DISNEY BROADCASTING (INDIA) LTD, MUMBAI V. DCIT (IT) 4(3)(1), MUMBAI

ITA 262/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0639 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2016-2017
• Appeal Filed On: 12-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M.V.RAJGURU
• Keywords: Double taxation relief; Retrospective amendment; TDS
• Section: 244A; 195; 13; 153; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 1289/MUM/2016 (ASSESSMENT YEAR 2013-14) ITA NOS.1290 TO 1302 & 1303 TO 1308/MUM/2016 (ASSESSMENT YEARS 2014-15 & 2015-16) ITA NOS. 7303 TO 7306/MUM/2016 (ASSESSMENT YEAR 2015-16) ITA NOS. 264,266,269,270,272&273/MUM/2017 (ASSESSMENTS YEAR 2016-17) UNITED HOME ENTERTAINMENT PRIVATE LIMITED, 1 ST FLOOR, BUILDING NO.14, SOLITAIRE CORPORATE PARK, GURU HARGOVINDJI MARG, CHAKALA, ANDHERI(E), MUMBAI- 400093 ..... APPELLANT PAN:AAACV6668D VS. THE DY. COMMISSIONER OF INCOME TAX- (INTERNATIONAL TAXATION)- 4(3)(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI 400 001 ...... RESPONDENT ITA NOS.262,263, 265,267,268&271 /MUM/2017 (ASSESSMENT YEAR 2016-17) DISNEY BROADCASTING (INDIA) LIMITED. 1 ST FLOOR, BUILDING NO.14, SOLITAIRE CORPORATE PARK, GURU HARGOVINDJI MARG, CHAKALA, ANDHERI(E), MUMBAI- 400093 ..... APPELLANT PAN:AACCV4782D VS. THE DY. COMMISSIONER OF INCOME TAX- (INTERNATIONAL TAXATION)- 4(3)(1), MUMBAI. ..... RESPONDE NT 2 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. APPELLANT BY : S/SHRI MADHUR AGARWAL / JEEGAR MODI RESPONDENT BY : SHRI M.V.RAJGURU DATE OF HEARING : 06/02/2018 DATE OF PRONOUNCEMENT : 09/02/2018 ORDER PER G.S.PANNU,A.M: THE CAPTIONED ARE 36 APPEALS PERTAINING TO TWO DIF FERENT ASSESSEES BUT INVOLVING A COMMON ISSUE, THEREFORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE FIRST SET OF 30 APPEALS VIDE ITA NOS.1289 TO 1308/MUM/2016, ITA NOS. 7303 TO 7606/MUM/2016, ITA NOS. 264&266/MUM/2017, ITA NOS. 269& 270/MUM/2017 & ITA NOS. 272&273/MUM/2017 PERTAINS TO FOUR DIFFERENT ASSES SMENT YEARS NAMELY, ASSESSMENT YEARS 2013-14 TO 2016-17 AND TH E GRIEVANCE IS AGAINST THE SIMILARLY WORDED MULTIPLE ORDERS OF TH E CIT(A), WHICH IN TURN ARISE FROM THE SEPARATE ORDERS PASSED BY THE ASSESS ING OFFICER UNDER SECTION 195(2) OF THE INCOME TAX ACT, 1961 ( THE A CT) OF DIFFERENT DATES. IN ALL THE APPEALS, THE SUM AND SUBSTANCE OF THE DI SPUTE RELATES TO THE NATURE OF THE PAYMENT MADE BY THE ASSESSEE TO M/S.I NTELSAT GLOBAL SALES AND MARKETING LTD., UK AND/OR TO M/S. INTELSA T CORPORATION, USA (INTELSAT) FOR TRANSPONDER SERVICES. IN ORDER TO A PPRECIATE THE CONTROVERSY IN ITS PROPER PERSPECTIVE, WE MAY REFER TO THE FACTS IN ITA NO.1289/MUM/2016, WHICH IS AN APPEAL DIRECTED AGAIN ST THE ORDER OF 3 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. CIT(A) -58, MUMBAI DATED 29/12/2015, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 195(2)OF THE ACT DATED 26/03/2012. 3. THE ASSESSEE, UNITED HOME ENTERTAINMENT PRIVATE LIMITED, IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE CO MPANIES ACT, 1956 AND IS INTER-ALIA, ENGAGED IN THE BUSINESS OF ENTER TAINMENT, INASMUCH AS, IT OWNS AND MANAGES THE TV CHANNEL HUNGAMA. T HIS CHANNEL IS CANVASSED TO BE THE FIRST INDIAN ENTERTAINMENT CHAN NEL FOR KIDS IN HINDI WITH MULTI-GENRE LOCALIZED & ACQUIRED CONTENT. TH E ASSESSEE COMPANY ENTERED INTO A TRANSPONDER SERVICE AGREEMENT WITH I NTELSAT GLOBAL SALES & MARKETING LTD.,UK TO AVAIL THE TRANSPONDER SERVICE. WHEN THE ASSESSEE WAS REQUIRED TO MAKE REMITTANCE OF TRANSPO NDER FEE TO INTELSAT, IT APPROACHED THE ASSESSING OFFICER FOR WITHHOLDING TAX CERTIFICATE UNDER SECTION 195 OF THE ACT AND, INTE R-ALIA, CONTENDED THAT THE AMOUNT PAID TO INTELSAT WAS NOT TAXABLE IN INDI A. THE ASSESSING OFFICER VIDE HIS ORDER DATED 26/03/2012, HOWEVER, T OOK THE VIEW THAT THE PAYMENT TO INTELSAT IN TERMS OF THE SERVICE AGR EEMENT DATED 29/10/2010 WAS IN THE NATURE OF ROYALTY AS PER TH E PROVISIONS OF THE ACT AS WELL AS UNDER THE INDIA-UK DOUBLE TAXATION A VOIDANCE AGREEMENT (DTAA). ACCORDINGLY, THE ASSESSING OFFIC ER HELD THAT THE PAYMENT TO INTELSAT ATTRACTED TAX @10% PLUS APPLICA BLE SURCHARGE AS IT WAS IN THE NATURE OF ROYALTY. THE CIT(A) HAS SINCE AFFIRMED THE ACTION OF THE ASSESSING OFFICER, AGAINST WHICH THE ASSESSEE I S IN FURTHER APPEAL BEFORE US. 4 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. 4. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT SIMILAR ISSUE HAD COME UP ON AN EARLIER OCCASI ON BEFORE THE TRIBUNAL WHEN ASSESSEE WAS TO REMIT PAYMENTS IN THE EARLIER PERIOD IN PURSUANCE TO THE SAME AGREEMENT WITH INTELSAT, AND THE TRIBUNAL VIDE ORDER IN ITA NO.2841/MUM/2012& OTHERS FOR ASSESSMEN T YEAR2011-12 DATED 25/10/2016 UPHELD THE ASSESSEES POINT OF VIE W THAT THE FEE FOR TRANSPONDER SERVICE PAID BY THE ASSESSEE TO INTELSA T WAS NOT IN THE NATURE OF ROYALTY AND THAT THE SAME WAS NOT TAXAB LE IN INDIA, AND THUS THE REMITTANCE DID NOT WARRANT ANY DEDUCTION OF TAX AT SOURCE. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE FOR THE ASS ESSEE HAS TAKEN US THROUGH THE DECISION OF THE TRIBUNAL DATED 25/10/20 16(SUPRA) AND POINTED OUT THAT THE ENTIRE MATRIX HAS BEEN FULLY D EALT WITH, AND, THEREFORE, CANVASSED THAT THE ISSUE IN THE CAPTIONE D PROCEEDINGS IS FULLY COVERED BY THE SAID PRECEDENT. 5. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, DID NOT CONTROVERT THE FACTUAL MATRIX BROUGHT OUT BY THE LD . REPRESENTATIVE FOR THE ASSESSEE, BUT POINTED OUT THAT THE CIT(A) HAS DECIDED THE ISSUE BY REFERRING TO A CONTRARY VIEW OF THE TRIBUNAL IN THE CASE OF VIACOM 18 MEDIA PVT. LTD. VS. ADT, 153 ITD 384(MUM) AND HE RE LIED ON THE SAME. 6. IN REPLY THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE SUBSEQUENT PAYMENT MADE BY THE ASSESSEE TO INTE LSAT CORRESPONDING TO ASSESSMENT YEARS 2012-13 AND 2013- 14 ALSO CAME UP BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER IN ITA NOS.5171 TO 5181/MUM/2013 DATED 28/11/2016 REITERATED ITS EARLI ER ORDER DATED 5 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. 25/10/2016(SUPRA); AND, IN COMING TO SUCH A DECISI ON, THE TRIBUNAL HAS CONSIDERED THE CONTRARY VIEW IN THE CASE OF VIA COM 18 MEDIA PVT. LTD. (SUPRA). OUR ATTENTION WAS DRAWN TO THE FOLLOWING DISCUSSION IN PARA 10 OF THE ORDER DATED 28/11/2006(SUPRA) IN THIS REGARD :- 10. IT IS NOTED FROM THE ABOVE THAT THE BENCH RELI ED UPON VARIOUS JUDGMENTS INCLUDING THE JUDGMENT OF TAJ TV LTD WHEREIN DECISI ON RELIED UPON BY THE LD. DR IN THE CASE OF VIACOM.18 HAS BEEN CONSIDERED IN DETAIL . APART FROM THAT THE MAIN POINT TO BE NOTED HERE IS THAT THE BENCH TOOK NOTE OF A V ITAL FACT THAT HONBLE DELHI HIGH COURT IN THE CASE OF PAYEE, VIZ. M/S INTELSAT CORPO RATION, USA HAS CATEGORICALLY HELD THAT PAYMENT RECEIVED BY INTELSAT CORPORATION IS NO T TAXABLE IN INDIA UNDER THE PROVISIONS OF INDO US DTAA. THUS, IN THE CASE OF PA YEE, IT HAS BEEN CATEGORICALLY HELD THAT SAID PAYMENT IS NOT TAXABLE, THEN THE ASSESSEE IS NOT OBLIGED TO DEDUCT TDS, THEREFORE, THE IMPUGNED PROCEEDINGS U/S 195 DESERVE S TO BE QUASHED. THUS, AFTER TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ISSUE STANDS SQUARELY COVERED BY THE DECISION OF TH E MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE AND, THEREFORE, THE ISSUE RA ISED IN THE APPEAL BEFORE US STANDS ALLOWED IN TERMS OF EARLIER ORDER OF THE TRI BUNAL WHICH SHALL APPLY MUTATIS MUTANDIS ON THE ISSUE RAISED IN THIS APPEAL BEFORE US. ACCORDINGLY WE HOLD THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. 7. HAVING HEARD THE RIVAL STANDS, WE FIND THAT THE SHORT ISSUE BEFORE US RELATES TO THE NATURE OF PAYMENTS MADE TO INTEL SAT GLOBAL SALES & MARKETING LTD.,UK ON ACCOUNT OF TRANSPONDER FEE IN TERMS OF AN AGREEMENT DATED 29/12/2010. THE TRIBUNAL VIDE ITS ORDER DATED 25/10/2016(SUPRA)HAS PERUSED AND ENUMERATED THE TERMS AND CONDITIONS OF THE SERVICE AGREEMENT DATED 29/12/201 0, AND HAS CONSIDERED ITS NATURE IN THE CONTEXT OF THE PROVISI ONS OF THE ACT AS WELL AS THE INDIA-UK DTAA AND HAS CONCLUDED THAT THE PAY MENTS ARE NOT IN THE NATURE OF ROYALTY. IN COMING TO SUCH DECISION , RELIANCE HAS BEEN PLACED MAINLY ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF THE PAYEE BEFORE US I.E. INTELSAT CORPORATI ON US, VIDE ORDER DATED 19/08/2011 AND AGAIN REAFFIRMED BY THE HONBL E HIGH COURT VIDE ORDER DATED 28/09/2012 IN ITA NO.530&545/2012 FOLLO WING AN EARLIER 6 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. JUDGMENT OF THE HONBLE DELHI HIGH COURT ITSELF IN THE CASE OF ASIA SATELLITE COMMUNICATION LTD., IN ITA NO.131/2003 DA TED 31/01/2011. AS PER THE TRIBUNAL, ONCE IT HAS BEEN HELD IN THE C ASE OF INTELSAT CORPORATION US, THE PAYEE ITSELF, THAT THE PAYMENTS ARE NOT TAXABLE IN INDIA; THEREFORE, PAYER OF SUCH INCOME I.E. ASSES SEE BEFORE US, WAS NOT OBLIGATED TO DEDUCT TAX AT SOURCE. FOR THE SAID RE ASON, THE TRIBUNAL QUASHED THE PROCEEDINGS UNDER SECTION 195 OF THE AC T. IN ORDER TO IMPART COMPLETENESS, WE HEREBY REPRODUCE THE RELEV ANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 25/10/2016(SUPRA) AS UN DER:- 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS AS WELL AS VAR IOUS DECISIONS AS RELIED UPON BY THE PARTIES BEFORE US. AT THE THRESHOLD IT IS NOTICED THAT, IN THE CASE OF THE PAYEE, I.E., INTELSAT CORPORATION US, THE HO NBLE DELHI HIGH COURT VIDE ORDER DATED 19.08.2011 AND THEN AGAIN REAFFIRMED VI DE ORDER DATED 28.09.2012 IN ITA NO. 530 & 545/2012, FOLLOWING THE ORDER OF ITS OWN COURT IN ASIA SATELLITE COMMUNICATIONS LTD (ITA 131/2003 DEC IDED ON 31.01.2011), HAVE CATEGORICALLY HELD THAT PAYMENT RECEIVED BY IN TELSAT IS NOT TAXABLE IN INDIA UNDER THE PROVISIONS OF INDO-US-DTAA. ONCE IN THE CASE OF THE PAYEE IT HAS BEEN CATEGORICALLY HELD THAT THE SAID AMOUNT IS NOT TAXABLE, THEN ASSESSEE IS NOT OBLIGED TO DEDUCT TDS AND, THEREFOR E, THE IMPUGNED PROCEEDINGS UNDER SECTION 195 DESERVES TO BE QUASHE D. OTHERWISE ALSO, THIS ISSUE OF PAYMENT OF TRANSPONDER CHARGES MADE TO PAN AMSAT (LATER ON NAME WAS CHANGED TO INTELSAT CORPORATION) HAS BEEN SUBJE CT MATTER OF ISSUE BEFORE VARIOUS COURTS INCLUDING THAT OF THE ITAT, MUMBAI B ENCH IN THE CASE OF TAJ TV LTD. IN THE SAID CASE, THE TRIBUNAL HAS OBSERVED AN D HELD AS UNDER:- 18. NOW, COMING TO THE ISSUE OF DISALLOWANCE OF VA RIOUS EXPENSES UNDER SECTION 40(A)(I) LIKE, TRANSPONDER CHARGES AND UP LINKING CHARGES AS RAISED IN GROUND NO.2(I) AND 2(II), IT IS SEEN THAT THESE, PAYMENTS HAS BEEN PAID TO PANAMSAT INTERNATIONAL S YSTEMS INC. USA FOR PROVIDING FACILITY OF TRANSPONDER FOR TELECASTI NG TEN SPORTS CHANNEL IN VARIOUS COUNTRIES INCLUDING INDIA. THE A SSESSEE ENTERED INTO AN AGREEMENT WITH PANAMSAT TO UTILIZE THE TRAN SPONDER FACILITY PROVIDING BY THE SAID US BASED COMPANY FOR TELECAST ING ITS SPORTS CHANNEL WHICH ARE ON THE FOOTPRINT OF TRANSPONDER O F PANAMSAT. THE REVENUES CASE BEFORE US IS THAT, FIRSTLY, IT IS TA XABLE UNDER SECTION 9(1)(VI) AS ROYALTY AND ALSO UNDER ARTICLE 12(3)( B) OF INDO-USDTAA. SIMILARLY, THE UP LINKING CHARGES PAID FOR UP LINKI NG THE CHANNELS TO PANAMSAT SATELLITE FOR DELAY IN TRANSMISSION AND FO R UP LINKING SIGNALS 7 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. FOR LIVE EVENTS FROM THE VENUE OF THE EVENTS TO THE SATELLITE HAVE BEEN TREATED TO BE ROYALTY. SINCE, THE ASSESSEE HAD NO T DEDUCTED TDS UNDER SECTION 195, DISALLOWANCE UNDER SECTION 40(A) (I) HAS BEEN MADE. THE ASSESSEES CASE BEFORE US IS THAT, FIRSTL Y, PANAMSAT IS A USA BASED COMPANY, THEREFORE, INDO-US DTAA IS APPLI CABLE AND SINCE IT DOES NOT HAVE ANY PE OR BUSINESS CONNECTION IN I NDIA, THEREFORE, THE PAYMENT MADE TO A NON-RESIDENT OUTSIDE INDIA FOR AV AILING SERVICE OF EQUIPMENT PLACED OUTSIDE INDIA CANNOT BE TAXED IN I NDIA. IN SUPPORT OF SUCH A CONTENTION DECISION OF HONBLE BOMBAY HIG H COURT IN THE CASE OF DIT VS. SET SATELLITE (SUPRA) HAS BEEN RELI ED UPON. IN ANY CASE, IT HAS BEEN SUBMITTED THAT, EVEN OTHERWISE ALSO THE DEFINITION OF ROYALTY UNDER ARTICLE 12(3) OF INDO-US-DTAA IS AL SO NOT APPLICABLE, BECAUSE TRANSPONDER CHARGES IS ONLY USE OF FACILITY AND IT IS NOT AN EQUIPMENT AND DOES NOT AMOUNT TO USE OF ANY COPYRIG HT EFFECTING WORK, SECRET FORMULA, PROCESS ETC OR ANY OTHER TERM DESCRIBED IN PARA 3 OF ARTICLE 12. THE LD. CIT(A) HAS HELD THAT IT IS NOT A ROYALTY AND SECONDLY, EVEN OTHERWISE ALSO BY VIRTUE OF ARTICLE 12(7) SUCH A ROYALTY CANNOT BE TAXED IN INDIA, BECAUSE IT IS NOT BORNE B Y PE OR FIXED PLACE OF THE US COMPANY IN INDIA. THE LD. DR HAS STRONGLY RELIED UPON AMENDED DEFINITION OF THE ROYALTY UNDER THE ACT, WHEREIN, THE SCOPE AND DEFINITION OF ROYALTY HAS BEEN ENLARGED BY TH E NEWLY INSERTED EXPLANATION (VI) AND (VI) BY THE FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 01.06.1976 AND HAS CONTENDED THAT THE S AID DEFINITION IS TO BE READ INTO DTAA ALSO, THAT IS, THE DEFINITION OF ROYALTY HAS TO BE TAKEN FROM THE DOMESTIC LAW. IN SUPPORT, LD. DR HAS STRONGLY RELIED UPON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF VERIZON COMMUNICATIONS SINGAPORE PTE LTD. (SUPRA) AND THE I TAT DECISION IN THE CASE OF VIACOM 18 MEDIA PVT. LTD. 19. FIRST OF ALL, LET US EXAMINE THE DEFINITION OF ROYALTY AS BEEN DEFINED UNDER A RTICLE 12 OF THE INDO- US-DTAA, WHICH HAS BEEN DEFINED IN THE FOLL OWING MANNER: 3. THE TERM 'ROYALTIES' AS USED IN THIS ARTICLE ME ANS: A) PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATIO N FOR THE USE OF OR THE RIGHT TO USE, ANY COPYRIGHT OF A LITERARY, ARTI STIC, OR SCIENTIFIC WORK, INCLUDING CINEMATOGRAPH FILMS OR WORK ON FILM, TAPE OR OTHER MEANS OF REPRODUCTION FOR USE IN CONNECTION WITH RADIO OR TELEVISION BROADCASTING, ANY PATENT, TRADE MARK, DESIGN OR MOD EL, PLAN, SECRET FORMULA OR PROCESS, OR FOR INFORMATION CONCERNING I NDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE, INCLUDING GAIN S DERIVED FROM THE ALIENATION OF ANY SUCH RIGHT OR PROPERTY WHICH ARE CONTINGENT ON THE PRODUCTIVITY, USE, OR DISPOSITION THEREOF; AND B) PAYMENTS OF ANY KIND RECEIVED AS CONSIDERATION F OR THE USE OF OR THE RIGHT TO USE, ANY INDUSTRIAL, COMMERCIAL, OR SC IENTIFIC EQUIPMENT, OTHER THAN PAYMENTS DERIVED BY AN ENTERPRISE DESCRI BED IN PARAGRAPH 8 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. 1 OF ARTICLE 8 (SHIPPING AND AIR TRANSPORT) FROM AC TIVITIES DESCRIBED IN PARAGRAPH 2(C) OR 3 OF ARTICLE 8. THE ARTICLE GIVES EXHAUSTIVE DEFINITION OF THE TERM ROYALTY AND THEREFORE, THE DEFINITION AND SCOPE OF ROYALTY IS TO BE SEEN FROM THE ARTICLE ALONE AND NO DEFINITION UNDER THE DOMESTIC ACT OR LAW IS REQUIRED TO BE CONSIDERED OR SEEN OR ANY AMENDMENT MADE IN SUCH DEFINITION WHETHER RETROSPECTIVE OR PROSPECTIVE WHI CH CAN BE READ IN A MANNER SO AS TO EXTEND ANY OPERATION TO THE TERMS A S DEFINED OR UNDERSTOOD IN THE TREATY. THE LEGISLATURE OR PARLIA MENT WHILE CARRYING OUT AMENDMENT TO INTERPRET OR DEFINE A GIV EN PROVISION UNDER THE DOMESTIC LAW OF THE COUNTRY CANNOT SUPERS EDE OR CONTROL THE MEANING OF THE WORD WHICH HAS BEEN EXPRESSLY DE FINED IN A TREATY NEGOTIATED BETWEEN EXECUTIVES OF TWO SOVEREIGN NATI ONS. THE PAYMENT OF TRANSPONDER CHARGES TO PANAMSAT AND UP L INKING CHARGES CANNOT BE TREATED AS A CONSIDERATION FOR USE OR RIGHT TO USE ANY COPYRIGHT OF VARIOUS TERMS USED IN PARA 3(A) LIKE C OPYRIGHT OF A LITERARY, ARTISTIC, OR SCIENTIFIC WORK, INCLUDING C INEMATOGRAPH FILMS OR WORK ON FILM, TAPE OR OTHER MEANS OF REPRODUCTION F OR USE IN CONNECTION WITH RADIO OR TELEVISION BROADCASTING OR IN ANY MANNER RELATES TO ANY PATENT OR TRADEMARK, DESIGN, SECRET FORMULA OR PROCESS. IT IS ALSO NOT USE OR RIGHT TO USE ANY INDUSTRIAL, COMMERCIAL, OR SCIENTIFIC EQUIPMENT. THERE IS NO SUCH KIND OF RIG HT TO USE WHICH IS GIVEN BY PAN AM SAT TO ASSESSEE. THUS, THE SAID PAY MENT DOES NOT FALL WITHIN THE AMBIT OF THE TERMS USED IN PARA 3 OF ART ICLE 12. SO FAR AS THE READING OF AMENDED DEFINITION OF ROYALTY AS G IVEN IN SECTION 9(1)(VI) INTO TREATY, HONBLE DELHI HIGH COURT IN I TS LATEST JUDGMENT IN THE CASE OF DIT VS. NEW SKIES SATELLITE(SUPRA), WHE REIN IT HAS CONSIDERED HONBLE MADRAS HIGH COURT DECISION IN TH E CASE OF VERIZON COMMUNICATIONS SINGAPORE PTE LTD. (SUPRA) ALSO, HAV E DISCUSSED THE ISSUE THREADBARE AND CAME TO THE CONCLUSION IN THE FOLLOWING MANNER:- 60. CONSEQUENTLY, SINCE WE HAVE HELD THAT THE FIN ANCE ACT, 2012 WILL NOT AFFECT ARTICLE 12 OF THE DTAAS, IT WOULD F OLLOW THAT THE FIRST DETERMINATIVE INTERPRETATION GIVEN TO THE WORD ROY ALTY IN ASIA SATELLITE, SUPRA NOTE 1, WHEN THE DEFINITIONS WERE IN FACT PARI MATERIAL (IN THE ABSENCE OF ANY CONTOURING EXPLANATIONS), WI LL CONTINUE TO HOLD THE FILED FOR THE PURPOSE OF ASSESSMENT YEARS PRECE DING THE FINANCE ACT, 2012 AND IN ALL CASES WHICH INVOLVE A DOUBLE T AX AVOIDANCE AGREEMENT, UNLESS THE SAID DTAAS ARE AMENDED JOINTL Y BY BOTH PARTNERS TO INCORPORATE INCOME FROM DATA TRANSMISSI ON SERVICES AS PARTAKING OF THE NATURE OF ROYALTY, OR AMEND THE DE FINITION IN A MANNER SO THAT SUCH INCOME AUTOMATICALLY BECOMES RO YALTY. IT IS REITERATED THAT THE COURT HAS NOT RETURNED A FINDIN G ON WHETHER THE 9 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. AMENDMENT IS IN FACT RETROSPECTIVE AND APPLICABLE T O CASES PRECEDING THE FINANCE ACT OF 2012 WHERE THERE EXISTS NO DOUBL E TAX AVOIDANCE AGREEMENT. THE AFORESAID DECISION TAKES CARE OF ALL THE ARGUM ENTS RELIED UPON BY THE LD. DR INCLUDING THAT OF THE VERIZON COMMUNICAT IONS SINGAPORE PTE LTDS. THE HONBLE HIGH COURT HAS SPECIFICALLY CLARIFIED AS TO WHY THE SAID DECISION OF MADRAS HIGH COURT CANNOT BE AP PLIED IN SUCH CASES AFTER OBSERVING AS UNDER:- 31. IN A JUDGMENT BY THE MADRAS HIGH COURT IN VER IZON COMMUNICATIONS SINGAPORE PTE LTD. V. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION I, [2014] 361 ITR 575 (MAD), THE COURT HELD THE EXPLANATIONS TO BE APPLICABLE TO NOT ONLY THE DOMES TIC DEFINITION BUT ALSO CARRIED THEM TO INFLUENCE THE MEANING OF ROYAL TY UNDER ARTICLE 12. NOTABLY, IN BOTH CASES, THE CLARIFICATORY NATUR E OF THE AMENDMENT WAS NOT QUESTIONED, BUT WAS INSTEAD APPLIED SQUAR ELY TO ASSESSMENT YEARS PREDATING THE AMENDMENT. THE CRUCIAL DIFFEREN CE BETWEEN THE JUDGMENTS HOWEVER LIES IN THE APPLICATION OF THE AM ENDMENTS TO THE DTAA. WHILE TV TODAY, SUPRA NOTE 22 RECOGNIZES THAT THE QUESTION WILL HAVE TO BE DECIDED AND THE SUBMISSION ARGUED, VERIZON, SUPRA NOTE 23 CITES NO REASON FOR THE EXTENSION OF THE AM ENDMENTS TO THE DTAA. THUS, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT, WE HOLD THAT, THE DEFINITION OF ROYALTY AS ENLARGED BY FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT WILL NO T HAVE ANY AFFECT IN ARTICLE 12 OF DTAA. IN THE AFORESAID DECISION, THE TRIBUNAL HAS TAKEN NOTE OF THE RATIO AND LAW UPHELD BY THE HONBLE DELHI HIGH COURT IN T HE LATEST CASE OF NEW SKIES SATELLITE (SUPRA) AND ASIA SATELLITE TELE COMMUNICATIONS AND HAS HELD THAT THE PAYMENT MADE FOR TRANSPONDER CHAR GES WILL NOT FALL IN THE NATURE OF ROYALTY AND ALSO THE SCOPE OF EN LARGED DEFINITION OF ROYALTY GIVEN IN SECTION 9(1)(VI) WILL NOT APPLY IN DTAA. 8. BEFORE US LD DR HAS HEAVILY RELIED UPON THE DEC ISION OF BOMBAY HIGH COURT IN THE SIEMENS AG TO CONTEND THAT NOWHER E THE COURT HAS LAID DOWN THAT AMENDMENT IN THE DOMESTIC LAW CANNOT BE READ INTO TREATY RATHER IT IS OTHERWISE. WE FIND THAT IN THE LATEST DECISION THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. NEW S SKY SATELLITE BV (SUPRA) HAVE EXPLAINED THE RATIO AND PRINCIPLE OF H ONBLE BOMBAY HIGH COURT IN THE CASE OF SIEMENS AKTIONGESELLSCHAF T (SUPRA). THE RELEVANT OBSERVATION OF THE HONBLE DELHI HIGH COUR T IN THE SAID CASE READS AS UNDER:- 48. IN COMMISSIONER OF INCOME TAX V. SEIMENS 10 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. AKTIONGESSELLSCHAFT, [2009] 310 ITR 320 (BOM), THE BOMBAY HIGH COURT CITING R V. MELFORD DEVELOPMENTS INC. HELD TH AT THE RATIO OF THE JUDGMENT, IN OUR OPINION, WOULD M EAN THAT BY A UNILATERAL AMENDMENT IT IS NOT POSSIBLE FOR ONE NAT ION WHICH IS PARTY TO AN AGREEMENT TO TAX INCOME WHICH OTHERWISE WAS N OT SUBJECT TO TAX. SUCH INCOME WOULD NOT BE SUBJECT TO TAX UNDER THE EXPRESSION LAWS IN FORCE. ********** ********* ********* WHI LE CONSIDERING THE DOUBLE TAX AVOIDANCE AGREEMENT THE EXPRESSION LAWS IN FORCE WOULD NOT ONLY INCLUDE A TAX ALREAD Y COVERED BY THE TREATY BUT WOULD ALSO INCLUDE ANY OTHER TAX AS TAXE S OF A SUBSTANTIALLY SIMILAR CHARACTER SUBSEQUENT TO THE DATE OF THE AGR EEMENT AS SET OUT IN ARTICLE I(2). CONSIDERING THE EXPRESS LANGUAGE O F ARTICLE I(2) IT IS NOT POSSIBLE TO ACCEPT THE BROAD PROPOSITION URGED ON B EHALF OF THE ASSESSEE THAT THE LAW WOULD BE THE LAW AS APPLICABL E OR AS DEFINE WHEN THE DOUBLE TAX AVOIDANCE AGREEMENT WAS ENTERED INTO. 49. IT IS ESSENTIAL TO NOTE THE CONTEXT IN WHICH THIS JUDG MENT WAS DELIVERED. THERE, THE COURT WAS CONFRONTED WITH A SITUATION WH ERE THE WORD ROYALTY WAS NOT DEFINED IN THE GERMAN DTAA. FOLLOWI NG FROM OUR PREVIOUS DISCUSSION ON THE BIFURCATION OF TERMS WIT HIN THE TREATY, IN SITUATIONS WHERE WORDS REMAIN UNDEFINED, ASSISTANCE IS TO BE DRAWN FROM THE DEFINITION AND IMPORT OF THE WORDS AS THEY EXIST IN THE DOMESTIC LAWS IN FORCE. IT WAS IN THIS CONTEXT TH AT THE BOMBAY HIGH COURT HELD THAT THEY WERE UNABLE TO ACCEPT THE ASSE SSEES CONTENTION THAT THE LAW APPLICABLE WOULD BE THE LAW AS IT EXIS TED AT THE TIME THE DOUBLE TAX AVOIDANCE AGREEMENT WAS ENTERED INTO. TH IS IS THE CONTEXT IN WHICH THE AMBULATORY APPROACH TO TAX TRE ATY INTERPRETATION WAS NOT REJECTED. THE SITUATION BEFO RE THIS COURT HOWEVER IS MATERIALLY DIFFERENT AS THERE IS IN FACT A DEFINITION OF THE WORD ROYALTY UNDER ARTICLE 12 OF BOTH DTAA, THUS DI SPENSING WITH THE NEED FOR RECOURSE TO ARTICLE 3. 50. THERE ARE THERE FORE TWO SETS OF CIRCUMSTANCES. FIRST, WHERE THERE EXISTS NO DEFINIT ION OF A WORD IN ISSUE WITHIN THE DTAA ITSELF, REGARD IS TO BE HAD T O THE LAWS IN FORCE IN THE JURISDICTION OF THE STATE CALLED UPON TO INTERP RET THE WORD. THE BOMBAY HIGH COURT SEEMS TO ACCEPT THE AMBULATORY AP PROACH IN SUCH A SITUATION, THUS ALLOWING FOR SUCCESSIVE AMENDMENT S INTO THE REALM OF LAWS IN FORCE. WE EXPRESS NO OPINION IN THIS R EGARD SINCE IT IS NOT IN ISSUE BEFORE THIS COURT. THIS COURTS FINDING IS IN THE CONTEXT OF THE SECOND SITUATION, WHERE THERE DOES EXIST A DEFINITI ON OF A TERM WITHIN THE DTAA. WHEN THAT IS THE CASE, THERE IS NO NEED TO REFER TO THE LAWS IN FORCE IN THE CONTRACTING STATES, ESPECIALLY TO DEDUCE THE MEANING OF THE DEFINITION UNDER THE DTAA AND THE UL TIMATE TAXABILITY OF THE INCOME UNDER THE AGREEMENT. THAT IS NOT TO S AY THAT THE COURT MAY BE INCONSISTENT IN ITS INTERPRETATION OF SIMILA R DEFINITIONS. WHAT THAT DOES IMPLY HOWEVER, IS THAT JUST BECAUSE THERE IS A DOMESTIC 11 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. DEFINITION SIMILAR TO THE ONE UNDER THE DTAA, AMEND MENTS TO THE DOMESTIC LAW, IN AN ATTEMPT TO CONTOUR, RESTRICT OR EXPAND THE DEFINITION UNDER ITS STATUTE, CANNOT EXTEND TO THE DEFINITION UNDER THE DTAA. IN OTHER WORDS, THE DOMESTIC LAW REMAINS STAT IC FOR THE PURPOSES OF THE DTAA. THUS THE CONTENTION OF THE LD. DR CANNOT BE ACCEPT ED IN VIEW OF CLARIFICATION GIVEN BY THE HONBLE DELHI HIGH COURT THAT WHERE THE DEFINITION HAS BEEN GIVEN IN THE TREATY THEN THERE IS NO REQUIREMENT TO LOOK INTO DOMESTIC LAW OR ANY AMENDMENT MADE THE REIN. IN VIEW OF THE AFORESAID DECISIONS, WE HOLD THAT THE PAYMENT M ADE BY THE ASSESSEE TO INTELSAT IS NOT TAXABLE AS ROYALTY IN I NDIA AND, THEREFORE, ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS OR WITHHOLD ANY TAX ON SUCH PAYMENTS. THIS PROPOSITION HAS BEEN UPHELD BY HONB LE SUPREME COURT IN THE CASE OF GE TECHNOLOGY CENTRE, 327 ITR 456 FOLLOWING THE AFORESAID PRECEDENT AND CONSIDERING T HAT THE SAME HAS BEEN RENDERED AFTER RELYING ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ONE OF THE PAYEE, I.E. INTELSA T CORPORATION US, WE FIND NO REASON TO DISTRACT FROM THE SAME IN THE INS TANT YEAR, SINCE THE FACTS AND CIRCUMSTANCES REMAIN IDENTICAL. IN SO FA R AS RELIANCE PLACED BY THE LD. DEPARTMENTAL REPRESENTATIVE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF VIACOM 18 MEDIA PVT. LTD. (SUPRA), THE SAME HAS BEEN APPROPRIATELY DEALT WITH BY OUR CO-ORDINATE BENCH I N THE ASSESSEES OWN CASE IN ITS ORDER DATED 28/11/2016(SUPRA) AND, THEREFORE, THE SAID ARGUMENT OF THE LD. DEPARTMENTAL REPRESENTATIVE IS NOT POTENT SO AS TO DEPART FROM THE PRECEDENT IN ASSESSEES OWN CASE . THUS, WE HEREBY SET-ASIDE THE ORDER OF THE CIT(A) AND HOLD THAT TH E ASSESSEE IS NOT OBLIGATED TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE FOR TRANSPONDER SERVICES. THUS, ON THIS ASPECT ASSESSEE SUCCEEDS. 7.1 THE ONLY OTHER ASPECT RAISED BY THE ASSESSEE I S BY WAY OF ADDITIONAL GROUND, WHICH RELATES TO THE ALLOWABILIT Y OF INTEREST UNDER SECTION 244A OF THE ACT ON REFUND ARISING DUE TO E XTRA DEPOSIT OF TDS 12 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. UNDER SECTION 195 OF THE ACT. IT WAS A COMMON POIN T BETWEEN THE PARTIES THAT THE SAID ISSUE WAS ALSO BEFORE THE TRI BUNAL IN THE PAST, AND VIDE ORDER DATED 25/10/2016(SUPRA), THE SAME HAS BE EN SENT BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE IN THE LIGH T OF THE CBDT CIRCULAR NO.11 OF 2016 DATED 26/04/2016. FOLLOWING THE AFOR ESAID PRECEDENT, IN THIS YEAR TOO, WE DIRECT THE ASSESSING OFFICER TO F OLLOW THE EARLIER ORDER OF THE TRIBUNAL DATED 25/10/2016(SUPRA) ON THIS ASP ECT AND DECIDE THE MATTER AFRESH AND AS PER LAW. THUS, ON THIS ASPECT ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 7.2 RESULTANTLY, THE APPEAL OF THE ASSESSEE IN ITA NO.1289/MUM/2016 FOR ASSESSMENT YEAR 2013-14 IS AL LOWED, AS ABOVE. 8. IN SO FAR AS THE OTHER 29 APPEALS IN ITA NOS.129 0 TO 1302 & 1303 TO 1308/MUM/2016(ASSESSMENT YEARS 2014-15 & 2015-16 ); ITA NOS. 7303 TO 7606/MUM/2016 (ASSESSMENT YEAR 2015-16); AN D ITA NOS. 264,266,269,270,272&273/MUM/2017(ASSESSMENT YEAR 20 16-17) ARE CONCERNED, IT WAS A COMMON POINT BETWEEN THE PARTI ES THAT FACTS AND CIRCUMSTANCES ARE PARI-MATERIA TO THOSE CONSIDERED BY US IN ITA NO. 1289/MUM/2016 FOR ASSESSMENT YEAR 2013-14; THUS, O UR DECISION THEREIN SHALL APPLY MUTATIS MUTANDIS IN THESE APPEALS ALSO. 9. THE BALANCE SIX APPEALS IN ITA NOS.262,263, 26 5,267,268&271 MUM/2017 FOR ASSESSMENT YEAR 2016-17 RELATE TO P AYMENTS MADE FOR TRANSPONDER SERVICES TO INTELSAT BY ANOTHER ASSES SEE, NAMELY, DISNEY BROADCASTING (INDIA) LIMITED 13 UNITED HOME ENTERTAINMENT PRIVATE LIMITED,& DISNEY BROADCASTING (INDIA) LIMITED. 10. IN THIS SET OF SIX APPEALS ALSO, IT WAS A COMM ON POINT BETWEEN THE PARTIES THAT FACTS AND CIRCUMSTANCES ARE PARI-MATERIA TO THOSE CONSIDERED BY US IN ITA NO. 1289/MUM/2016 FOR ASSE SSMENT YEAR 2013-14, IN THE EARLIER PARAGRAPHS; THUS, OUR DECI SION THEREIN SHALL APPLY MUTATIS MUTANDIS IN THESE APPEALS ALSO. 11. IN THE RESULT, THE APPEALS ARE ALLOWED, AS ABOV E. ORDER PRONOUNCED IN THE OPEN COURT ON 09/ 02/2018. SD/- SD/ (RAVISH SOOD) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 09/02/2018 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI