VIACOM 18 MEDIA P.LTD, MUMBAI V. DCIT (IT) 4(3)(1), MUMBAI

ITA 618/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4409 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2016-2017
• Appeal Filed On: 27-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Assessee Lawyers: ARVIND SONDE
• Keywords: Business income; Double taxation relief; Services rendered outside India; Permanent establishment; Advance ruling; Question of law
• Section: 6; 15

Judgement Text

1 ITA 618/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L, MUMBAI BEFORE SHRI MAHAVIR SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.618/MUM/2017 (ASSESSMENT YEAR: 2016-17) VIACOM 18 MEDIA PVT LTD ZION BIZWORLD, SUBHASH ROAD-A, NEAR GARWARE OFFICE, VILE PARLE (E), MUMBAI-400 057 PAN : AAACM9164E VS DY.CIT(INTERNATIONAL TAXATION)- 4(3)(1), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI ARVIND SONDE RESPONDENT BY SHRI M.V. RAJGURU DATE OF HEARING 18-07-2018 DATE OF PRONOUNCEMENT -10-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST ORDER OF THE CIT(A)-55, MUMBAI DATED 20-10-2016 AND IT PERTAINS TO AY 2016-17. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1. ON THE FACTS, AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) - 55, MUMBAI ['CIT(A)'] HAS ERRED IN DISMISSING THE APPELLANT'S APPEAL, HOLDING THAT THE PAYMENTS OF TRANSPONDER FEES BY TH E APPELLANT TO INTELSAT CORPORATION, USA, ('INTELSAT'), ARE TAXABLE AS 'ROYALTY 1 UNDER THE INCOME-TAX ACT, 1961 ('THE ACT'), AND UN DER THE INDIA-USA TAX TREATY ('THE TREATY'), AND CONSEQUENTL Y, SUBJECT TO TAX WITHHOLDING UNDER SECTION 195 OF THE ACT. 2. ON THE FACTS, AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE TRANSPONDER FEES PAYABLE BY T HE APPELLANT TO INTELSAT ARE NOT TAXABLE IN INDIA AND CONSEQUENTLY, NOT SUBJECT TO TAX WITHHOLDI NG UNDER SECTION 195 OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY AND 2 ITA 618/MUM/2017 IS PRIMARILY ENGAGED IN BROADCASTING TELEVISION CHA NNELS FROM INDIA. THE ASSESSEE HAS BEEN PROVIDED WITH A 24 HOUR SATELLITE SIGNAL RECEPTION AND RETRANSMISSION SERVICE (TRANSPONDER SERVICE) BY IN TELSAT CORPORATION, A USA CORPORATION AS PER AGREEMENT BETWEEN THE ASSES SEE AND INTELSAT CORPORATION DATED 19 TH AUGUST, 2011. IN CONSIDERATION FOR THE TRANSPONDER SERVICE, THE ASSESSEE HAD TO PAY TRANSP ONDER SERVICE FEES. AS PER THE AGREEMENT BETWEEN THE PARTIES, THE TAXES , IF ANY PAYABLE ON THE TRANSPONDER SERVICE FEES IS TO BE BORNE BY THE ASSESSEE. INTELSAT CORPORATION IS A TAX RESIDENT IN USA UNDER ARTICLE 4 OF THE INDIA USA TAX TREATY. THE ASSESSEE CLAIMED THAT INTELSAT CORPORA TION DOES NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA, THEREFORE, AS PER ARTICLE 12 OF THE TREATY, ROYALTY INCOME AND FEES FEES FOR INCLUDED S ERVICE IS TAXABLE IN INDIA (AND CONSEQUENTLY WITHHOLDING IN INDIA) AT TH E RATE OF 15% WHEREAS RATE AS PER THE INCOME-TAX ACT IS 10.506%. THE AS SESSEE WAS OF THE VIEW THAT THE PAYMENT TO INTELSAT CORPORATION ARE N OT TAXABLE IN INDIA AND HENCE, IT WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE FROM TRANSPONDER FEES PAID TO INTELSAT CORPORATION. ACCORDINGLY, THE ASS ESSEE HAS DEPOSITED TAX OF RS.14,55,153 ON 05-06-2015 AND PREFERRED THI S APPEAL AS PER THE PROVISIONS OF SECTION 248 WITH RESPECT TO THE NET F EES OF US$1,00,000 PER MONTH PAYABLE TO INTELSAT CORPORATION FOR APRIL AND MAY, 2015. 3. BEFORE THE CIT(A), THE ASSESSEE HAS FILED DETAIL ED SUBMISSIONS AND 3 ITA 618/MUM/2017 CONTENDED THAT THE TRANSPONDER FEES PAID TO INTELSA T CORPORATION WAS NOT SUBJECT TO TAX IN INDIA AND HENCE REQUESTED THAT TH E SAME COULD NOT BE SUBJECTED TO WITHHOLDING TAX IN INDIA U/S 195 OF TH E INCOME-TAX ACT, 1961. THE ASSESSEE FURTHER CLAIMED THAT INTELSAT CORPORAT ION IS A RESIDENT OF USA AND IS ELIGIBLE TO CLAIM BENEFITS OF THE TREATY IN RESPECT OF PAYMENT RECEIVED FROM THE ASSESSEE. IT WAS FURTHER CLAIMED THAT AS PER SECTION 90(2) OF THE ACT, THE PROVISIONS OF THE ACT OR THE TREATY WHICHEVER IS MORE BENEFICIAL CAN BE ADOPTED BY THE NON RESIDENT TAXPA YER. THE ASSESSEE FURTHER CLAIMED THAT PAYMENTS MADE TO INTELSAT CORP ORATION IN RESPECT OF TRANSPONDER SERVICES IS IN THE NATURE OF BUSINESS P ROFITS AND CAN ONLY BE BROUGHT TO TAX IN INDIA UNDER ARTICLE 7 OF THE TREA TY, WHERE THE REQUIREMENT OF PERMANENT ESTABLISHMENT IS A MUST. SINCE INTELSAT CORPORATION DOES NOT HAVE ANY PERMANENT ESTABLISHME NT IN INDIA, SUCH PROFITS WILL NOT BE TAXABLE UNDER THE TREATY. THE ASSESSEE ALSO EXPLAINED THE NATURE OF SERVICES RENDERED BY INTELSAT CORPORA TION. ACCORDING TO THE ASSESSEE, TRANSPONDER SERVICES THAT INTELSAT CO RPORATION RENDERS ARE STANDARD SERVICES, WHICH ARE RENDERED TO ANY PERSON , WHO IS WILLING TO PAY FOR THE SAME. THERE IS NOTHING SECRET / CONFID ENTIAL ABOUT SUCH SERVICES ALONG WITH TECHNICAL DETAILS THEREOF ARE P UBLICLY AVAILABLE. ACCORDINGLY, PAYMENT FOR PROVISION OF TRANSPONDER S ERVICES CANNOT BE CONSIDERED AS PAYMENTS FOR USE OF A SECRET PROCESS AND, THEREFORE, ARE 4 ITA 618/MUM/2017 NOT IN THE NATURE OF ROYALTY. THE ASSESSEE HAS PLA CED ITS RELIANCE ON CERTAIN JUDICIAL PRECEDENTS INCLUDING THE DECISION OF DELHI ITAT IN THE CASE OF NEW SKIES SATELLITE N.V. 4. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIO NS OF THE ASSESSEE AND ALSO ON ANALYSIS OF PROVISIONS OF SECTION 9(1)( VI) OF THE INCOME-TAX ACT, 1961 AND ARTICLE 12 OF THE INDIA USA DTAA HELD THAT THE ITAT HAS ALREADY CONSIDERED THE ISSUE OF WITHHOLDING OF TAX ON PAYMENTS MADE TO INTELSAT CORPORATION FOR RENDERING TRANSPONDER SERV ICES IN ASSESSEES OWN CASE FOR AY 2009-10 IN ITA 1584/MUM/2010 (2014) 44 TAXMAN.COM 1 WHEREIN AFTER ELABORATE DISCUSSION ON THE FACTS OF THE CASE AND AFTER DISCUSSING THE REASON FOR DEVIATING FROM THE HONBLE DELHI HIGH COURT DECISION IN THE CASE OF ASIA SATELLITE H AS ARRIVED AT A CONCLUSION THAT THE PAYMENT MADE TO NON RESIDENT FO R PAYMENT RELATED TO USE OF TRANSPONDER CAPACITY CONSTITUTE ROYALTY, BOT H UNDER THE INCOME- TAX ACT AS WELL AS UNDER THE INDIA USA TREATY. THE FACTS OF THE PRESENT CASE ARE EXACTLY SIMILAR TO THE CASE WHICH HAS ALRE ADY BEEN CONSIDERED BY THE ITAT. THE PAYMENT MADE BY THE ASSESSEE TO I NTELSAT CORPORATION CONSTITUTE ROYALTY BOTH UNDER THE INCOM E-TAX ACT AS WELL AS UNDER THE INDIA USA DTAA AND HENCE, LIABLE TO TAX I N INDIA. SINCE THERE IS NO DISPUTE OVER THE RESIDENT STATUS OF NON RESID ENT, TAX U/S 195 WOULD BE DEDUCTIBLE AT THE RATE SPECIFIED IN THE INDIA US A DTAA. ACCORDINGLY, 5 ITA 618/MUM/2017 THE LD.CIT(A) DISMISSED THE APPEAL FILED BY THE ASS ESSEE. THE RELEVANT OBSERVATIONS OF THE LD.CIT(A) IS EXTRACTED BELOW:- 11. 1 HAVE GONE THROUGH THE APPELLANT'S SUBMISSION. THE CLAIM OF THE APPELLANT IS THAT THE PAYMENT CANNOT BE CATEGORISED EITHER AS ROYALTY FOR USE OR RIGHT TO USE A 'PROCESS' OR AS ROYALTY FOR USE OF EQUIPMENT. HENCE, THE AMOUNT REPRESENTS BUSINESS INCOME OF THE NONRESIDENT WHICH CAN BE TAXED IN INDIA ONLY IF THERE IS AN EXISTENCE OF A PE FOR THE NONRESIDEN T. TWO ISSUES COME UP FOR ADJUDICATION IN THE PRESENT APPEAL - (IJ WHETHER TH E PAYMENT IS FOR USE OR RIGHT TO USE A PROCESS AND (II) WHETHER THE PAYMENT CONST ITUTES ROYALTY FOR USE OF EQUIPMENT. 12. ROYALTY FOR USE OR RIGHT TO USE A PROCESS: THE FIRST ISSUE WHICH ARISES FOR DETERMINATION IS WHETHER THE PAYMENT MADE BY TH E APPELLANT CONSTITUTES ROYALTY FOR USE OR RIGHT TO USE A PROCESS. THE APP ELLANT HAS ADMITTED THAT AFTER THE AMENDMENT AND INTRODUCTION OF EXPLANATION 6 TO SECTION 9[L](YI) OF THE ACT, THE AMOUNT REPRESENTS ROYALTY AS FAR AS THE IN COME TAX ACT IS CONCERNED. BUT SINCE IT IS NOT TAXABLE AS PER INDIA UK DTAA AN D NO CHANGE HAVING BEEN BROUGHT TO THE TREATY, THE AMOUNT CANNOT BE CATEGOR ISED AS ROYALTY THROUGH AMENDMENT TO ACT. THE GROUNDS OF APPEAL RAISED BY T HE APPELLANT AND THE WRITTEN SUBMISSIONS HAVE BEEN CAREFULLY EXAMINED. A DMITTEDLY, THE UP-LINKING OF THE CONTENT IS BEING DONE FROM INDIA AND THE DOW N LINKING OF THE PROGRAM ALSO HAPPENS IN INDIA. FURTHER, THE TRANSPONDER CAP ACITY ALLOCATED TO THE APPELLANT AS PER THE SERVICE AGREEMENT CANNOT BE RE ALLOCATED TO ANOTHER PARTY AND THIS CAPACITY IS AVAILABLE TO THE APPELLANT 24 HRS A DAY, 7 DAYS A WEEK. 13. WITH REGARD TO THE APPELLANT'S CLAIM THAT CONTE NTS OF A TREATY CANNOT BE CHANGED BY INTRODUCING CHANGES IN THE ACT, IT IS SE EN THAT SUCH A SURMISE IS BASED ON WRONG SET OF FACTS, OECD IS KNOWN TO HAVE A MODEL DTAA WHICH IS FOLLOWED BY THE MEMBER COUNTRIES. HOWEVER, THE INTE RPRETATION OF VARIOUS ARTICLES CAN BE CHANGED BY MERELY CHANGING THE DEFI NITION OR THE INTERPRETATION OF THE TREATY TOTT IN THE COMMENTARY ISSUED BY THE OECD. HENCE, THE MEANING OF A WORD IN TREATY IS EFFECTIVELY ALTERED BY CHANG ING ITS INTERPRETATION IN THE COMMENTARY ALTHOUGH NO CHANGE IS EFFECTED TO THE LA NGUAGE IN THE TREATY. ACCEPTANCE OF 'SERVER' AS PE IS THE BIGGEST EXAMPLE OF SUCH CHANGE IN THE TREATY WITHOUT EFFECTING ANY CHANGE IN ARTICLE 5 OF THE MODEL CONVENTION. THE PRINCIPLE HAS BEEN UPHELD BY ITAT, MUMBAI IN THE AS SESSEE'S CASE VIZ. M/S VIACOM 18 MEDIA (P) LTD. [2014] 44 TAXMANN.COM 1 (M UMBAI - TRIB.) WHICH HAS BEEN DISCUSSED IN SUBSEQUENT PARAS. HENCE , THE CLAIM OF THE APPELLANT THAT BENEFICIAL PROVISIONS OF TREATY CANN OT BE TAKEN AWAY BY AMENDING THE ACT IS NOT FOUND ACCEPTABLE AND IS REJ ECTED. 14. THE FACTS OF THIS CASE ARE EXACTLY SIMILAR TO T HE ISSUES RAISED BEFORE THE L BENCH OF HON'BLE ITAT, ITANO. 1584/MUM/201G IN THE CASE OF M/S VIACOM 18 MEDIA [P] LTD. [2014] 44 TAXMANN.COM 1 [MUMBAI - TRIB.). THE HON'BLE ITAT, AFTER AN ELABORATE DISCUSSION ON THE FACTS OF THE CASE AND AFTER DISCUSSING THE REASON FOR DEVIATING FROM THE HON'BLE HIGH COUR T DECISION IN THE CASE OF ASIA SATELLITE (SUPRA), HAS ARRIVED AT A CONCLUSION THAT THE PAYMENT MADE TO THE 6 ITA 618/MUM/2017 NON-RESIDENT FOR SERVICES RELATING TO USE OF TRANSP ONDER CAPACITY CONSTITUTE ROYALTY, BOTH UNDER THE INCOME TAX ACT AS WELL AS U NDER THE INDIA-US TREATY, THE OPERATIVE PORTION OF THE IT AT JUDGMENT DETAILI NG THE FACTS AND CURRENT LAW ON THE ISSUE, IS REPRODUCED BELOW: '7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE QUESTION BEFORE US IS WHETH ER THE FEE PAYABLE BY THE ASSESSEE TO INTELSAT CORPORATION, A TAX RESIDEN T OF USA IS IN THE NATURE OF 'ROYALTY' IN THE LIGHT OF AMENDED PROVISI ONS OF SECTION 9(L)(VI) AS WELL AS UNDER ARTICLE 12 OFLNDO-US DTAA, THE ID. COUNSEL FOR THE ASSESSEE HAS GIVEN MUCH EMPHASIS ON THE SUBMISSION THAT ANY AMENDMENT IN THE ACT WOULD NOT AFFECT THE BENEFICIA L PROVISIONS OF DTAA AND CONSEQUENTLY THE PAYMENT BY THE ASSESSEE CANNOT BE TREATED AS ROYALTY BY UNILATERAL ACT OF AMENDMENT IN ACT. THER E IS NO QUARREL ON THIS POINT THAT AS PER SECTION 90(2)' IN RELATION TO THE ASSESSEE TO WHOM DTAA APPLIES, THE PROVISIONS OF ACT SHALL APPLY TO THE E XTENT THEY ARE MORE BENEFICIAL TO THAT ASSESSEE. IN OTHER WORDS IF THE ASSESSEE IS C?.'SD BY DTAA AND THE PROVISIONS OF DTAA ARE MORE BENEFICIAL THEN THERE IS NO NEED TO GO INTO THE PROVISIONS OF THE ACT. THE DECI SION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SIEMENS AK TIENGESELLSCHA/T (SUPRA) AS WELL AS IN THE CASE OFDIT V. INFRASOFT L TD. [2013] 39 TAXMANN.COM 88/[2014J 220 TAXMAN 273 (DELHI) ARE RE LEVANT ON THIS POINT. 8. THE TERM 'ROYALTY' HAS BEEN DEFINED IN DTAA AS W ELL AS IN THE ACT. AS PER ARTICLE 12(3) OF THE !NDO-US DTAA, THE TERM 'RO YALTY' IS DEFINED AS UNDER: 'ARTICLE 12- ROYALTIES AND FEES FOR INCLUDED SERVIC ES. THE TERM 'ROYALTIES' AS USE.D.M THIS, ARTICLE MEANS: PAYMENTS MADE OF ANY KIND RECEIVED AS CONSIDERATION 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 TE LEVISION, 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 GAINS DERIVED FROM THE ALIENATION OF ANY SUCH RIGHT OR PROPERTY WHICH ARE CONTINGENT ON THE PRODUCTIVITY, USE OF DISPOSITION THEREOF; AND PAYMENTS OF ANY KIND RECEIVED AS CONSIDERATION FOR THE USE OF, OR THE RIGHT TO USE, ANY INDUSTRIAL, COMMERCIAL OR SCIENTI FIC EQUIPMENT, OTHER THAN PAYMENTS DERIVED BY AN ENTERPRISE DESCRIBED IN PARAGRAPH 1 OF ARTICLE 8(SHIPPING AND AIR TRANSPORT) FROM ACTIVITI ES DESCRIBED IN PARAGRAPH 2(C) OR 3 OF ARTICLE 8. 9. THE DEFINITION OF ROYALTY UNDER THE ACT IS GIVEN IN EXPLANATION 2 OF SECTION 9(L)(VI) AS UNDER: INCOME BY WAY OF ROYALTY PAYABLE BY- 'EXPLANATION 2. FOR THE PURPOSES OF THIS CLAUSE, ' ROYALTY' MEANS CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION BUT EXCLUDING ANY 7 ITA 618/MUM/2017 CONSIDERATION WHICH WOULD BE THE INCOME OF THE RECI PIENT CHARGEABLE UNDER THE HEAD 'CAPITA! GAINS') FOR- THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING THE GR ANTING OF A (LICENCE) IN RESPECT OF A PATENT, INVENTION, MODEL, DESIGN, SECR ET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY: THE IMPARTING OF ANY INFORMATION CONCERNING THE WOR KING OF, OR THE USE OF, A PATENT, INVENTION, MODEL, DESIGN, SECRET FORM ULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY; THE USE OF ANY PATENT, INVENTION, MODEL, DESIGN, SE CRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY; THE IMPARTING OF ANY INFORMATION CONCERNING TECHNIC AL INDUSTRIAL, COMMERCIAL OR SCIENTIFIC KNOWLEDGE, EXPERIENCE OR S KILL ; THE USE OR RIGHT TO USE ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT BUT NOT INCLUDING THE AMOUNTS REFERRED TO IN SECTIO N 44BB; (V) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING THE GRANTI NG OF A (LICENCE) IN RESPECT OF ANY COPYRIGHT, LITERARY, ARTISTIC OR SCI ENTIFIC WORK INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONNECTION WITH TEL EVISION OR TAPES FOR USE IN CONNECTION WITH RADIO BROADCASTING, BUT NOT INCL UDING CONSIDERATION FOR THE SALE, DISTRIBUTION OR EXHIBITION OF CINEMAT OGRAPHIC FILMS; OR - THE RENDERING OF ANY SERVICES IN CONNECTION WITH TH E ACTIVITIES REFERRED TO IN SUB-CLAUSES (1) TO 93[(IV), (IVA) AND (V).' 10-SOFAR AS THE TERM ROYALTY' DEFINED IN THE EXPL ANATION 2 OF SECTION 9(1)(VI), THERE IS NO CHANGE OR AMENDMENT IN THE TE RM ROYALTY AS SUCH. THEREFORE, THE DEFINITION OF TERM ROYALTY REMAINED UNCHANGED DESPITE INSERTION OF EXPLANATION 6 BY FINANCE ACT 2012, EVE N OTHERWISE THE TERM 'ROYALTY' IS DEFINED IN THE DTAA, THEREFORE, ANY AM ENDMENT IN THE DEFINITION OF 'ROYALTY' AFFECTING ADVERSELY TO AN ASSESSES COVERED BY THE DTAA WOULD BE INCONSEQUENTIAL DUE TO THE PROTECTION OF DTAA. THE CLAUSE (B) OF ARTICLE 12(3) OF DTAA AND CLAUSE (IVA ) OF EXPLANATION 2 OF SECTION 9(L)(VI) ARE PARIMATERIA OF DTAA AND CLAUSE (I) TO (V) EXCEPT CLAUSE (IVA) ARE ALSO PARI MATERIAL. IT IS PERTINEN T TO NOTE THAT THERE IS NO CHANGE IN THE DEFINITION OF TERM 'ROYALTY' AS PROVI DED IN EXPLANATION 2 OF SECTION 9(L)(VI) OF THE ACT, BY VIRTUE OF THE RE TROSPECTIVE AMENDMENT INSERTING OF EXPLANATION 6 TO THIS CLAUSE OF SECTION 9(L)(VI). WE ARE CONCERNED WITH THE DEFINITION OF ROYALTY WHICH IS C OMMON UNDER THE DTAA AS WELL AS UNDER THE ACT TO THE EXTENT ' PAYM ENT OF ANY KIND RECEIVED AS CONSIDERATION FOR THE USE OF, OR THE RI GHT TO USE - ANY PROCESS, INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIP MENT'. THE TERM PROCESS, INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIP MENT ARE NOT DEFINED IN DTAA. THEREFORE, THE MEANING OF SUCH TERM UNDER THE ACT SHALL APPLY BY VIRTUE OF ARTICLE 3(2) OF INDO-US DTAA WHICH READS AS UN DER: ARTICLE 3 - GENERAL DEFINITIONS 'AS REGARDS THE APPLICATION OF THE CONVENTION BY A CONTRACTING STATE ANY TERM NOT DEFINED THEREIN SHALL, UNLESS THE CONTEXT OTHERWISE REQUIRES OR THE COMPETENT AUTHORITIES AGREE TO A COMMON MEANING PUR SUANT TO THE PROVISION OF ARTICLE 27 (MUTUAL AGREEMENT PROCEDURE], HAVE TH E MEANING WHICH IT HAS 8 ITA 618/MUM/2017 UNDER THE LAWS OF THAT STATE CONCERNING THE TAXES T O WHICH THE CONVENTION APPLIES' 11. APART FROM THE ORDINARY CONTEXTUAL MEANING, THE TER M PROCESS HAS BEEN DEFINED IN EXPLANATION 6 OF SECTION 9(L)(VI) OF THE ACT AS UNDER: 'EXPLANATION 6.FOR THE REMOVAL OF DOUBTS, IT IS HE REBY CLARIFIED THAT THE EXPRESSION 'PROCESS' INCLUDES AND SHALL BE DEEMED T O HAVE ALWAYS INCLUDED TRANSMISSION BY SATELLITE (INCLUDING UP-LINKING, AM PLIFICATION, CONVERSION FOR DOWN-LINKING OF ANY SIGNAL), CABLE, OPTIC FIBRE OR BY ANY OTHER SIMILAR TECHNOLOGY, WHETHER OR NOT SUCH PROCESS IS SECRET;' 12. THE INTRODUCTION OF EXPLANATION 6 WITH RETROSPECTIV E EFFECT W.E.F 1.6.1976 IS AN EXPRESSION AS INTENDED BY THE LEGISL ATURE OF THE MEANING OF TERM PROCESS IN THE CONTEXT OF TRANSMISSION BY SATE LLITE IS CLARIFICATORY IN NATURE AND, THEREFORE, IT DOES NOT AMEND THE DEFINI TION OF ROYALTY PER SE.THERE IS NO QUARREL ON THE POINT THAT ANY PAYMEN T FOR USE OR RIGHT TO USE OF PROCESS IS IN THE NATURE OF ROYALTY AS PER THE P ROVISIONS OF ARTICLE 12(3) OF DTAA AS WELL AS THE EXPLANATION 2 OF SECTION 9(L)(V I) OF THE ACT. SINCE THE TERM PROCESS IS NOT DEFINED UNDER THE DTAA, THEREFO RE, BY VIRTUE OF ARTICLE 3(2) OF THE INDO-US DTAA, THE MEANING OF TERM PROCE SS AS DEFINED IN THE ACT WOULD APPLY FOR THIS PURPOSE. WE SAY SO AS A WO RD 'PROCESS' IS A TERM OF WIDE IMPORT AND, ACCORDINGLY, HAS TO BE CONSTRUED I N A GENERIC SENSE. THE SAME HAS IN FACT BEEN THE SUBJECT MATTER OF ELUCIDA TION BY THE HO 'BLE APEX COURT IN A NUMBER OF CASES, VIZ. CHILLIES EXPORTS L TD. V. CIT [1997] 225 ITR 814/92 TAXMAN 68 (SQ;UJAGAR PRINTS V. UNION OF INDI A [1989] 179 ITR 317 (SC); DY. CST, BOARD OF REVENUE (TAXES) V. PIO FOOD PACKERS [1980] 46 STC 63 (SC), EXPLAINING THE SAME IN THE CONTEXT OF PROCESSING OF GOODS, WHICH THOUGH WOULD APPLY AND HOLD. THERE IS NOTHING IN THE LANGUAGE OF THE RELEVANT PROVISION/S OF EITHER THE ACT OR OF THE DT AA CONSTRICTING OR RESTRICTING THE SCOPE OF THE TERM, WHICH HAS THUS T O BE EXAMINED AND CONSIDERED CONTEXTUALLY. AS SUCH, EVEN DE HORS EXPL ANATION 6 TO SECTION 9(L)(VI), WHICH ONLY ABUNDANTLY CLARIFIES MATTERS, A PROCESS COULD ONLY REASONABLY BE REGARDED AS INCLUDING A PROCESS/ES AS SPECIFIED IN EXPLANATION 6 (SUPRA). THE SAME MUST, THEREFORE, BE REGARDED AS WITHIN THE CONTEMPLATION OF THE SAID TERM AND, THUS, THE TERM 'ROYALTY' AS DEFINED BY EXPLANATION 2 TO SECTION 9(L)(VI) AND ARTICLE 12(3) OF THE INDO-US DTAA. THE FOREGOING, HOWEVER, DOES NOT DETRACT FROM THE F ACT THAT THE TERM 'PROCESS' BEING NOT DEFINED, THE EXTANT DEFINITION OF THE SAME, I.E. AS PER THE DOMESTIC LAW, SHALL APPLY IN TERMS OF ARTICLE 3(2) OF THE SAID TREATY. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VERIZON CO MMUNICATIONS SINGAPORE (P.) LTD. (SUPRA) WHILE CONSIDERING AN IDENTICAL ISSUE HAS OBSERVED IN PARA 33 AS UNDER: '33. FACED WITH THE DECISIONS OF THE AUT HORITY FOR ADVANCE RULING, EXPLANATIONS 4 AND 5 WERE INSERTED UNDER FINANCE AC T, 2012, WITH EFFECT FROM 01.06.1976. UNDER EXPLANATION 5, THE LEGISLATURE SO UGHT TO CLARIFY THE DEFINITION OF 'ROYALTY' TO INCLUDE THE CONSIDERATIO N IN RESPECT OF ANY RIGHT, PROPERTY OR INFORMATION WHETHER OR NOT POSSESSION O R CONTROL OF SUCH RIGHT, PROPERTY OR INFORMATION IS WITH THE PAYER; SUCH RIG HT, PROPERTY OR INFORMATION IS USED DIRECTLY BY THE PAYER; THE LOCA TION OF SUCH RIGHT, PROPERTY OR INFORMATION IS IN INDIA. EXPLANATION 6 FURTHER CLARIFIES THAT THE EXPRESSION 'PROCESS' INCLUDED TRANSMISSION BY SATEL LITE (INCLUDING UP-LINKING, 9 ITA 618/MUM/2017 AMPLIFICATION, CONVERSION FOR DOWN-LINKING OF ANY S IGNAL), CABLE, OPTIC FIBRE OR BY ANY OTHER SIMILAR TECHNOLOGY, WHETHER OR NOT SUCH PROCESS IS SECRET. THUS, AFTER THE AMENDMENT INTRODUCED IN THE YEAR 20 12, WITH EFFECT FROM 01.06.1976, IRRESPECTIVE OF POSSESSION, CONTROL WIT H THE PAYER OR USE BY THE PAYER OR THE LOCATION IN INDIA, THE CONSIDERATION W OULD NEVERTHELESS BE TREATED AS 'ROYALTY'. THE DECISIONS CITED, HENCE, C ANNOT BE PRESSED INTO SERVICE TO UNDERSTAND THE SCOPE OF THE EXPRESSION ' ROYALTY'.' 13. THE EXPRESSION PROCESS HAS BEEN UNDERSTOOD BY T HE HON'BLE HIGH COURT IN THE LIGHT OF EXPLANATION 6 INSERTED BY THE FINANCE ACT 2012 W.E.F 1.6.1976 AND IT WAS OBSERVED THAT THE DECISION RELIED UPON BY THE ASSES SEE CANNOT BE PRESSED INTO SERVICE TO UNDERSTAND THE SCOPE OF EXPRESSION ROYAL TY WHILE DISTINGUISHING THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF ASIA SATELLITE COMMUNICATION CO. LTD (SUPRA), THE HON 'BLE MADRAS HIGH COURT IN PARA 42 AND 43 HAS HELD AS UNDER: '42. THE DECISION RELIED ON BY THE ASSESSEE, PARTIC ULARLY WITH REFERENCE TO THE DELHI HIGH COURT REPORTED IN 332 ITR 340 (ASIA SATELLITE V. DIT) IS ALSO '-''''''-' DISTINGUISHABLE. THIS RELATES' TFF'A C ASE OF*AN ASSESSEE/LESSEE OF A SATELLITE CALLED ASIASAT 1 WHICH WAS LAUNCHED IN AP RIL 1990 AND WAS THE OWNER OF A SATELLITE CALLED ASIASAT 2 WHICH WAS LAU NCHED IN NOVEMBER 1995. THESE SATELLITES WERE LAUNCHED BY THE APPELLANT AND WERE PLACED IN A GEOSTATIONARY ORBIT IN ORBITAL SLOTS, WHICH INITIAL LY WERE ALLOTTED BY THE INTERNATIONAL TELECOMMUNICATION UNION TO UK, AND SU BSEQUENTLY HANDED OVER TO CHINA, THESE SATELLITES NEITHER USE INDIAN ORBITAL SLOTS NOR ARE THEY POSITIONED OVER INDIAN AIRSPACE. THE FOOTPRINTS OF ASIASAT 1 AND ASIASAT 2 EXTEND OVER FOUR CONTINENTS, VIZ., ASIA, AUSTRALIA, EASTERN EUROPE AND NORTHERN AFRICA. IT ENTERS INTO AN AGREEMENT WITH T V CHANNELS, COMMUNICATION COMPANIES OR OTHER COMPANIES WHO DESI RE TO UTILIZE THE TRANSPONDER CAPACITY AVAILABLE ON THE APPELLANT'S S ATELLITE TO RELAY THEIR SIGNALS. THE CUSTOMERS HAVE THEIR OWN RELAYING FACI LITIES, WHICH ARE NOT SITUATED IN INDIA. FROM THESE FACILITIES, THE SIGNA LS ARE BEAMED IN SPACE WHERE THEY ARE RECEIVED BY A TRANSPONDER LOCATED IN THE APPELLANT'S SATELLITE. THE TRANSPONDER RECEIVES THE SIGNALS AND ON ACCOUNT OF THE DISTANCE THE SIGNALS HAVE TRAVELLED, THEY ARE REQUIRED TO BE AMP LIFIED. THE AMPLIFICATION IS A SIMPLE ELECTRICAL OPERATION. THEREAFTER, THE F REQUENCY ON WHICH THE SIGNALS ARE TO BE DOWNLINKED IS CHANGED ONLY IN ORD ER TO FACILITATE THE TRANSMISSION OF SIGNALS SO THAT, THERE IS NO DISTOR TION BETWEEN THE SIGNALS THAT ARE BEING RECEIVED AND THE SIGNALS THAT ARE BE ING RELAYED FROM THE TRANSPONDER. THE TRANSPONDER OPERATIONS ARE COMMONL Y KNOWN, WHICH ARE CARRIED OUT NOT ONLY IN SATELLITE TRANSMISSION BUT ALSO IN THE CASE OF TERRESTRIAL TRANSMISSION. THERE IS NO CHANGE IN THE CONTENT OF THE SIGNALS WHATSOEVER THAT IS CARRIED OUT BY THE APPELLANT IN THE TRANSPONDER. THEREAFTER, THE SIGNALS LEAVE THE TRANSPONDER AND A RE RELAYED OVER THE ENTIRE FOOTPRINT AREA WHERE THEY CAN BE RECEIVED BY THE FACILITIES OF THE APPELLANT'S CUSTOMERS OR THEIR CUSTOMERS. ITS ROLE IS CONFINED IN SPACE WHERE THE TRANSPONDER WHICH IT MAKES AVAILABLE TO I TS CUSTOMERS PERFORMS A FUNCTION WHICH IT IS DESIGNED TO PERFORM . IT IS CLAIMED BY THE APPELLANT THAT NO PAN OF THE INCOME GENERATED BY IT FROM THE CUSTOMERS TO WHOM THE AFORESAID SERVICES ARE PROVIDED WAS CHARGE ABLE TO TAX IN INDIA 10 ITA 618/MUM/2017 AND FOR THIS REASON NO RETURN INCOME WAS FILED IN I NDIA. THE TRIBUNAL FOUND THAT THE TRANSPONDER WAS NOT EQUIPMENT AND HE NCE THE PAYMENT MADE BY THE TV CHANNELS TO THE APPELLANT COULD NOT BE REGARDED AS ONE FOR USE OF EQUIPMENT. THE TRIBUNAL HELD THAT THE AP PELLANT HAD NOT LEASED OUT ANY EQUIPMENT BUT HAD ONLY MADE AVAILABLE THE P ROCESS THAT WAS CARRIED OUT IN THE TRANSPONDER TO ITS CUSTOMERS. IN SOFAR AS INCOME EARNED BY THE APPELLANT FROM ITS CUSTOMERS IN INDIA IS CON CERNED, THE TRIBUNAL HELD THAT THIS WOULD QUALIFY AS 'ROYALTY' AS DEFINE D IN EXPLANATION 2 TO SECTION 9(L)(VI) OF THE ACT 43.THEREFORE, ISSUES WHICH AROSE FOR CONSIDERATION IN THE APPEAL BEFORE THE DELHI HIGH COURT RELATED TO CLAUSES (I), (VI) A ND FVII} OF SUB-SECTION (1) OF THE SECTION 9 OF THE ACT. THE HIGH COURT HEL D THAT EVEN WHEN THE APPELLANT HAD BUSINESS CONNECTION IN INDIA, NO PART OF THE APPELLANT'S INCOME WAS CHARGEABLE TO TAX IN INDIA IN TERMS OF S ECTION 9 (L)(I) T AS NO OPERATIONS TO EARN THE INCOME WERE CARRIED ON IAJND IA. THE DELHI HIGH COURT HELD THAT CARRYING OUT THE OPERATIONS IN INDI A, WHOLLY OR AT LEAST PARTLY, IS SINE QUA NON FOR THE APPLICATION OF CLAU SE (I) OF SUB-SECTION (1) OF SECTION 9 OF THE ACT. MERELY BECAUSE THE FOOTPRI NT AREA INCLUDED INDIA AND ULTIMATE CONSUMERS/VIEWERS ARE WATCHING THE PRO GRAMMES IN INDIA, EVEN WHEN THEY ARE UPLINKED AND RELAYED OUTSIDE IND IA, WOULD NOT MEAN THAT THE APPELLANT IS CARRYING OUT ITS BUSINESS OPE RATIONS IN INDIA. NO MACHINERY OR COMPUTER, ETC. IS INSTALLED BY THE APP ELLANT IN INDIA THROUGH WHICH THE PROGRAMMES ARE REACHING INDIA. THE PROCES S OF