Independent News Service Pvt. Ltd., New Delhi V. ITO (International Taxation), New Delhi

ITA 1883/DEL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6762 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 08-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURIND ER PAL SR DR INTL
• Keywords: Business income; Double taxation relief
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. H.S. SIDHU, JM AND SHRI PRASHANT MAHARIS HI, AM ITA NO. 1867/DEL/2016 : ASSTT. YEAR : 2013-14 ITA NO. 1869/DEL/2016 : ASSTT. YEAR : 2013-14 ITA NO. 1883/DEL/2016 : ASSTT. YEAR : 2014-15 ITA NO. 1885/DEL/2016 : ASSTT. YEAR : 2015-16 ITA NO. 1887/DEL/2016 : ASSTT. YEAR : 2015-16 ITA NO. 1891/DEL/2016 : ASSTT. YEAR : 2015-16 M/S INDEPENDENT NEWS SERVICE PVT. LTD., B-39, OKHLA INDUSTRIAL AREA, 310, PHASE-I, NEW DELHI- 110020 VS INCOME TAX OFFICER (INTERNATIONAL TAXATION), WARD-2(1)(2), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAACI3024R ASSESSEE BY : SH. M. P. RASTOGI, ADV., SH. PARVEEN AGGARWAL, CA REVENUE BY : SH. SURIND ER PAL, SR. DR. (INTL.) ORDER PER H.S. SIDHU, JM : THESE ARE THE BUNCH OF 06 APPEALS FILED BY THE ASSE SSEE AGAINST THE ORDER OF THE LD. CIT(A), WHEREIN IT HAS BEEN HELD THAT P ROVISION OF SECTION 195 APPLIES ON MONIES REMITTED BY THE ASSESSEE TO M/S INTELSAT CORPORATION, USA FOR THE USE OF TRANSPONDER FACILITY. VARIOUS GROUN DS RAISED IN THIS APPEAL ARE AS UNDER:- 1. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT TH E PROVISIONS OF SECTION 195 OF THE INCOME TAX ACT, 1961 ARE APPLICA BLE TO THE MONIES REMITTED BY THE APPELLANT TO THE NON-RESIDENT PAYEE , VIZ. M/S INTELSAT CORPORATION, USA. 2 2. THE MONIES REMITTED TO M/S INTELSAT CORPORATION, US A FOR USE OF TRANSPONDER FACILITY IS NOT CHARGEABLE TO TAX UNDER THE PROVISIONS OF SECTION 195 OF THE ACT. 3. THE MONIES REMITTED TO M/S INTELSAT CORPORATION, US A FOR USE OF TRANSPONDER FACILITY IS NOT CHARGEABLE TO TAX UNDER ARTICLE 12 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND THE USA. 4. IT IS CONTENDED THAT THE MONIES REMITTED TO M/S INT ELSAT CORPORATION, USA FOR USE OF TRANSPONDER FACILITY, NOT BEING ROYA LTY OR FEES FOR TECHNICAL SERVICES UNDER ARTICLE 12 OF THE DTAA BET WEEN INDIA AND THE USA, THE PROVISIONS OF EXPLANATION 6 TO SECTION 9(1)(VI) OF THE ACT ARE NOT APPLICABLE AT ALL. 5. THE COMMISSIONER (APPEALS) HAS ERRED IN APPLYING TH E PROVISIONS OF SUB-ARTICLE (2) OF ARTICLE 3 OF THE DTAA BETWEEN IN DIA AND THE USA TO THE IMPUGNED SUM REMITTED TO M/S INTELSAT CORPOR ATION, USA. 6. IT IS CONTENDED THAT IN THE ABSENCE OF AN AMENDMENT IN THE DTAA BETWEEN INDIA AND THE USA, THE PROVISIONS OF EXPLA NATION 6 TO SECTION 9(1)(VI) OF THE ACT CANNOT BE APPLIED TO TH E MONIES REMITTED TO M/S INTELSAT CORPORATION, USA. 7. IT IS CONTENDED THAT THE IMPEND SUM OF RS. 25,12,85 1/- BEING BUSINESS PROFITS OF M/S INTELSAT CORPORATION, USA WHO DOES N OT CARRY ON BUSINESS IN INDIA, IS NOT TAXABLE UNDER THE PROVISI ONS OF SECTIONS 4 AND 5 OF THE ACT. 8. IT IS CONTENDED THAT THE IMPUGNED SUM OF RS. 25,14, 851/- BEING BUSINESS PROFITS OF M/S INTELSAT CORPORATION, USA W ITHIN THE MEANING OF ARTICLE 7 OF THE DTAA BETWEEN INDIA AND THE USA, NO PART OF THE SAME IS TAXABLE IN INDIA. 3 9. THAT THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT AN D WITHOUT PREJUDICE TO ONE ANOTHER. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R WITHDRAW ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. THE GROUNDS FOR ASSESSMENT YEAR 2013-14 ARE EXTR ACTED AND GROUNDS FOR ALL OTHER APPEALS ARE SIMILAR. 3. BRIEF FACTS OF THE CASE SHOWS THAT THE APPELLANT -ASSESSEE HAS PAID SUM TO M/S INTELSAT CORPORATION, USA TOWARDS TRANSPONDER F ACILITY AND NO TAX HAS BEEN DEDUCTED THEREON FOR THE REASONS THAT, ACCORDING TO THE ASSESSEE, THERE IS NO INCOME CHARGEABLE TO TAX AND PROVISIONS OF SECTION 195 DOES NOT APPLY. THE ASSESSEE SUPPORTS ITS CASE BY STATING THAT ACCORDIN G TO ARTICLE 12 OF INDO-USA DTAA, THE ABOVE FACILITY IS NEITHER ROYALTY NOR FEE S FOR TECHNICAL SERVICES, BUT A BUSINESS INCOME. THE CLAIM OF THE REVENUE IS THAT TAX DEDUCTED THEREON, AS INCOME OF THE RECIPIENT IS CHARGEABLE TO TAX IN IND IA AS ROYALTY. THEREFORE, THE AO PASSED THE ORDER U/S. 195(2) OF THE ACT. TH E SAME WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD. CIT(A), WHO UPHELD THE FINDING OF THE AO. 4. AT THE TIME OF COMMENCEMENT OF HEARING, LD. AR S UBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH DATED 25.01.2018 IN ASSESSES OWN CASE PASSED IN ITA NO. 1868/DEL/2016 AY 2014-15 & ORS. TITLE INDEPEND ENT NEWS SERVICES PVT. LTD. VS. ITO(INTL. TAXATION) WHEREIN RELYING ON T HE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ASIA SATELLITE TELE COMMUNICATION CO. LTD. VS. DIT REPORTED AT 332 ITR 340, IT WAS HELD THAT THE I MPUGNED SUM WAS NOT THE ROYALTY AND THEREFORE, THE SAME WAS NOT CHARGEABL E TO TAX IN INDIA, ACCORDING TO ARTICLE 12 OF DTAA. 4 5. ON THE OTHER HAND, LD. DR VEHEMENTLY OBJECTED AN D STATED THAT THE DECISION OF THE COORDINATE BENCH HAS NOT CONSIDERED THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. TV TODAY NETWORK LTD. (2014) 41 TAXMANN.COM 192 (DELHI). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE ALSO PERUSED TH E ORDER OF THE COORDINATE BENCH DATED 25.01.2018 IN ASSESSEES OWN CASE PASSE D IN ITA NO. 1868/DEL/2016 & ORS. (AY 2014-15) WHEREIN CATEGORIC ALLY IT HAS BEEN HELD THAT IMPUGNED SUM IS NOT A ROYALTY, AS PER INDO-US A DTAA AND THEREFORE THERE IS NO REQUIREMENT OF DEDUCTION OF TAX AT SOU RCE U/S. 195 OF THE ACT. AT PAGE NO. 5 OF THE ORDER, THE COORDINATE BENCH HAS R ECORDED THAT THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. TV TODAY NETWORK LTD. (SUPRA) WAS CITED. COORDINATE BENCH RELYING UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ASIA SATELLITE TELE COMMUNICATION CO. LTD. VS. DIT (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ATTENTION OF THE COORDINATE BENCH WAS BROUGHT TOWARDS THE DECISION OF TV TODAY NETWORK LTD. (SUPRA), HENCE, IT CANNOT BE SAID THAT THE SAM E WAS NOT CONSIDERED BY THE COORDINATE BENCH. FURTHER, EVEN OTHERWISE, THE LD. DR, IF HE SO SURE, THAT DECISION COULD HAVE CHANGED THE DECISION OF THE COO RDINATE BENCH, THE REVENUE HAS NOT FILED ANY APPLICATION FOR RECTIFICA TION OF APPARENT ERROR, IF ANY. AS WE ARE BOUND BY THE JUDICIAL PRECEDENT AND THER EFORE, FOLLOWING THE DECISION OF THE COORDINATE BENCH DATED 25.01.2018 IN ASSESSEES OWN CASE, WE ALSO HOLD THAT THE INCOME OF M/S INTALSET CORPORA TION, USA IS NOT A ROYALTY IN TERMS OF ARTICLE 12 OF THE INDO-USA DTAA AND THE REFORE, ASSESSEE WAS NOT OBLIGED TO DEDUCT TAX AT SOURCE UNDER THE PROVISIO NS OF SECTION 195 OF THE ACT. ACCORDINGLY, THE ISSUE IN DISPUTE IS DECIDED IN FA VOUR OF THE ASSESSEE AND APPEALS OF THE ASSESSEE ARE ALLOWED. 5 6.1 IN OTHER APPEALS, THE FACTS ARE IDENTICAL AND EVEN THE RIVAL CONTENTION WERE SIMILAR, THEREFORE, OUR AFORESAID FINDINGS SH ALL APPLY MUTATIS MUTANDIS FOR ALL OTHER APPEALS. 7. IN THE RESULT, ALL THE 06 APPEALS OF THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED ON 04/07/2018. SD/- SD/- (PRASHANT MAHARISHI) ( H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 04/07/2018 *SR BHATNAGAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR