M/s. Intelsat Corporation, Chennai V. ADIT, New Delhi

ITA 5443/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0306 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-02-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 02-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Double taxation relief; Question of law
• Section: 234B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI K.G . BANSAL, ACCOUNTANT MEMBER I.T.A. NO.5443/D/2010 ASSESSMENT YEAR : 2007-08 M/S INTELSAT CORPORATION, VS. ASSTT. DIRECTOR OF C/O S.R. BATLIBOI & CO. TPL INCOME-TAX, HOUSE, IIND FLOOR, NO.3, CIRCLE-1(2), CENOTAPH ROAD, TEYNAMPET, NEW DELHI CHENNAI-600018 PAN NO. AADCP 6533D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PAWAN KUMAR, AR RESPONDENT BY: SHRI ASHWANI KUMAR MAHAJAN, CIT- DR ORDER PER K.G. BANSAL: AM: THE ASSESSEE HAD TAKEN 12 GROUNDS IN THE APPEAL FILED ON 02 .12.2010. THESE GROUNDS WERE REVISED IN THE COURSE OF HEARING. AGAIN THE ASSESSEE TOOK 12 GROUNDS, WHICH READ AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS ERRONEOU S AND BAD IN LAW. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN HOLDING THAT TH E AMOUNT PAID TO THE APPELLANT BY ITS CUSTOMERS REPRESENTED INCOME BY WAY OF ROYALTY AS DEFINED IN EXPLANATION 2 TO SECTION 9( 1)(VI) OF THE INCOME-TAX ACT,1961 (THE ACT) AS WELL AS UNDER ARTIC LE 12(3) OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT ENTERED INTO BETWEEN INDIA AND USA (DTAA). 5443-2010-I C 2 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN HOLDING THAT THE RECEIPTS EARNED BY THE APPELLANT ARE IN THE NATURE OF ROYALTY AS DEFINED I N CLAUSE (IVA) OF EXPLANATION 2 TO SECTION 9(1)(VI) OF THE ACT AND ARTICLE 12(3)(B) OF THE DTAA REPRESENTING CONSIDERATION FOR THE R IGHT TO USE AN INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN HOLDING THAT THE RECEIPTS EARNED BY THE APPELLANT ARE IN THE NATURE OF ROYALTY AS DEFINED I N CLAUSE (III) OF EXPLANATION 2 TO SECTION 9 (1)(VI) OF THE AC T AND ARTICLE 12(3)(A) OF THE DTAA REPRESENTING CONSIDERATION FOR USE PROCESS. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN HOLDING THAT TH E PAYMENTS BY NON-RESIDENT CUSTOMERS OF THE APPELLANT ARE A LSO CHARGEABLE TO TAX IN INDIA AS PER THE PROVISIONS OF SECT ION 9(1)(VI)(C) OF THE ACT AND ARTICLE 12(7) OF THE DTAA. 6. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED ASSESSING OFFI CER HAS ERRED IN CATEGORIZING THE PAYMENTS RECEIVED BY THE APPELLANT FROM ITS NON-RESIDENT CUSTOMERS INTO THREE CATEGORIES WITHOUT GIVING A REASONABLE BASIS AND ACCORDINGLY, TAXING 90%, 50% AND 5% OF THE REVENUE FROM SUCH NON-RESIDENT CUSTOMERS. 7. WITHOUT PREJUDICE TO THE ABOVE, THE LD. ASSESSING OFFICER HAS ERRED IN NOT APPLYING THE RATIONALE OF MUTUAL AGREEMENT PROCEDURE (MAP) RESOLUTION ACCEPTED BY THE APPELLANT IN RESPECT OF EARLIER PREVIOUS YEARS THOUGH THE SUCH RATIONALE WAS A CCEPTED AND APPLIED BY THE LEARNED ASSESSING OFFICER FOR THE ASSES SMENT YEAR 2005-06. 8. WITHOUT PREJUDICE TO THE ABOVE, THE LD. ASSESSING OFFICER HAS ERRED IN NOT TAKING INTO CONSIDERATION THE CORRECT REVENUE OF THE NON-RESIDENT CUSTOMERS PROVIDED BY THE APPELLANT WHICH HA S RESULTED IN TAXING THE GLOBAL REVENUE FROM SUCH NON-RESIDEN T CUSTOMERS INSTEAD OF THE REVENUE RELATING TO ONLY INDIAN O CEAN BEAM. 5443-2010-I C 3 9. WITHOUT PREJUDICE TO THE ABOVE, THE LD. ASSESSING OFFICER HAS APPLIED THE TAX RATE OF 40% WHEREAS THE DISPUTE RESOLUTION PANEL (DRP) HAS CONFIRMED THE DRAFT ORDER OF THE ASSESSING O FFICER HOLDING THAT THE INCOME OF THE APPELLANT IS TAXABLE AS ROYALTY. 10. WITHOUT PREJUDICE TO THE ABOVE, EVEN IF THE PAYMENT IS TAX ED AS ROYALTY, THE LD. ASSESSING OFFICER HAS ERRED IN LEVYING S URCHARGE OF 2.5% AND EDUCATIONAL CESS AT 2% IN RESPECT OF PAYMENTS RECEIVED BY APPELLANT WITHOUT APPRECIATING THE FACT THAT THE AMO UNT OF TAX CHARGEABLE IN RESPECT OF THE ROYALTY COULD NOT IN TERMS O F ARTICLE 12(2)(B) OF THE TAX TREATY EXCEED 10% OF THE GROSS AMOU NT OF ROYALTY. 11. WITHOUT PREJUDICE TO THE ABOVE, THE LD. ASSESSING OFFICER HAS ERRED IN LEVYING INTEREST U/S 234B OF THE ACT, BY NOT APP RECIATING THE FACT THAT NO INTEREST WAS CHARGEABLE U/S 234B OF THE ACT IN VIEW THAT THE PAYMENTS RECEIVED BY THE APPELLANT WERE SUBJECT TO WITHHOLDING TAX AND THE APPELLANT NOT BEING UNDER ANY O BLIGATION TO PAY ADVANCE TAX. 12. THE LD. ASSESSING OFFICER HAS ERRED IN NOT GRANTING CREDI T FOR TAXES DEDUCTED AT SOURCE CLAIMED BY THE APPELLANT IN THE RETURN O F INCOME AMOUNTING TO `32,874,228/-. 2. IN THE ASSESSMENT ORDER DATED 01.10. 2010 PASSED U/S 1 43(3) READ WITH SECTION 144C(1) OF THE INCOME-TAX ACT, 1961 (THE ACT ), PASSED BY THE ADIT, CIRCLE 1(2), INTERNATIONAL TAXATION, NEW DELHI, HE HAS GIVEN TH E HISTORY OF ASSESSMENTS PREVIOUSLY MADE IN THIS CASE. IT IS MENTIONED THAT ASSES SMENTS FOR THE YEARS 1996- 97 TO 2004-05 WERE COMPLETED ON THE BASIS OF MUTUAL AGR EEMENT PROCEDURE (MAP) RESOLUTION ENTERED INTO BY THE COMPETENT AUTHORITIES OF THE USA AND INDIA, WHICH WAS MADE APPLICABLE TO THESE YEARS. AS PER THE RESOL UTION, THE REVENUE CONSIDERED FOR TAXATION CONSISTED OF TWO COMPONENTS ( I) 100% OF THE REVENUE RECEIVED FROM RESIDENTS INDIAN CUSTOMERS; - (II) 5% OF REV ENUE RECEIVED FROM NON RESIDENT CUSTOMERS. THIS FORMULA WAS APPLIED WHILE COMP UTING THE REVENUE FOR ASSESSMENT YEAR 2005-06. THE AGGREGATE OF THE REVENUE WAS TAXED AT THE RATE OF 5443-2010-I C 4 10% CONSIDERING THEM TO BE ROYALTY AS USE OF OR A R IGHT TO USE ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT. THE ASSESSMENT FOR AS SESSMENT YEAR 2006-07 WAS COMPLETED BY COMPUTING 10% OF THE REVENUES RECEIVED FRO M IDENTIFIED CUSTOMERS. AGAIN THE REVENUES WERE TAXED @10%. 2.1 COMING TO THE FACTS OF THIS YEAR, IT IS MENTIONED T HAT THE ASSESSEE IS A TAX RESIDENT COMPANY OF THE USA, WITH ITS REGISTERED OFFICE LOC ATED IN WASHINGTON DC. THEREFORE, THE TAX TREATY BETWEEN INDIA AND USA (DTAA) IS AP PLICABLE TO IT. THE ASSESSEE IS OWNER AND OPERATOR OF GLOBAL NETWORK OF TELECOM MUNICATION SATELLITES LOCATED IN OUTER SPACE. IT IS ENGAGED IN THE BUSINESS O F TRANSMITTING TELECOMMUNICATION SIGNALS TO AND FRO FROM THE EARTH STA TION(S). ITS CUSTOMERS ARE VARIOUS TV CHANNELS, NICNET AND INTERNET SERVICE PROVIDER S. FOR THIS PURPOSE, THE ASSESSEE ENTERS INTO CONTRACTS WITH VARIOUS PARTIES AROUN D THE WORLD. THE ASSESSEE LEASED ITS TRANSPONDER CAPACITY AND BANDWIDTH TO VARIO US CUSTOMERS IN INDIA AND OUTSIDE INDIA, WHO USED THE TRANSPONDERS FOR THEIR BUSI NESS IN INDIA. THE CASE OF THE ASSESSEE IS THAT IT IS NOT LIABLE TO BE TAXED IN INDIA AN D THAT IS WHY NIL RETURN WAS FILED ON 06.11.2007. HOWEVER, LOOKING TO THE PAST HISTORY O F THE CASE, THE ASSESSING OFFICER COMPUTED THE TAXABLE REVENUES BY ATTRIBUTING CERTA IN PERCENTAGES OF RECEIPTS FROM THE CUSTOMERS, WHICH IS MENTIONED IN A TABU LAR FORM ON PAGE NO.5 OF THE ORDER. THE SAME IS REPRODUCED BELOW:- PARTICULARS TOTAL REVENUE RS ATTRIBUTED REVENUE TAX INDIAN CUSTOMERS (100%) 61 ,73,34,434 61,73,33,434 6,17,33,443 GLOBAL CUSTOMERS (ATTRIBUTION @90%) 1,53,85,788 1,38,47,209 13,84,720 GLOBALCUSTOMERS (ATTRIBUTION @50%) 8,62,783,522 43,13,91,761 4,31,39,176 GLOBALCUSTOMERS (ATTRIBUTION @5%) 1,21,69,44,924 6,08,47,246 60,84 ,724 TOTAL INCOME ATTRIBUTED 1,12,34,20,650 11,23,42,063 5443-2010-I C 5 2.2 THE MATTER WAS REFERRED TO THE DISPUTE RESOLUTION PANEL (DRP). AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE, THE PANEL DIRECT ED THE ASSESSING OFFICER TO COMPUTE THE INCOME AS PER THE DRAFT ORDER. IN PARTICU LAR, RELIANCE WAS PLACED ON THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF NEW SK IES SATELLITE NV, 319 ITR 269, THE SALIENT FINDINGS OF WHICH HAVE BEEN REPRODUCED ON PAGE 4 OF THE ORDER OF THE PANEL. THESE FINDINGS ARE REPRODUCED BELOW:- FROM THE READING OF SUB-SECTION (1) OF SECTION 142A, I T IS CLEAR THAT THE LEGISLATURE REFERRED TO THE PROVISIONS OF SECTION 69, 69A AND 69B BUT SPECIFICALLY EXCLUDED SECTION 69C. THE PRINCIPLE OF CAUS US OMISSUS BECOMES APPLICABLE IN A SITUATION LIKE THIS. WHAT IS N OT INCLUDED BY THE LEGISLATURE AND RATHER SPECIFICALLY EXCLUDED, CANNOT B E INCORPORATED BY THE COURT THROUGH THE PROCESS OF INTERPR ETATION. THE ONLY REMEDY IS TO AMEND THE PROVISIONS. IT IS NOT THE FUNCTION OF THE COURT TO LEGISLATE OR TO PLUG THE LOOPHOLES IN THE LAW. IN THE PRESENT CASE, EXCEPT THE REPORT OF THE DVO ON WHICH THE ASSESSING OFFICER RELIED UPON, THERE WAS NOTHING ON RECORD TO SUGGEST THAT THERE WAS ANY OTHER EVIDENCE TO DISBELIEVE THE EXPENDITURE SHOWN BY THE ASSESSEE. IN FACT DURING THE COURSE OF ARG UMENTS, LEARNED COUNSEL FOR THE ASSESSEE PRODUCED THE ASSESSMENT ORDER, WHICH CLEARLY DEMONSTRATES THAT THE EXPENDITURE SHOWN BY THE ASSESSEE FROM THE TIME, WHEN IT WAS ON ONGOING PROJECT, WA S EXAMINED AND ACCEPTED BY THE ASSESSING OFFICER. IN THESE CIRCUMSTANCES, WE ANSWER THE QUESTION FORMULATED A BOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. AS A CONSEQU ENCE, THIS APPEAL IS DISMISSED BEING DEVOID OF ANY MERITS. 3. BEFORE US, THE CASE OF THE LEARNED COUNSEL IS THAT GROUN D NOS.1 TO 5 STAND COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN TH E CASE OF ASIA SATELLITE COMMUNICATION COMPANY LTD. VS. DIT AND VICE VERSA IN I.T.A. NO. 131 OF 2003; CM NO.2865/2009 AND I.T.A. NO.134 OF 2003 DATED 31.01.2 011, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK ON PAGE NOS.18 TO 91. HE DR EW OUR ATTENTION TO PAGE NOS. 19 & 20 OF THE PAPER BOOK, WHICH NARRATE THE SUBSTANTIAL QUESTION OF LAW 5443-2010-I C 6 ADMITTED BY THE HONBLE COURT ON THE APPEAL OF THE ASSESSEE AND THE APPEAL OF THE REVENUE. FOLLOWING GROUNDS WERE ADMITTED IN RESPECT OF TH E APPEAL OF THE ASSESSEE IN I.T.A. NO.131 OF 2003:- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE AMOUNT S RECEIVED BY THE APPELLANT (A NON-RESIDENT) FROM ITS NON-RESIDENT CUSTOMERS FOR AVAILING TRANSPONDER CAPACITY WAS CHARG EABLE TO TAX IN INDIA WHERE THE SATELLITE WAS NOT STATIONED OVER INDIAN AIRSPACE AND IN DIRECTING HOW MUCH INCOME IS TO BE DETERMINED? (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE TRIBUNAL WAS RIGHT IN HOLDING THAT THE APPELLANT HAD A BUSINESS CONNECTION IN INDIA THROUGH OR FROM WHICH IT EARNED INCOME? (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE AMOUNT PAID TO THE APPELLANT BY ITS CUSTOMERS REPRESENTED INCOME BY WAY OF ROYALTY AS THE SAID EXPRESSION IS DEFINED IN EXPLANA TION 2 TO SECTION 9(1)(VI) OF THE INCOME-TAX ACT? (IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE CUSTOMER S OF THE APPELLANT WERE EITHER CARRYING ON BUSINESS IN INDIA OR HAD A SOURCE OF INCOME IN INDIA AND, HENCE, THE AMOUNT RECEIVED BY THE APPELLANT FROM ITS CUSTOMERS WERE CHARGEABLE TO TAX IN INDIA? (V) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS JUSTIFIED IN ADMITTING THE ADDITIONA L GROUND RAISED BY THE REVENUE SEEKING TO ASSESS THE AMOUNTS RECEIVED BY THE APPELLANT AS FEES FOR TECHNICAL SERVICES IN TERMS OF SECTION 9(1)(VII)? (VI) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL ERRED IN HOLDING THAT THE DEPRECIATION WAS ADMISSIBLE TO THE APPELLANT ONLY ON A PROPORTIONATE BAS IS? 3.1 FOLLOWING GROUNDS WERE ADMITTED IN RESPECT OF THE APP EAL OF THE REVENUE IN I.T.A. NO.134 OF 2003: 5443-2010-I C 7 (I) WHETHER THE ITAT IS RIGHT IN LAW IN HOLDING THAT THE INTEREST U/S 234B OF THE INCOME-TAX ACT, 1961 SHOULD BE CALCULATED BY GIVING BENEFIT TO THE ASSESSEE OF TAX DEDUCTIBLE U/S 195 B Y THE PAYER THOUGH NO SUCH DEDUCTION IN FACT WAS MADE? (II) WHETHER LEARNED ITAT IS RIGHT IN LAW IN HOLDING THAT SEC TION 9(1)(I) OF THE INCOME-TAX ACT, 1961 IS NOT APPLICABL E IN THE CASE OF THE ASSESSEE? (III) WHETHER THE LEARNED ITAT HAS ERRED IN NOT DECIDING THE ISSUE WHETHER INCOME OF THE ASSESSEE IS TAXABLE U/S 9(1)(I) OF THE INCOME-TAX ACT, 1961? (IV) WHETHER ITAT IS RIGHT IN HOLDING THAT TRANSPONDERS CAN NOT BE REGARDED AS EQUIPMENT UNDER EXPLANATION 2 CLAUSE (IVA) TO SECTION 9(1)(IVI) OF THE INCOME-TAX ACT, 1961? 3.2 THEREAFTER HE DREW OUR ATTENTION TOWARDS PARAGRAPH NO S.72 TO 81 OF THE JUDGMENT. IN PARAGRAPH NO.72, IT IS MENTIONED THAT T HE TRIBUNAL HAS MADE AN ATTEMPT TO TRACE THE FUND FLOW AND OBSERVED THAT SINCE TH E END CUSTOMERS BEING PERSONS WATCHING TELEVISIONS IN INDIA ARE PAYING THE AMO UNTS TO CABLE OPERATORS WHO IN TURN ARE PAYING THE SAME TO TV CHANNELS, THE FLO W OF FUND IS TRACED TO INDIA. THIS IS A FAR-FETCHED GROUND TO ROPE IN PAYMENT RECEIVED B Y THE APPELLANT IN THE TAXATION NET. THE TRIBUNAL HAS GLOSSED OVER AN IMPORTA NT FACT THAT THE MONEY, WHICH IS RECEIVED FROM THE CABLE OPERATORS BY THE TELECAST OPERATOR S, IS TREATED AS INCOME BY THE TELECAST OPERATORS, WHICH HAS ACCRUED IN INDIA, AND THEY HAVE OFFERED AND PAID TAX. THUS, THE INCOME, WHICH IS GENERATED IN INDIA , HAS BEEN SUBJECTED TO TAX. IT IS THE PAYMENT, WHICH IS MADE BY THE TELECAST OPERATOR S WHO ARE SITUATED ABROAD TO THE APPELLANT, WHICH IS ALSO A NON-RESIDENT, I.E., SO UGHT TO BE BROUGHT WITHIN THE TAX NET. IT IS CONCLUDED THAT IT IS DIFFICULT TO ACC EPT SUCH FAR-FETCHED REASONING WITH NO CAUSAL CONNECTION. IT MAY BE MENTIONED HERE THAT THE ASSESSEE HAS RECEIVED REVENUES FROM INDIAN RESIDENTS ALSO, AS CAN BE SEEN FROM T HE TABLE MENTIONED IN THE ASSESSMENT ORDER AND REPRODUCED BY US WHILE SUMMARIZING T HE ORDER. 5443-2010-I C 8 3.3 THEREAFTER HE DREW OUR ATTENTION TOWARDS PARAGRAPH NO .79 OF THE JUDGMENT, IN WHICH IT HAS BEEN HELD THAT THE COURT IS UNABLE TO SUBSCRIBE TO THE VIEW TAKEN BY THE TRIBUNAL IN THE IMPUGNED JUDGMENT ON THE INTERPRETATIO N OF SECTION 9(1)(VI) OF THE ACT. THUS QUESTION NO.3 WAS ANSWERED IN FAVOUR OF THE ASSESSEE WHICH IS WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE AMOUNT PAID TO THE APPELLANT BY IT S CUSTOMERS REPRESENTED INCOME BY WAY OF ROYALTY AS DEFINED IN EXPLANATION 2 T O SECTION 9(1)(VI) OF THE ACT? IN ARRIVING AT THIS DECISION, THE HONBLE COURT INTER A LIA REFERRED TO OECD CONVENTION, COMMENTARY THEREON, COMMENTARY WRITTEN BY KL AUS VOGEL, DECISION IN THE CASE OF UNION OF INDIA AND ANOTHER VS. AZADI BACHA O AANDOLAN AND ANOTHER, (2003) ITR 706, CIT VS. AHAMDABAD MANUFACTURING AND CALICO PRINTING COMPANY 139 ITR 806 (GUJARAT), AND CIT VS. VISHAKHAPATNAM P ORT TRUST, (1983) 144 ITR 146 (AP). 3.4 THE REVENUE HAD ALSO RAISED THE QUESTION REGARDING APPL ICABILITY OF SECTION 9(1)(VII) FOR THE FIRST TIME BEFORE THE TRIBUNAL. ALTHO UGH THIS GROUND WAS ADMITTED, IT WAS NOT DECIDED AS THE INCOME WAS HELD TO BE ASSESSABLE U/S 9(1)(VI). NO ARGUMENT WAS ADVANCED BY THE LEARNED COUNSEL FOR THE REVENU E BEFORE THE HONBLE COURT IN THIS MATTER. THEREFORE, THE SUBMISSION IN THE GROUND REGARDING APPLICABILITY OF SECTION 9(1)(VII) WAS NOT ACCEPTED. THE RESULT OF T HE DECISION IS THAT THE REVENUES RECEIVED BY THE ASSESSEE IS NOT TAXABLE EITHER U/S 9(1)(VI) O R SECTION 9(1)(VII) OF THE ACT. 3.5 BEFORE US, THE COMMON CASE OF BOTH THE PARTIES IS THA T THE GROUNDS ARE COVERED UNDER THE AFORESAID DECISION IN THE CASE OF ASIA SAT ELLITE TELECOMMUNICATIONS COMPANY LIMITED. 5443-2010-I C 9 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION S MADE BEFORE US. WE HAVE ALREADY MENTIONED THAT THERE IS A DISTINGUISHABLE FEATURE NAMELY THAT THE ASSESSEE HAS RECEIVED PAYMENTS FROM PERSONS RESIDENTS IN INDI A. HOWEVER, THE RECEIPTS HAVE BEEN TAXED U/S 9(1)(VII), EXPLANATION 2, CL AUSE (VI) THEREUNDER. THE DECISION IN THE CASE OF ASIA SATELLITE TELECOMMUNICATIONS C OMPANY LIMITED IS TO THE CONTRARY AND IN FAVOUR OF THE ASSESSEE. IT IS ALSO A M ATTER OF FACT ON RECORD THAT THE ASSESSEE IS A TAX RESIDENT OF USA AND, THEREFORE, THE PROVISI ONS CONTAINED IN THE DTAA ARE APPLICABLE. HOWEVER, WE ARE OF THE VIEW THAT WE NEED NOT GO INTO THE PROVISIONS OF THE DTAA BECAUSE OF THE PROVISION CONTAI NED IN SECTION 90(2) OF THE ACT. THIS PROVISION PROVIDES THAT WHERE THE CENTRAL GO VERNMENT HAS ENTERED INTO AN AGREEMENT WITH THE GOVERNMENT OF ANY COUNTRY OUTSIDE INDI A UNDER SUB-SECTION (1) FOR GRANTING RELIEF OF TAX, OR AS THE CASE MAY BE, AVOID ANCE OF DOUBLE TAXATION, THEN, IN RELATION TO THE ASSESSEE TO WHOM SUCH AGREEMENT APP LIES, THE PROVISIONS OF THIS ACT SHALL APPLIED TO THE EXTENT THEY ARE MORE BENEFICI AL TO THAT ASSESSEE. THE ASSESSEE IS FOUND TO HAVE INCURRED NO LIABILITY TO TAX U NDER THE ACT. THEREFORE, EVEN IF THE PROVISIONS OF THE TREATY GO AGAINST THE ASSESSEE, I T HAS TO BE GRANTED THE BENEFIT OF THE ACT UNDER WHICH NO LIABILITY TO TAX CAN BE FASTENED ON THE ASSESSEE. ACCORDINGLY, GROUND NOS. 1 TO 5 ARE ALLOWED. 5. IN THE LIGHT OF AFORESAID FINDING, GROUND NOS. 6,7 ,8, 9 & 10 BECOME INFRUCTUOUS. THEY ARE TREATED AS DISMISSED. 6. GROUND NO.11 AGAINST CHARGING OF INTEREST U/S 234B ALSO BECOMES INFRUCTUOUS IN VIEW OF OUR FINDING IN THE MATTER OF NO N-TAXABILITY OF THE ASSESSEE IN INDIA. 5443-2010-I C 10 7. IN PURSUANCE OF GROUND NO.12, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE AMOUNT OF TAX DEDUCTED AT SOURCE, CLAIMED TO BE `3,28,74 ,228/-, AND GRANT CREDITED AS PER VERIFICATION. THE ASSESSEE MAY BE ALLOWED T O STATE ITS CASE IN THIS MATTER. THUS, THIS GROUND IS TREATED AS ALLOWED FOR ST ATISTICAL PURPOSE. 8. IN RESULT, THE APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED IN THE ORDER. THIS ORDER WAS PRONOUNCED IN OPEN COURT ON 04.03.2011 . SD/- SD/- ( R.P. TOLANI ) ( K.G. BANSAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER DT. 04/03/2011 NS COPY FORWARDED TO:- 1. M/S INTELSAT CORPORATION C/O S.R. BATLIBOI & CO. TPL HOUSE, SECOND FLOOR, NO.3, CENOTAPH ROAD, TEYNAMPET, CHENNAI-600018 2. THE CIT 3. THE CIT (A), NEW DELHI. 4. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY BY ORDER (ITAT, NEW DELHI).