DDIT (I.T) 2(1), MUMBAI V. M/s. TAJ T.V. LTD., MUMBAI

ITA 3702/MUM/2005

• Counselvise Citation: 370219914 RSA 2005
• Duration Of Justice: 7 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 13-09-2011
• Assessment Year: misc
• Appeal Filed On: 16-05-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: MADHUR AGARWAL
• Keywords: Residential status
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 3702/MUM./2005 (ASSESSMENT YEAR : NOT APPLICABLE ) DY. DIRECTOR OF INCOME TAX (I.T) CIRCLE-2(1), SCINDIA HOUSE BALLARD ESTATE, N.M. ROAD MUMBAI 400 038 .. APPELLANT V/S M/S. TAJ TV LIMITED C.O SURESH SURANA & ASSOCIATES 310, AHURA CENTRE 82, MAHAKALI CAVES ROAD ANDHERI (E), MUMBAI 400 093 .... RESPONDENT REVENUE BY : MR. JITENDR A YADAV ASSESSEE BY : MR. MADHUR AGARWAL DATE OF HEARING 18.04.2012 DATE OF ORDER 18.05.2012 O R D E R PER J. SUDHAKAR REDDY, A.M. THE PRESENT APPEAL PREFERRED BY THE REVENUE, IS DIR ECTED AGAINST IMPUGNED ORDER DATED 27 TH JANUARY 2005, PASSED BY THE COMMISSIONER (APPEALS)XXXI, MUMBAI. GROUND NO.1, READS AS FOLLO WS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PAYMEN T TOWARDS LIVE TELECAST OF THE EVENTS ARE NOT ROYALTY PAYMENTS. 2. AFTER HEARING RIVAL CONTENTIONS AND ON PERUSAL OF T HE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THIS ISSUE IS COVERED AGAIN ST THE REVENUE AND IN M/S. TAJ TV LIMITED 2 FAVOUR OF THE ASSESSEE BY THE DECISION OF A CO-ORDI NATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1079/MUM./2008, VI DE ORDER DATED 17 TH APRIL 2012, WHEREIN THE TRIBUNAL HELD AS FOLLOWS:- 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RELEVANT MATERIAL ON RECORD. THE LD. AR HAS PLACED ON RECORD A COPY OF THE ORDER PASSED BY THE MUMBAI BENCH OF THE TRIBUNAL IN ADIT( IT) VS. NEO SPORTS BROADCAST PVT. LTD. IN ITA NO.99/MUM/2009. V IDE THIS ORDER DATED 09-11-2011, THE TRIBUNAL HAS HELD THAT CONSID ERATION FOR LIVE BROADCASTING DOES NOT FALL U/S.9(1)(VI) OF THE ACT AND HENCE THERE IS NO QUESTION OF DEDUCTION OF TAX AT SOURCE. BOTH THE SI DES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THE I NSTANT CASE ARE MUTATIS MUTANDIS SIMILAR TO THOSE CONSIDERED AND DE CIDED BY THE TRIBUNAL IN THE AFORENOTED CASE OF NEO SPORTS BROAD CAST PVT. LTD. (SUPRA). THE IMPUGNED ORDER, BEING IN CONFORMITY WI TH THE VIEW TAKEN BY THE TRIBUNAL IN THE AFORESAID CASE OF NEO SPORTS BROADCAST PVT. LTD. (SUPRA), DOES NOT REQUIRE ANY INTERFERENCE. WE, THE REFORE, UPHOLD THE IMPUGNED ORDER. 3. FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE CITED SUPRA, WE DISMISS THE GROUND RAISED BY THE RE VENUE. 4. GROUND NO.2, READS AS FOLLOWS:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PAYMEN TS MADE TO THE CONTENT PROVIDERS CANNOT BE SAID TO ARISE IN INDIA UNDER ARTICLE 12(7) OF THE TREATY BETWEEN INDIA AND MAURITIUS. 5. THIS GROUND IS, ADMITTEDLY, COVERED IN FAVOUR OF TH E ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF A CO-ORDINAT E BENCH OF THIS TRIBUNAL, IN SET SATELLITE (SINGAPORE) PTE. LTD. V/S ADIT, [2 010] 132 TTJ 459 (MUM.), WHEREIN THE TRIBUNAL HELD AS FOLLOWS:- HELD : THE PAYMENT MADE BY THE ASSESSEE TO GCC CANN OT BE SAID TO ARISE IN INDIA UNDER ART. 12(7) OF THE TREATY SINCE THE PAYER (I.E. ASSESSEE) IS NOT A RESIDENT OF INDIA. AS PER THE FI RST LIMB OF ART. 12(7) OF THE TREATY, ROYALTIES CANNOT ARISE IN INDIA, SIN CE THE PAYER IS NOT A RESIDENT OF INDIA. SUCH ROYALTIES UNDER THE FIRST L IMB OF ART. 12(7) OF THE TREATY ARISE IN SINGAPORE SINCE THE PAYER (I.E. THE ASSESSEE) IS A RESIDENT OF SINGAPORE. THE SECOND LIMB OF ART. 12(7 ) OF THE TREATY DEALS WITH A SCENARIO WHERE THE PAYMENTS ARE MADE BY A NO N-RESIDENT, WHERE SUCH FLOAT RESIDENT HAS A PE IN INDIA. HOWEVE R, A MERE EXISTENCE OF A PE IN INDIA CANNOT LEAD TO A CONCLUSION THAT R OYALTIES ARISE IN INDIA. IN ADDITION TO THE EXISTENCE OF PE FOR ROYAL TIES TO ARISE IN INDIA UNDER ART. 12(7) OF THE TREATY, IT IS ESSENTIAL THA T LIABILITY TO PAY SUCH M/S. TAJ TV LIMITED 3 ROYALTIES HAS BEEN INCURRED IN CONNECTION WITH AND IS BORN BY THE PE OF THE PAYER IN INDIA. BASED ON AN ANALOGY FROM PAR AS 26 AND 27 OF OECD COMMENTARY ON ART. 11, IT IS CLEARLY EVIDENT T HAT FOR ROYALTIES TO INDIA, AN EXISTENCE OF AN ECONOMIC LINK BETWEEN THE LIABILITY FOR PAYMENT OF SUCH ROYALTIES AND PE IS NECESSARY. HOWE VER, IN THE PRESENT CASE THERE IS NO ECONOMIC FINK BETWEEN THE PAYMENT OF ROYALTIES AND THE ALLEGED RE OF THE ASSESSEE IN IND IA (I.E. SET INDIA), THE ECONOMIC LINK IS ENTIRELY WITH THE ASSESSEES H EAD OFFICE IN SINGAPORE. THUS, THE PAYMENTS TO GCC CANNOT BE SAID TO HAVE BEEN INCURRED IN CONNECTION WITH THE APPELLANTS RE IN INDIA (I.E. SET INDIA). FURTHER, THE ALLEGED .PE IN INDIA (I.E. SET INDIA) WAS ALSO NOT INVOLVED IN ANY WAY WITH THE ACQUISITION OF THE RIG HT TO BROADCAST THE CRICKET MATCHES, NOR DID THE RE BEAR THE COST OF PA YMENTS TO GCC. THUS THE PAYMENTS TO GCC CANNOT BE SAID TO HAVE BEE N BORNE BY THE ASSESSEES PE IN INDIA (I.E. SET INDIA). THE PAYER IS NOT A RESIDENT OF INDIA AND THE LIABILITY TO PAY SUCH ROYALTY HAS NOT BEEN INCURRED IN CONNECTION WITH AND IS NOT BORNE BY THE PE OF THE P AYER IN INDIA. THEREFORE THERE BEING NO ECONOMIC LINK BETWEEN THE PAYMENT OF ROYALTY AND SET INDIA HENCE THE ROYALTY DOES NOT AR ISE IN INDIA HAVING REGARD TO THE PROVISIONS OF ART. 12(7) OF THE TREAT Y. HENCE EVEN IF IT IS ASSUMED THAT THE PAYMENT FOR BROADCASTING CRICKET C ONSTITUTES ROYALTY, SUCH ROYALTY DOES NOT ARISE IN INDIA WITHIN THE MEA NING OF PROVISIONS OF ART. 12(7) OF THE TAX TREATYSTANLEY KEITH KINNETT, IN RE (1999) 154 CTR (AAR) 193: (1999) 238 ITR 155 (AAR) AND CIT VS. ELITOS SPA. (2005) 196 CTR (ALL) 638: (2006) 280 ITR 495 (ALL) RELIED ON . 6. BEFORE US, BOTH THE PARTIES AGREE THAT THE PROPOSIT ION LAID DOWN IN THIS CASE IS APPLICABLE TO THE FACTS ON HAND. THUS, RESP ECTFULLY FOLLOWING THE SAME, WE DISMISS THE GROUND RAISED BY THE REVENUE. 7. GROUND NO.3, READS AS FOLLOWS:- 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESS EE WAS NOT LIABLE TO THE PROVISIONS OF SECTION 201(1) AND 201(1A) OF THE ACT. 8. THIS GROUND IS CONSEQUENTIAL IN NATURE. ACCORDINGLY , THE SAME IS DISMISSED. 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MAY 2012 SD/- B.R. MITTAL JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 18 TH MAY 2012 M/S. TAJ TV LIMITED 4 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, L BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI SELF DRAFTED DATE INITIAL 1. DRAFT DICTATED ON 11.5.2012 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 14.5.2012 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 14.5.2012 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 14.5.2012 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 14.5.2012 SR.PS 6. DATE OF PRONOUNCEMENT 18.5.2012 SR.PS 7. FILE SENT TO THE BENCH CLERK 22.4.2012 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER