Intelsat Corporation, New Delhi V. ACIT (Intl. Taxation), Circle-2(1)(1), New Delhi

ITA 3199/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3357 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI AMIT SHUKLA, JUDICIAL MEMB ER ITA NO. 3199/DEL/2018 [ASSESSMENT YEAR: 2015-16] INTELSAT CORPORATION VS. THE A.C.I. T C/O PRICEWATER HOUSE COOPERS PVT LTD CIRCLE 21(2 ) SUCHETA BHAWAN, GATE NO. 2, 1 ST FLOOR [INTTL TAXATION 11A, VISHNU DIGAMBER MARG, NEW DELHI PAN : AADCP 6533 D [APPELLANT] [RESPONDENT] DATE OF HEARING : 11.10.2021 DATE OF PRONOUNCEMENT : 11.10.2021 ASSESSEE BY : SHRI VISHAL KALRA, ADV REVENUE BY : SHRI GANGADHAR PANDA, CIT-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER DATED 14.03.2018 FRAMED U/S 143(3) R.W.S 144C(13) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHOR T]. 2 2. GRIEVANCES OF THE ASSESSEE READ AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER (LD. AO) HA S ERRED IN ASSESSING THE INCOME OF THE APPELLANT AT INR 1,05,1 3,94,035/- FOR THE SUBJECT YEAR. 1.1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DISPUTE RESOLUTION PANEL (HON' BLE PANEL) ERRED IN NOT DIRECTING THE LD. AO TO HOLD THAT THE APPELL ANT IS NOT LIABLE TO TAX IN INDIA. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE HONBLE PANEL ERRED IN NOT DIRECTING TH E LD. AO TO FOLLOW THE ORDERS ISSUED BY THE HONBLE HIGH COURT OF DELH I IN THE APPELLANT'S OWN CASE FOR AY 2006-07 TO AY 2008-09, WHEREIN THE HONBLE DELHI HIGH COURT HAS DISMISSED THE APPEALS FILED BY THE REVENUE DEPARTMENT AGAINST THE FAVOURABLE ORDERS OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI (HONBLE ITAT). 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE PANEL AND THE LD. AO ERRED IN HOLDING T HAT THE RECEIPTS OF THE APPELLANT ARE IN THE NATURE OF 'ROYALTIES' W ITHIN THE AMBIT OF EXPLANATION 2 TO SECTION 9(I)(VI) OF THE INCOME-TAX ACT, 1961 (THE ACT) AND ARTICLE 12(3) OF THE INDIA-USA DOUBLE TAX ATION AVOIDANCE AGREEMENT (DTAA). 3 4. THAT WITHOUT PREJUDICE TO THE ABOVE, ON FACTS AN D CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE P ANEL AND THE LD. AO ERRED IN NOT APPRECIATING THAT APPELLANT BEING A RESIDENT OF USA IS COVERED BY THE BENEFICIAL PROVISIONS OF DTAA BETWEEN INDIA AND USA AND ACCORDINGLY, COULD NOT BE TAXED U NDER THE PROVISIONS OF THE ACT. 5. THAT WITHOUT PREJUDICE TO THE ABOVE, ON FACTS AN D CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE P ANEL AND THE LD. AO ERRED INFERRING THAT THE EXPANDED DEFINITION OF ROYALTIES CONTAINED IN SECTION G(I)(VI) OF THE ACT AS RETROSP ECTIVELY AMENDED BY FINANCE ACT, 2012, IS APPLICABLE ON THE DEFINITI ON OF 'ROYALTIES' AS PROVIDED UNDER ARTICLE 12(3) OF THE INDIA-USA DT AA, WHEREAS IT IS A SETTLED POSITION IN LAW THAT AMENDMENT IN T HE ACT CANNOT AUTOMATICALLY IMPACT THE INTERPRETATION OF A DTAA. 6. THAT WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE P ANEL AND LD. AO ERRED IN HOLDING THAT THE RECEIPTS OF APPELLANT FRO M ITS NON RESIDENT CUSTOMERS ARE ALSO CHARGEABLE TO TAX IN IN DIA AS PER THE PROVISIONS OF SECTION 9(I)(VI)(C) OF THE ACT AND AR TICLE 12(7) OF THE INDIA-USA DTAA. 6.1 THATWITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE P ANEL AND LD. AO ERRED IN CATEGORIZING THE RECEIPTS OF APPELLANT FRO M ITS NON RESIDENT CUSTOMERS INTO THREE CATEGORIES WITHOUT GI VING A REASONABLE BASIS AND ACCORDINGLY, TAXING 90 PERCENT , 50 PERCENT 4 AND 5 PERCENT OF THE REVENUE FROM SUCH NON-RESIDENT CUSTOMERS. 7.THAT THE LD. AO ERRED IN INITIATING PENALTY PROCE EDINGS UNDER SECTION 271(I)(C) OF THE ACT. THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTH ER. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER , AMEND OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFORE OR AT T HE TIME OF HEARING OF THIS APPEAL. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE APPELLANT IS A COMPANY OF UNITED STATES OF AMERICA AND AS SUCH, QU ALIFIED AS A TAX RESIDENT OF USA IN TERMS OF ARTICLE 4 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND USA. THE APPELLANT IS THE OWNER AND OPERATOR OF GLOBAL NETWORK TELECOMMUNICATION SATELL ITES LOCATED IN OUTER SPACE AND IS ENGAGED IN ACTIVE BUSINESS OF TR ANSMITTING TELECOMMUNICATION SIGNALS TO/FROM ITS CUSTOMERS. V ARIOUS TV CHANNELS, NICNET AND INTERNET SERVICE PROVIDERS ARE USING THE SATELLITES FOR VARIOUS PURPOSES INCLUDING TELECOMMUNICATION, B ROADCASTING ETC. 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER DISMISSED THE CONTENTION OF THE A SSESSEE THAT IT IS NOT TAXABLE IN INDIA. 5 5. THE ASSESSEE HAS PLACED STRONG RELIANCE ON ITS P AST ASSESSMENT HISTORY, BUT THE SAME WAS NOT ACCEPTED BY THE ASSES SING OFFICER ON THE BASIS THAT THE DEPARTMENT HAS FILED SLP BEFORE THE HON'BLE SUPREME COURT AGAINST THE ORDER OF THE HON'BLE HIGH COURT B Y WHICH THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE. 6. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE DEPARTMENTS SLP IN THE CASE OF ASIA SATELLITE TELECOMMUNICATION CO. LTD IS ALSO PENDING BEFORE THE HON'BLE SUPREME COURT ON WHICH THE HON'B LE HIGH COURT HAS BASED ITS DECISION. 7. THE DRP ALSO FOLLOWED ITS DIRECTIONS GIVEN IN EA RLIER YEAR HOLDING THAT THERE IS NO CHANGE IN THE FACTUAL MATRIX. THE REFORE, THERE IS NO REASON TO DEVIATE FROM THE DIRECTIONS GIVEN EARLIER . 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW. IN OUR CONSIDERED OPINION AND AFTER GOING THROUGH T HE DECISIONS OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF THE APPE LLANT, WE FIND THAT THE QUARREL HAS NOW BEEN WELL SETTLED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN ITA NO. 530/2012 AND 545/2012 ORDER DATED 28.09. 2012. THE 6 HON'BLE HIGH COURT OF DELHI, AGAIN IN ITA NO. 900/2 019, ORDER DATED 15.12.2019 HAD THE OCCASION TO CONSIDER SIMILAR QUA RREL AND HELD AS UNDER: THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER D ATED 26.03.2019 PASSED BY THE INCOME TAX APPELLATE TRIBU NAL DELHI BENCH (ITAT): G , NEW DELHI IN ITA NO. 236/DEL/2016 IN RESPECT OF THE ASSESSMENT YEAR 2012-13. THE TRIBUNAL HAS PL ACED RELIANCE ON THE DECISIONS OF THIS COURT IN M/S ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. VS. DIT (2011) 332 ITR 340 (DEL) AND DIRECTOR OF INTERNATIONAL TAXATION VS. NEW SKIES SA TELLITE BV , (2016) 382 ITR 114 DEL. SINCE THE ISSUES RAISED BY THE REVENUE ARE SQUARELY COVERED BY THE AFORESAID DECISIONS OF THIS COURT, IN OUR VIEW, NO QUESTION OF LAW ARISES FOR OUR CONSIDERATION. DISMISSED. 9. SIMILAR VIEW WAS TAKEN IN ASSESSMENT YEAR 2013-1 4 BY THIS TRIBUNAL IN ITA NO. 5534/DEL/2016 WHEREIN THE TRIBU NAL HAS PLACED STRONG RELIANCE ON THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF ASIA SATELLITE TELECOMMUNICATIONS CO. LTD 3 32 ITR 340 AND NEW SKY SATELLITE 382 ITR 114 AND SINCE THE ORDER OF TH E TRIBUNAL WAS BASED ON THESE DECISIONS OF THE HON'BLE JURISDICTIONAL HI GH COURT OF DELHI, THE 7 HON'BLE HIGH COURT DISMISSED THE APPEAL OF THE REVE NUE HOLDING THAT NO QUESTION OF LAW ARISES. 10. CONSIDERING THE FACTS OF THE CASE IN LIGHT OF T HE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT [SUPRA] IN THE AP PELLANTS OWN CASE, WE DIRECT THE ASSESSING OFFICER TO TREAT THE INCOME OF THE ASSESSEE AS NOT LIABLE TO TAX IN INDIA. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO. 3199/DEL/2018 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE REPRESENTATIVES ON 11.10.2021. SD/- SD/- [AMIT SHUKLA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH OCTOBER, 2021 VL/ 8 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER