/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91048 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 03-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 30-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDR AKARSR
• Assessee Lawyers: SSH SALIL AGGARWAL
• Keywords: Double taxation relief; Opportunity of being heard; Retrospective amendment; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SHRI R.S. SYAL AND SHRI I.C. SUDHIR ITA NO. 1376/DEL/2010 ASSESSMENT YEAR: 2007-08 TV TODAY NETWORK LTD., VS. ACIT, E-1, VIDEOCON TOWER, CIRCLE-16(1), JHANDEWALAN EXTENSION, NEW DELHI. NEW DELHI. (PAN: AABCT0424B) (APPELLANT) (RESPONDENT) APPELLANT BY: S/SH. SALIL A GGARWAL, ADV. & SHAILESH GUPTA, CA RESPONDENT BY: SHRI J.P. CHANDR AKAR,SR. DR DATE OF HEARING : 03.03.2015 DATE OF PRONOUNCEMENT: 19:05.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER O N THE SOLE GROUND THAT THE LEARNED CIT(APPEALS) HAS GONE WRONG IN UPH OLDING THE ASSESSMENT ORDER IN NOT ALLOWING THE ASSESSEE FIRM NIL DEDUCTI ON OF TAX DEDUCTED AT SOURCE FOR PAYMENT MADE TO PANAMSAT (WHO IS A NON-R ESIDENT BROADCASTER HAVING NO PE IN INDIA) FOR DOWN LINKING OF TELEVISION SIGNAL INTO INDIA AND INTERNATIONAL FOOT PRINT THROUGH SATELLIT E. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIA L AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 2 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE IS A BR OADCASTER OF NEWS CHANNELS WHICH AAJ TAK, HEADLINES TODAY, TEJ AN D DELHI AAJ TAK. FOR TELECASTING THE SAID CHANNELS DOWN LINKI NG OF TELEVISION SIGNALS INTO INDIA AND INTERNATIONAL FOOT PRINTS THROUGH TH E SATELLITE IS NECESSARY. THE ASSESSING OFFICER DID NOT ALLOW ASSESSEE FOR NIL DE DUCTION OF TAX DEDUCTED AT SOURCE OR PAYMENT MADE TO PANAMSAT, A NON-RESIDENT BROADCASTER HAVING NO PE IN INDIA, FOR DOWN LINKING OF TELEVISION SIGN ALS INTO INDIA AND INTERNATIONAL FOOT PRINTS THROUGH THE SATELLITE. TH E ASSESSING OFFICER DENIED THE CLAIM ON THE BASIS THAT THE REVENUE HAD GONE IN APPEAL BEFORE THE HON'BLE DELHI HIGH COURT AGAINST THE DECISION OF DE LHI BENCH OF THE ITAT (ITA NO. 1796/DEL/2001) FOR THE ASSESSMENT YEAR 199 7-98 IN THE CASE OF DCIT VS. PANAMSAT INTERNATIONAL SYSTEM. THE ASSESSE E QUESTIONED THE ACTION OF THE ASSESSING OFFICER IN NOT GRANTING A C ERTIFICATE UNDER SEC. 195(2) FOR NOT WITHHOLDING THE TAX ON THE AMOUNTS PAID/TO BE PAID TO A NON-RESIDENT COMPANY FOR DOWN LINKING THE SIGNALS INTO INDIA AND INTERNATIONAL FOOT PRINTS THROUGH THE SATELLITE WHICH WERE OWNED BY A NON-RES IDENT COMPANY. THE LEARNED CIT(APPEALS) UPHELD THE ACTION OF THE ASSES SING OFFICER FOLLOWING THE DECISION OF SPECIAL BENCH OF THE ITAT IN THE CA SE OF NEW STYLE SET LIGHT N.V. VS. ACIT (2009) 319 ITR (AT) 269 (DEL. ) WITH THIS FINDING THAT 3 THE PAYMENT MADE BY THE ASSESSEE TO PANAMSAT INTERN ATIONAL (OWNER OF SATELLITE) IS TO BE TREATED AS ROYALTY. THE ITAT, H OWEVER, REVERSED THE FIRST APPELLATE ORDER VIDE ORDER DATED 30.9.2011 WITH THI S FINDING THAT SERVICES CHARGES RECEIVED BY THE ASSESSEE FROM VARIOUS TV CH ANNELS WERE NOT LIABLE TO BE TAXED AS ROYALTY IN INDIA AND THE AMOUNT REMI TTED TO PANAMSAT WHICH IS NOT HAVING A PE IN INDIA, WERE NOT LIABLE TO BE TDS AT THE TIME OF PAYMENT BY THE ASSESSEE. AGAINST THIS ORDER OF THE ITAT, THE REVENUE WENT IN APPEAL VIDE ITA NOS. 600/2012 BEFORE THE HON'BLE DELHI HIGH COURT AND THE HON'BLE DELHI HIGH COURT VIDE ORDER DATED 12.11 .2013 WHILE ANSWERING THE QUESTION OF LAW IN FAVOUR OF THE REVENUE, REMIT TED THE MATTER BACK TO THE TRIBUNAL TO DECIDE THE OTHER CONTENTION RAISED BY T HE ASSESSEE AS TO WHETHER THE PAYMENTS MADE, NEVERTHELESS REMAIN UNTAXABLE IN VIEW OF THE PROVISIONS OF THE DTAA. THUS, IT IS SECOND ROUND OF THE PROCEE DINGS BEFORE THE ITAT. 4. THE LEARNED AR REFERRED PARA NO.7 OF THE ORDER O F THE HON'BLE HIGH COURT. THE SENIOR DR ALSO PLACED RELIANCE ON THE OR DER OF THE HON'BLE HIGH COURT. 5. AFTER CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE HON'BLE HIGH COURT WHILE DECIDING THE ISSUE RAISED BEFORE I T AS TO WHETHER THE ITAT IN THE IMPUGNED ORDER IS IN ERROR OF LAW TO HOLD TH AT THE AMOUNT PAID BY THE ASSESSEE TO PANAMSAT INTERNATIONAL WAS LIABLE FOR D EDUCTION OF TAX BY 4 VIRTUE OF SEC. 195 READ WITH SECTION 9(1)(VI) OF TH E INCOME-TAX ACT, 1961? HAS BEEN PLEASED TO NOTE THAT REASON GIVEN BY THE I TAT THAT THE PAYMENTS MADE FOR PROVIDING DATA TRANSMISSION SERVICES THROU GH PROVISIONS OF SPACE SEGMENT CAPACITY ON SATELLITE DID NOT CONSTRU E ROYALTY WITHIN THE MEANING OF SEC. 9(1)(VI) OF THE INCOME-TAX ACT, 196 1, HAS NOT CONSIDERED THE SUBSEQUENT AMENDED PROVISIONS UNDER SEC. 9(1)(VI) O F THE ACT AND EXPLANATIONS 5 & 6 INSERTED THERETO BY FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 01.06.1976. IN VIEW OF THE SAID STATUTO RY AMENDMENTS, THE HON'BLE HIGH COURT HAS HELD THAT THE REASONING GIVE N BY THE ITAT CANNOT BE SUSTAINED. THE LEARNED COUNSEL APPEARING FOR THE AS SESSEE POINTED OUT TO THE HON'BLE HIGH COURT THAT BEFORE THE ASSESSING OFFICE R, THE ASSESSEE HAD ALSO PLEADED AND SUBMITTED THAT THE PAYMENTS MADE CANNOT BE CONSIDERED AS ROYALTY OR FREE FOR INCLUDED SERVICES AS DEFINED IN DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND UNITED STATES OF AMERICA. IT WAS SUBMITTED BY THE ASSESSEE THAT THE PAYMENTS WERE BUSINESS PROFITS AND ACCORDINGLY NOT TAXABLE OR CHARGEABLE T O TAX UNDER THE ACT. THIS FACT WAS ALSO NOTICED IN PARA NO.2 OF THE ORDER OF THE ITAT. THE ITAT HAD NOT REFERRED TO AND EXAMINED THE EFFECT OF DTAA BET WEEN INDIA AND USA AND WHETHER THE ASSESSEE WAS ENTITLED TO BENEFIT OR ADVANTAGE UNDER THE SAID AGREEMENT AND, THEREFORE, PAYMENTS MADE WERE NOT TA XABLE IN INDIA IN THE 5 HANDS OF THE RECIPIENT. THE HON'BLE HIGH COURT TH US WHILE ANSWERING THE QUESTION OF LAW IN FAVOUR OF THE REVENUE HAS BEEN P LEASED TO REMIT THE MATTER TO THE ITAT WITH DIRECTION TO DECIDE THE OTH ER CONTENTIONS RAISED BY THE ASSESSEE. WE THUS RESPECTFULLY FOLLOWING THE DI RECTION OF THE HON'BLE DELHI HIGH COURT IN THE ORDER DATED 12.11.2013, DIS CUSSED ABOVE, SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ABOVE CONTENTION OF THE ASSESSEE THAT THE PAYMENTS MADE C ANNOT BE CONSIDERED AS ROYALTY OR FEE FOR INCLUDED SERVICES AS DEFINED IN DTAA BETWEEN INDIA AND USA AND THAT THE PAYMENTS WERE BUSINESS PROFIT AND ACCORDINGLY NOT TAXABLE OR CHARGEABLE TO TAX UNDER THE INCOME-TAX ACT, 1961 AND DECIDE THE ISSUE AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD T O THE ASSESSEE ON THE EFFECT OF DTAA BETWEEN INDIA AND USA AND AS TO WHETHER THE ASSESSEE IS ENTITLED TO BENEFIT OR ADVANTAGE UNDER THE SAID AGREEMENT AN D, THEREFORE, PAYMENTS MADE WERE NOT TAXABLE IN INDIA IN THE HANDS OF THE RECIPIENT. THE GROUND IS THUS ALLOWED FOR STATISTICAL PURPOSES. 6. IN RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 19.05.2015 SD/- SD/- ( R.S. SYAL ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 /05/2015 MOHAN LAL 6 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON COMPUTER 19 .05.2015 DRAFT PLACED BEFORE AUTHOR 19..05.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 19. 05.2015 APPROVED DRAFT COMES TO THE SR.PS/PS 19.05.201 5 KEPT FOR PRONOUNCEMENT ON 19.05.2015 FILE SENT TO THE BENCH CLERK 19.05.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.