AMPLIFYING AND RELAYING THE PROGRAMMES IS PERFORMED IN THE SAT ELLITE WHICH IS NOT SITUATED IN THE INDIAN AIRSPACE. THE TRANSPONDER FU NCTIONED ON ITS OWN. THE HIGH COURT HELD THAT THE TERMS 'LEASE OF TRANSP ONDER CAPACITY', 'LESSOR', 'LESSEE' AND 'RENTAL' USED IN THE AGREEME NT WOULD NOT BE THE DETERMINATIVE FACTORS. IT IS THE SUBSTANCE OF THE A GREEMENT WHICH IS TO BE SEEN. THE HIGH COURT WENT THROUGH THE VARIOUS CLAUS ES OF THE SAID AGREEMENT AND HELD THAT THE CONTROL ALWAYS REMAINED WITH THE APPELLANT AND THE APPELLANT HAD MERELY GIVEN ACCESS TO A BROA DBAND AVAILABLE WITH THE TRANSPONDER, TO PARTICULAR CUSTOMERS. MERELY BE CAUSE THE TRANSPONDER HAS ITS FOOTPRINT ON VARIOUS CONTINENTS , IT WOULD NOT MEAN THAT THE PROCESS HAS TAKEN PLACE IN INDIA. THUS THE DELHI HIGH COURT FOLLOWED THE DECISION OF THE APEX COURT REPORTED IN [2007] 288 ITR 408 (ISHIKAWAJAMA-HARIMA HEAVY INDUSTRIES LTD. V. DIREC TOR OF INCOME TAX} AND HELD THAT SERVICES RENDERED OUTSIDE INDIA WOULD HAVE NOTHING TO DO WITH THE PERMANENT ESTABLISHMENT IN INDIA AND HENCE THERE WAS NO PROCESS CARRIED OUT IN INDIA OR WAS THERE ANY BUSIN ESS IN INDIA WHICH COULD BE ATTRIBUTED TO THE INDIAN TERRITORY. THUS T HE HIGH COURT HELD THAT THE INCOME EARNED BY THE ASSESEE WOULD NOT QUALIFY AS 'ROYALTY', AS DEFINED IN EXPLANATION 2 TO SECTION 9(L)(VI) OF THE INCOME TAX ACT. AS SEEN FROM THE FACTS, THE SAID JUDGMENT WAS RENDERED IN THE YEAR 2011 T MUCH BEFORE THE AMENDMENT UNDER FINANCE ACT, 2012. FURTHER AFTER THE DECISION REPORTED IN [[2007] 288 ITR 408 (ISHIKAWAJAMA-HARIMA HEAVY INDUSTRIES LTD. V. DIRECTOR OF INCOME TAX) AN EXPLA NATION WAS INSERTED BELOW SUBSECTION 2 OF SECTION 9, WITH EFFECT FROM 0 1.06.1976 UNDER 11 ITA 618/MUM/2017 FINANCE ACT, 2007 TO GET OVER THE DECISION OF THE S UPREME COURT. HENCE THIS DECISION OF THE DELHI HIGH COURT IS DISTINGUIS HABLE AND HAS NO RELEVANCE TO THE CASE ON HAND WHICH HAS TO BE CONSI DERED ON THE STRENGTH OF THE LAW PREVAILING NOW.' 14. AFTER CONSIDERING THE DEFINITION OF ROYALTY UND ER ARTICLE 12 OF THE DTAA AS WELL AS U/S 9(L)(VI), THE HON'BLE HIGH COURT HAD HE LD THAT THE DEFINITION OF ROYALTY UNDER DTAA AND INDIAN INCOME TAX ACT ARE PA RIMATERIA IN PARA 100 AS UNDER: '100. THE DEFINITION OF 'ROYALTY' UNDER DTAA AND TH E INDIAN INCOME TAX ACT ARE IN PARIMATERIA. AS RIGHTLY POINTED OUT BY T HE REVENUE, EXPLANATION 6 DEFINES 'PROCESS' TO MEAN AND INCLUDE TRANSMISSION BY SATELLITE (INCLUDING UPLINKING, AMPLIFICATION, CONV ERSION FOR DOWNLINKING OF ANY SIGNAL) CABLE, OPTIC FIBRE, OR BY ANY OTHER SIMILAR TECHNOLOGY, WHETHER OR NOT SUCH PROCESS IS SECRET. THUS, APART FROM THE RELEVANCE AND APPLICABILITY OF CLAUSE (IVA) THAT THE PAYMENT IS F OR THE USE OR RIGHT TO USE OF THE EQUIPMENT, THE TRIBUNAL HELD THAT THE PA YMENT FOR THE BANDWIDTH AMOUNTS TO ROYALTY FOR THE USE OF THE PROCESS. THE TRIBUNAL ALSO POINTED OUT THAT OUT BY REASON OF THE LONG DIS TANCE, TO MAINTAIN THE REQUIRED SPEED, BOOSTERS ARE KEPT AT PERIODICAL INT ERVALS. GOING BY THIS TOO, IN ANY EVENT, THE PAYMENT RECEIVED BY THE ASSE SSES WAS RIGHTLY ASSESSED AS 'ROYALTY' AND WOULD CONSTITUTE SO FOR T HE PURPOSES OF DTAA.' 15. TURNING TO THE FACTS OF THE ASSESSEE'S CASE THE UNDISPUTED FACTS ARE THAT THE PAYMENTS IN QUESTION WAS PAYABLE TO THE INTELSAT IS FOR USER OF TRANSPONDER CAPACITY BY THE ASSESSEE FOR TELECASTINQ/BROADCASTI NG OF ITS VARIOUS PROGRAMMES ON TELEVISION CHANNELS INCLUDING MARKETING AND ADVERTISING AIRTIME ETC. THE HON'BLE DELHI HIGHCOURT IN THE CASE OF ASIA SATELLITE COMMUNICATION CO. LTD (SUPRA) OUSTED THE 'ROYALTY' TO THE_SAID TRANSACTION, ON THE PREMISE OF TERRITORIAL JURISDICTION IN-AS-MUCH AS THE SAID 'PROCESS' WAS NOT BEING USED IN INDIA. HOWEVER, SAID DECISION ENDORS ES THE CONCEPTUAL UNDERSTANDING OF TERM 'PROCESS', I.E., AS EXPLAINED BV US AT PARA 12 OF THIS ORDER. EVEN, THE SAME, IF AT ALL, IMPINGES ON EXPIA NATION 5 TO SECTION9(L)(VI), HAS NOTHING TO DO WITH EXPLANATION 6 THERETO. IN FA CT, TO OUR MIND, IT IS NOT THE SITUS OF THE PROPERTY OR THE PROCESS, BUT OF THE RI GHTS THEREIN, THAT IS RELEVANT WITHOUT DOUBT, THE RIGHTS IN OR FOR THE USE OF THE PROCESS VESTING IN THE ASSESSEE ARE, THUS, LOCATED IN INDIA, WHEREAT THE SIGNALS AR E DOWNLINKED AS ALSO UPLINKED FROM. AGAIN, THE SAME HAS TO BE READ IN CO NJUNCTION WITH EXPLANATION BELOW SECTION 9(2), INSERTED ON THE STATUTE BY FINA NCE ACT, 2007 W.E.F. 01.06.1976.THE DECISION IN THE CASE OF ASIA SATELLI TE COMMUNICATION CO. LTD (SUPRA) IS THUS COMPLETELY INAPPLICABLE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, EVEN AS CLARIFIED BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VERIZON COMMUNICATIONS SINGAPORE (P.) LTD.(SUPRA). THE USE OF TRANSPONDER BY THE ASSESSEE FOR TELECASTING/BROADCASTING THE PROGRAMME INVOLVES THE TRANSMISSION BY THE SATELLITE INCLUDING UPLINKING, AMPLIFICATION, C ONVERSION FOR DOWNLINKING OF SIGNALS WHICH FALLS IN THE EXPRESSION 'PROCESS' AS PER EXPLANATION 6 OF SECTION 9(L)(VI). HENCE THE PAYMENTS MADE FOR USE/ RIGHT TO USE OF PROCESS FALLS IN THE AMBIT OF EXPRESSION 'ROYALTY' AS PER DTAA AS WELL A S PROVISIONS OF INCOME TAX ACT. 12 ITA 618/MUM/2017 16. IN THE CASE OF SIEMENS AKTIENGESELLSCHAFT (SUPRA) T HE QUESTION BEFORE THE HON 'BLE HIGH COURT WAS THAT WHEN THE PAYMENT DOES NOT FALL UNDER THE TERM OF ROYALTY AS PER THE PROVISIONS OF DTAA, THE SAME CAN BE TAXE D AS ROYALTY IN TERMS OF THE DEFINITION IN THE ACT. THUS IT IS CLEAR THAT THE PA YMENT IN THE SAID CASE WAS NOT FOUND AS ROYALTY IN TERMS OF DTAA BETWEEN INDIA AND GERMANY. HOWEVER IT WAS TAXED BY THE REVENUE AUTHORITIES ON THE BASIS OF TH E DEFINITION OF ROYALTY AS PER THE INCOME TAX ACT, THE HON'BLE HIGH COURT HAS HELD IN PARA 40 AND 41 AS UNDER: 40 IN OUR OPINION, EVEN IN THE ABSENCE OF ROYALTY BEING DEFINED UNDER THE CLAUSES OF THE AGREEMENT, IF IT AMOUNTS TO ANY INDU STRIAL OR COMMERCIAL PROFIT IT WOULD BE TAXABLE UNDER CLAUSE HI PROVIDED THERE IS A PE IN INDIA UNLESS WE HOLD THAT CONSIDERING THE EXPLANATION TO SECTION 9 BROUGHT BY THE FINANCE ACT, 2007 THE REQUIREMENT OFPE IS NOW OF NO CONSEQUENCE.' '41 WHILE CONSIDERING THE DTAA THE EXPRESSION 'LAW IN FORCE' WOULD NOT ONLY INCLUDE A TAX ALREADY COVERED BY THE TREATY BU T WOULD ALSO INCLUDE ANY OTHER TAX AS TAXES OF A SUBSTANTIALLY SIMILAR CHARA CTER SUBSEQUENT TO THE DATE OF THE AGREEMENT AS SET OUT IN ARTICLE 1(2). CONSID ERING THE EXPRESS LANGUAGE OF ARTICLE 1(2) IT IS NOT POSSIBLE TO ACCEPT THE BR OAD PROPOSITION URGED ON BEHALF OF THE ASSESSEE THAT THE LAW WOULD BE THE LA W AS WAS APPLICABLE OR AS DEFINED WHEN THE DTAA WAS ENTERED INTO. THE QUESTIO N HOWEVER, WOULD STILL REMAIN, WHETHER THE INCOME BY WAY OF ROYALTIES OTHE R THAN THOSE INCLUDED IN ARTICLE 111(3) ARE SUBJECT TO TAX IN INDIA CONSIDER ING THE DTAA WHEN THERE IS NO PE'.' 17. THUS IT IS CLEAR THAT IN THE CASE OF SIEMENS AK TIENGESELLSCHAFT (SUPRA) IT WAS FOUND THAT THE PAYMENT WAS NOT ROYALTY AS DEFINED I N THE CLAUSES OF AGREEMENT AND, THEREFORE, IT COULD NOT BE TAXED AS ROYALTY AS PER THE PROVISIONS OF THE ACT. THE HON'BLE HIGH COURT THOUGH WAS OF THE VIEW THAT IF ANY TERM IS NOT AT ALL DEFINED IN THE TREATY THEN CONSIDERING THE EXPRESS LANGUAGE OF ARTICLE 1(2) OF THE INDO-GERMAN DTAA, THE TERM DEFINED IN THE ACT EVEN BY SUBSEQUENT TO THE DATE OF AGREEMENT WOULD BE APPLICABLE AS SET OUT IN THE ART ICLE 1(2) OF THE TREATY. THEREFORE, THE SAID DECISION WILL NOT HELP THE CASE OF THE ASSESSEE BEFORE US BECAUSE THE EXPLANATION 6 DEFINES THE TERM PROCESS AND NOT ROYALTY AND FURTHER THERE IS NO CHANGE IN THE DEFINITION OF ROYALTY BY VIRTUE OF EXPLANATION 6. THE OTHER DECISIONS RELIED UPON BY THE ASSESSEE ARE BAS ED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF ASIA SATELLITE COMM UNICATION CO. LTD (SUPRA) WHICH WAS PRIOR TO THE AMENDMENT AND WITHOUT CONSID ERING THE EXPLANATION 6 AS WELL AS EXPLANATION BELOW SUB-SECTION (2) OF SECTIO N 9. FURTHER THE BENEFIT OF THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE O F VERIZON COMMUNICATIONS SINGAPORE PTE. LTD (SUPRA) WAS NOT AVAILABLE AT THE TIME OF THOSE DECISIONS, THEREFORE, THE SAME ARE NOT APPLICABLE IN THE FACTS OF THE ASSESSEE'S CASE. IN FACT, THE SAID DECISION, BASED ON THE SITUS OF THE PROCES S ITSELF SUPPORTS THE REVENUE'S CASE OF THE SAME BEING A PROCESS AS CONTEMPLATED UN DER EXPLANATION 2 TO S. 18. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW. 15. THE FACTS OF THE PRESENT CASE ARE EXACTLY SIMIL AR TO THE ABOVE CASE. THE HON'BLE ITAT, HAVING ALREADY FACTORED ALL THE ISSUES RAISED BY THE APPELLANT BEFORE THIS OFFICE AND HAVING CONSIDERED THE JUDGMENT OF THE HON'BLE H IGH COURT IN THE CASE OF ASIA SATELLITE (SUPRA) EXTENSIVELY QUOTED AND RELIED ON BY THE APPELLANT, HAS COME TO A CONCLUSION THAT SUBSEQUENT TO THE AMENDMENT INTRODU CING THE DEFINITION OF WORD 'PROCESS', THE PAYMENT MADE BY THE APPELLANT TO INT ELSAT IS LIABLE TO BE CATEGORISED AS 13 ITA 618/MUM/2017 ROYALTY UNDER ARTICLE 12 OF THE INDIA US DTAA AS WE LL AS SECTION 9(L)(VI) OF THE INCOME TAX ACT. THIS DECISION HAS BEEN CONFIRMED BY ITAT IN OTHER SIMILAR DECISIONS LIKE ITA NO. 2910 & 2911/MUM/2012 AND ITA NO.5143/MUM/2013. 16. THE APPELLANT HAS STRESSED THE NEED FOR THE PRO CESS-TO BE A SECRET PROCESS IN ORDER TO FALL WITHIN THE AMBIT OF ROYALTY. HOWEVER, SUCH A REQUIREMENT HAS NEITHER BEEN READ INTO THE SECTION BY THE HON'BLE HIGH COUR T IN ASIA SATELLITE NOR BY THE JTAT IN THE ABOVE JUDGMENT. IN FACT, THE LANGUAGE O F THE ACT IS CLEAR ENOUGH NOT TO WARRANT USE OF THE PREFIX 'SECRET' WITH THE WORD PR OCESS. WITH THE AMENDMENT, THE ISSUE HAS BECOME FURTHER CLEAR. 17. THIS ISSUE HAS BEEN DISCUSSED AT LENGTH IN THE ASSESSEE'S OWN CASE BY MY PREDECESSOR IN AY 2013-14, WHEREIN THE ISSUE HAS BE EN DECIDED AGAINST THE APPELLANT. 18. 1 HAVE CONSIDERED THE APPELLANT'S AR SUBMISSION . HAVING CONSIDERED THE SAME, I FIND THAT THE ISSUE INVOLVED IN THIS APPEAL IS COV ERED AGAINST THE APPELLANT BY THE ORDER OF JURISDICTIONAL INCOME-TAX APPELLATE TRIBUN AL, MUMBAI BENCH ORDER NO.ITA 1584/MUM/2010 IN A.Y.2009-10 IN APPELLANT'S OWN CAS E, WHEREIN THE HON'BLE ITAT HAS HELD AS UNDER: 'THUS IT IS CLEAR THAT IN THE CASE OF SIEMENS AKTIE NGESELLSCHAFT (SUPRA) IT WAS FOUND THE PAYMENT WAS NOT ROYALTY AS DEFINED IN THE CLAUSES OF AGREEMENT AND, THEREFORE, IT COULD NOT BE TAXED AS ROYALTY AS PER THE PROVISIONS OF THE ACT. THE HON'BLE HIGH COURT THOUG H WAS OF THE VIEW THAT IF ANY TERM IS NOT AT ALL DEFINED IN THE TREATY THEN C ONSIDERING THE EXPRESS LANGUAGE OF ARTICLE 1(2) OF THE INDO-GERMAN DTAA, T HE TERM DEFINED IN THE ACT EVEN BY SUBSEQUENT TO THE DATE OF AGREEMENT WOU LD BE APPLICABLE AS SET OUT IN THE ARTICLE 1(2) OF THE TREATY. THEREFORE, T HE SAID DECISION WILL NOT HELP THE CASE OF THE ASSESSEE BEFORE US BECAUSE THE EXPL ANATION 6 DEFINES THE TERM PROCESS AND NOT ROYALTY AND FURTHER THERE IS N O CHANGE IN THE DEFINITION OF ROYALTY BY VIRTUE OF EXPLANATION 6. THE OTHER DE CISIONS RELIED UPON BY THE ASSESSEE ARE BASED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF ASIA SATELLITE COMMUNICATION CO.LTD. (SUPRA) WHI CH WAS PRIOR TO THE AMENDMENT AND WITHOUT CONSIDERING THE EXPLANATION 6 AS WELL AS EXPLANATION BELOW SUB-SECTION (2) OF SECTION 9. FUR THER THE BENEFIT OF THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE O F VERIZON COMMUNICATIONS SINGAPORE PTE. LTD. (SUPRA) WAS NOT AVAILABLE AT THE LIME OF CHOSE DECISIONS, THEREFORE, THE SAME ARE NOT APP LICABLE IN THE FACTS OF ' THE ASSESSEE'S CASE. IN FACT, THE SAID DECISION, BASED ON THE SITUS OF THE PROCESS ITSELF SUPPORTS THE REVENUE'S CASE OF THE SAME BEIN G A PROCESS AS CONTEMPLATED UNDER EXPLANATION 2 TO S,9(L)(VI). IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW.' 19. IN LIGHT OF THE ABOVE DISCUSSION, IT IS HELD TH AT THE PAYMENT MADE BY THE APPELLANT TO INTELSAT CONSTITUTES ROYALTY BOTH UNDE R THE INCOME TAX ACT AS WELL AS UNDER OF THE INDIA USA DTAA AND HENCE, LIABLE TO TAX IN INDIA. SINCE THERE IS NO DISPUTE OVER THE RESIDENT STATUS OF THE NON-R ESIDENT, TAXES UNDER SECTION 195 WOULD BE DEDUCTIBLE AT RATES SPECIFIED IN THE I NDIA UK DTAA. THUS, THIS GROUND OF APPEAL IS DISMISSED. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE I S IN APPEAL BEFOR E US. 14 ITA 618/MUM/2017 5. THE LD.AR FOR THE ASSESSEE, AT THE TIME OF HEARI NG SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT, MUMBAI BENCH L IN ASSESSEES OWN CASE FOR AYS 2013-14 TO 2015-16 IN IYA NOS. 599 TO 614/MUM/2016, WHERE UNDER SIMILAR SET OF FACTS, THE ITAT HELD THA T WHEN PAYMENT RECEIVED BY THE INTELSAT CORPORATION, USA HAS BEEN HELD TO BE NOT CHARGEABLE TO INCOME-TAX IN THE HANDS OF THE RECIPI ENT, THEN IT EMERGES THAT NO LIABILITY IS FASTENED ON THE ASSESSEE-PAYER TO DEDUCT TAX AT SOURCE ON PAYMENT MADE TO INTELSAT CORPORATION, USA . THE LD.AR FURTHER SUBMITTED THAT SUBSEQUENT TO THE JUDGMENT I N ASSESSEES OWN CASE FOR AY 2009-10, A SERIES OF JUDGEMENTS HAVE CO ME IN FAVOUR OF THE ASSESSES WHEREIN IT WAS CATEGORICALLY HELD THAT UNL ESS DTAA IS AMENDED JOINTLY BY BOTH PARTIES TO INCORPORATE INCO ME, DATA TRANSMISSION SERVICES HAS PARTAKING NATURE OF ROYALTY AND CANNOT DEFINE IN A MANNER SO THAT SUCH INCOME AUTOMATICALLY BECOME ROYALTY. FINANCE ACT, 2012 WHICH INSERTED EXPLANATIONS 4, 5 & 6 TO SECTION 9(1 )(VI) ITSELF WOULD NOT AFFECT MEANING OF TERM ROYALTY AS MENTIONED IN AR TICLE 12 OF DTAA. THE LD.AR FURTHER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF INTELSAT CORPORATION IN I.T.A. NO.530 OF 20 12 HELD THAT AMOUNT RECEIVED BY INTELSAT CORPORATION FROM INDIAN SUBSCR IBERS TOWARDS TRANSPONDER SERVICES IS NOT TAXABLE IN INDIA. THER EFORE, THE PROVISIONS OF 15 ITA 618/MUM/2017 WITHHOLDING TAX U/S 195 HAS NO APPLICATION. 6. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED THE ORDER OF THE LD.CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL S AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE SOLITARY ISSUE THAT CAME UP FOR OUR CONSIDERATION IS WHETHER PAYMENTS MADE BY THE ASSESSEE TO INTELSAT CORPORATION, USA FOR RENDE RING TRANSPONDER SERVICES IS LIABLE FOR WITHHOLDING TAX U/S 195 OF T HE INCOME-TAX ACT, 1961. THE ISSUE IS NO LONGER RES INTEGRA. THE ITAT, MUMB AI BENCH L IN ASSESSEES OWN CASE FOR AY 2013-14 TO 2015-16 IN IT AS NO.599 TO 614/MUM/2016 HAS CONSIDERED THE ISSUE IN THE LIGHT OF PROVISIONS OF SECTION 9(1)(VI) AND ARTICLE 12 OF THE INDIA USA TA X TREATY AND ALSO BY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT (INTERNATIONAL TAXATION) VS INTELSAT CORPORATION HE LD THAT 2011 (8) TMI 1248 HELD THAT NO LIABILITY ON THE PART OF THE ASSE SSEE TO DEDUCT TAX AT SOURCE ON PAYMENT MADE TO INTELSAT CORPORATION, USA AS THE AMOUNT RECEIVED BY THE INTELSAT CORPORATION, USA IS HELD T O BE NOT CHARGEABLE TO INCOME-TAX IN INDIA. THE RELEVANT OBSERVATIONS OF THE CO-ORDINATE BENCH IS EXTRACTED BELOW:- 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE NOTE THAT THE HON'BLE APEX COURT IN THE CASE OF G. E. TECHNOLOGY CENTRE PVT. LTD. (SUPRA), HAS HELD THAT WHERE AN AMOUNT IS PAYABLE TO A NON-R ESIDENT, THE PAYER'S 16 ITA 618/MUM/2017 OBLIGATIONS TO DEDUCT TAX AT SOURCE ARISES ONLY WHE N SUCH REMITTANCES IS A SUM CHARGEABLE UNDER THE ACT, I.E., CHARGEABLE U/S. ITA NOS. 5 99 T O 6 1 4/ MU M / 2 0 16 VIACOM 18 ME DIA PVT. LTD 4, 5, 9 OF THE ACT IN THE HANDS OF THE RECIPIENT. IT HAS FURTH ER BEEN EXPOUNDED THAT SECTION 195(2) OF THE ACT IS NOT MERELY A PROVISION TO PROVIDE IN FORMATION TO THE ITO(TDS), SO THAT THE DEPARTMENT CAN KEEP TRACK OF THE REMITTANCES BEING MADE TO NON RESIDENTS OUTSIDE INDIA, RATHER IT GETS ATTRACTED TO THE CASE WHERE PAYMENT MADE IN A COMPOSITE MANNER WHICH HAS AN ELE MENT OF INCOME CHARGEABLE TO TAX IN INDIA AND THE PAYER SEEKS DETE RMINATION OF THE 'APPROPRIATE PROPORTION OF SUCH SUM SO CHARGEABLE'. FROM THE ABOVE CASE LAW IT EMERGES THAT WHEN IN THE HANDS OF THE NONRESIDEN T RECIPIENT, THE SUM PAID IS NOT CHARGEABLE UNDER THE ACT, THERE IS NO LIABILITY ON THE PAYER TO DEDUCT TAX AT SOURCE. NOW WE NOTE THAT THE HON'BLE DELHI HIGH COU RT IN THE CASE OF DIT(INTERNATIONAL TAXATION) VS. INTELSAT CORPORATIO N (IN ITA NO. 977/2011 DATED 19.08.2011) CONSIDERING THE ISSUE OF CHARGEAB ILITY OF TAX OF SIMILAR PAYMENTS RECEIVED BY INTELSAT CORPORATION, USA HAS HELD AS UNDER: THE RESPONDENT ASSESSEE IS A TAX RESIDENT COMPANY O F THE UNITED STATES OF AMERICA WITH ITS REGISTERED OFFICE LOCATED IN WASHI NGTON D.C. THE ASSESSEE OWNS AND OPERATES GLOBAL NETWORK OF TELECOMMUNICATI ON SATELLITES IN OUTER SPACE. IT IS ENGAGED IN THE BUSINESS OF TRANSMITTIN G TELECOMMUNICATION SIGNALS TO AND FRO FROM THE EARTH STATION(S). ITS CUSTOMERS ARE VARIOUS TV CHANNELS, NICNET AND INTERNET SERVICE PROVIDERS. FOR THIS PUR POSE, THE ASSESSEE ENTERS INTO CONTRACTS WITH VARIOUS PARTIES AROUND THE WORL D. THE ASSESSEE LEASED ITS TRANSPONDER CAPACITY AND BANDWIDTH TO VARIOUS CUSTO MERS IN INDIA AND OUTSIDE INDIA, WHO USED THE TRANSPONDERS FOR THEIR BUSINESS IN INDIA. ACCORDING TO THE ASSESSEE, FOR THE AFORESAID ACTIVI TIES NO INCOME ACCRUED OR ATTRIBUTED TO INDIA AND THEREFORE, THE ASSESSEE WAS NOT LIABLE TO BE TAXED IN INDIA. FOR THIS REASON, IN RESPECT OF ASSESSMENT YE AR IN QUESTION, I.E., ASSESSMENT YEAR 2007-08 IT FILED ?NIL? INCOME RETUR N. THE A.O., HOWEVER, GOING BY THE PAST HISTORY OF THE ASSESSMENTS IN THE CASE OF ASSESSEE IN THE YEARS 1996-97 TO 2004-05 HELD THAT CERTAIN PERCENTAGE OF THE INCOME OF THE ASSESSEE WAS EXIGIBLE TO TAX IN INDIA AS IT WAS ATTRIBUTED TO THE RECEIPTS FROM THE CUSTOMERS IN INDIA. THE ITA NOS. 5 99 T O 6 1 4/ MU M / 2 0 16 VIACOM 18 MEDIA PVT. LTD MATTER WAS REFERRED TO THE DISPUTES RESOLUTION PANEL (DRP). OBJECTIONS PREFERRED BY THE ASSESSEE W ERE DISMISSED BY THE DRP AND THE DRP DIRECTED THE A.O. TO COMPUTE THE INCOME AS PER THE DRAFT ORDER PREPARED BY IT. IN ARRIVING AT THE CONCLUSION THAT REVENUE RECEIPTS ON ACCOUNT OF PROVIDING TRANSMISSION SERVICES TO ITS IDENTIFIED C USTOMERS WAS IN THE NATURE OF ROYALTY TO BE TAXED @ 10% OF THE TOTAL REVENUES, AS PER ARTICLE 12(7)(B) OF THE DTAA BETWEEN INDIA AND THE USA AND THE PROVISIONS O F SECTION 9(1)(VI) OF THE INCOME-TAX ACT, RELIANCE WAS PLACED ON THE JUDG MENT DATED 16.10.2009 OF THE SPECIAL BENCH OF THE ITAT, DELHI IN THE CASE OF NEW SKIES SATELLITE NV V. ADIT, INTERNATIONAL TAXATION, CIRCLE-2(1), NEW DELH I. PURSUANT TO THE DIRECTIONS GIVEN BY THE DRP THE ASSESSING OFFICER P ASSED ASSESSMENT ORDERS 17 ITA 618/MUM/2017 AND TAXED THE INCOME PERTAINING TO SATELLITE TRANSM ISSION SERVICE/TELECASTING COMPANIES AS ROYALTY INCOME. THIS ORDER OF THE ASSE SSING OFFICER WAS CHALLENGED BEFORE THE ITAT. THE ITAT HAS ALLOWED TH E APPEAL OF THE ASSESSEE. PERUSAL OF THE ORDER OF THE TRIBUNAL WOULD REVEAL T HAT IT IS RELIED UPON THE JUDGMENT OF THIS COURT IN THE CASE OF ASIA SATELLIT E COMMUNICATION COMPANY LTD. V. DIT AND VICE VERSA IN I.T.A. NOS.131 AND 13 4/2003 DECIDED ON 31.01.2001. OPERATIVE PORTION OF THE ORDER OF THE T RIBUNAL STATING THE MANNER IN WHICH THE JUDGMENT OF THIS COURT IN ASIA SATELLI TE?S CASE (SUPRA) WAS RELIED UPON, READS AS UNDER:- 3.2 THEREAFTER HE DREW OUR ATTENTION TOWARDS PARAGR APH NOS.72 TO 81 OF THE JUDGMENT. IN PARAGRAPH NO.72, IT IS MENTIONED THAT THE TRIBUNAL HAS MADE AN ATTEMPT TO TRACE THE FUND FLOW AND OBSERVED THAT SI NCE THE END CUSTOMERS BEING PERSONS WATCHING TELEVISIONS IN INDIA ARE PAYING TH E AMOUNTS TO CABLE OPERATORS WHO IN TURN ARE PAYING THE SAME TO TV CHANNELS, THE FLOW OF FUND IS TRACED TO INDIA. THIS IS A FAR-FETCHED GROUND TO ROPE IN PAYM ENT RECEIVED BY THE APPELLANT IN THE TAXATION NET. THE TRIBUNAL HAS GLOSSED OVER AN IMPORTANT FACT THAT THE MONEY, WHICH IS RECEIVED FROM THE CABLE OPERATORS B Y THE TELECAST OPERATORS, IS TREATED AS INCOME BY THE TELECAST OPERATORS, WHICH HAS ACCRUED IN INDIA, AND THEY HAVE OFFERED AND PAID TAX. THUS, THE INCOME, W HICH IS GENERATED IN INDIA, HAS BEEN SUBJECTED TO TAX. IT IS THE PAYMENT, WHICH IS MADE BY THE TELECAST OPERATORS WHO ARE SITUATED ABROAD TO THE APPELLANT, WHICH IS ALSO A NON- RESIDENT, I.E., SOUGHT TO BE BROUGHT WITHIN THE TAX NET. IT IS CONCLUDED THAT IT IS DIFFICULT TO ACCEPT SUCH FAR-FETCHED REASONING WITH NO CAUSAL CONNECTION. IT MAY BE MENTIONED HERE THAT THE ASSESSEE HAS RECEIVED RE VENUES FROM INDIAN RESIDENTS ALSO, AS CAN BE SEEN FROM THE TABLE MENTI ONED IN THE ASSESSMENT ORDER AND REPRODUCED BY US WHILE SUMMARIZING THE ORDER. 3.3 THEREAFTER HE DREW OUR ATTENTION TOWARDS PARAGR APH NO.79 OF THE ITA NOS. 5 99 T O 6 1 4/ MU M / 2 0 16 VIACOM 18 MEDIA PVT. LTD 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 INTERPRETA TION 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 T HE CASE, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE AMOUNT PAID TO THE AP PELLANT BY ITS CUSTOMERS REPRESENTED INCOME BY WAY OF ROYALTY AS DEFINED IN EXPLANATION 2 TO SECTION 9(1)(VI) OF THE ACT? IN ARRIVING AT THIS DECISION, THE HON? BLE COURT INTER ALIA REFERRED TO OECD CONVENTION, COMMENTARY THEREON, CO MMENTARY WRITTEN BY KLAUS VOGEL, DECISION IN THE CASE OF UNION OF INDIA AND ANOTHER VS. AZADI BACHAO AANDOLAN AND ANOTHER, (2003) ITR 706, CIT VS . AHAMDABAD MANUFACTURING AND CALICO PRINTING COMPANY 139 ITR 8 06 ( GUJARAT), AND CIT VS. VISHAKHAPATNAM PORT TRUST , (1983) 144 ITR 146 (AP). 3.4 THE REVENUE HAD ALSO RAISED THE QUESTION REGARD ING APPLICABILITY OF SECTION 9(1)(VII) FOR THE FIRST TIME BEFORE THE TRIBUNAL. ALTHOUGH T HIS 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 C OUNSEL FOR THE REVENUE 18 ITA 618/MUM/2017 BEFORE THE HON?BLE COURT IN THIS MATTER. THEREFORE, THE SUBMISSION IN THE GROUND REGARDING APPLICABILITY OF SECTION 9(1)(VII) WAS NOT ACCEPTED. THE RESULT OF THE DECISION IS THAT THE REVENUES RECEIVED BY TH E ASSESSEE IS NOT TAXABLE EITHER U/S 9(1)(VI) OR SECTION 9(1)(VII) OF THE ACT.? LEARNED COUNSEL FOR THE REVENUE COULD NOT DISPUTE T HE POSITION THAT ISSUES RAISED IN THIS APPEAL ARE DIRECTLY COVERED BY THE J UDGMENT OF THIS COURT IN THE CASE OF ASIA SATELLITE TELECOMMUNICATIONS LTD. VS. COMMISSIONER OF INCOME TAX (ITA 131/2003 DECIDED ON 31.01.2011). IN THAT J UDGMENT, A CATEGORICAL VIEW IS TAKEN THAT THE INCOME RECEIVED FROM THE ACT IVITIES UNDERTAKEN BY THE RESPONDENT/ASSESSEE WOULD NOT BE EXIGIBLE TO TAX IN INDIA. FOLLOWING THAT JUDGMENT, THIS APPEAL IS DISMISSED. 9. SIMILAR ORDER WAS PASSED BY THE HON'BLE DELHI HI GH COURT IN THE CASE OF DIT(INTERNATIONAL TAXATION) VS. INTELSAT CORPORA TION (IN ITA NO.530 & 545/2012 DATED 28.09.2012), WHEREIN THE HON'BLE HIG H COURT HAS HELD AS UNDER: THE REVENUE CLAIMS TO BE AGGRIEVED BY THE ORDERS DA TED 2.2.2012 AND 16.01.2012, WHEREBY ITS APPEALS BEFORE THE TRIBUNAL WERE DISMISSED. THE ITA NOS. 5 99 T O 6 1 4/ MU M / 2 0 16 VIACOM 18 MEDIA PVT. LTD SUBSTANTIAL QUESTION OF LAW SOUGHT TO BE URGED IS WHETHER THE T RIBUNAL FELL INTO ERROR IN HOLDING THAT THE ASSESSEE DID NOT INCUR ANY TAX LIA BILITY UNDER PROVISIONS OF THE INCOME TAX AC T ? AN ELABORATE DISCUSSION ON THE MERITS IS NOT WARRAN TED SINCE THE IMPUGNED ORDER AND NOTICES ARE BASED UPON A PREVIOUS ORDER O F THE TRIBUNAL DATED 4TH MARCH, 2011 (ITA 5443/DEL/2010), FOR AY 2007-08 THA T WAS SUBSEQUENTLY FOLLOWED BY THE TRIBUNAL IN ITS OWN DECISION FOR AY 2006-07 (ITA NO.4662/DEL/2011). THIS COURT BY ITS JUDGMENT AND O RDER DATED 19TH AUGUST, 2011 IN ITA NO.977/2011, AFFIRMED THE FINDINGS OF T HE TRIBUNAL BY A REASONED ORDER. IN VIEW OF THESE DEVELOPMENTS, NO SUBSTANTIA L QUESTION OF LAW CAN BE SAID TO ARISE; THERE IS NO INFIRMITY IN THE FINDING OF THE TRIBUNAL WITH REGARD TO THE TAXABILITY OF THE ASSESSEE FOR THE ASSESSMENT Y EARS IN QUESTION I.E. 2006-07 AND 2008-2009. THE APPEALS ARE ACCORDINGLY DISMISSE D. 10. FROM THE ABOVE CASE LAWS IT IS EVIDENT THAT SIM ILAR PAYMENTS RECEIVED BY THE INTELSAT CORPORATION USA HAVE BEEN HELD TO BE N OT CHARGEABLE TO INCOME TAX IN THE HANDS OF THE SAME RECIPIENT. WHEN THIS P OINT IS CONSIDERED IN LIGHT OF THE HON'BLE APEX COURT DECISION IN THE CASE OF G. E . TECHNOLOGY CENTRE PVT. LTD. (SUPRA) IT EMERGES THAT NO LIABILITY FASTEN ON THE ASSESSEE TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE TO INTELSAT CORPORATION USA . HENCE, THE ADDITIONAL GROUNDS OF THE ASSESSEE DESERVE TO BE ALLOWED. ACCO RDINGLY, WE HOLD THAT SINCE THE HON'BLE HIGH COURT HAS HELD THAT THE PAYMENT WA S NOT INCOME CHARGEABLE TO TAX IN THE HANDS OF THE SAME RECIPIENT, THERE WA S AS A COROLLARY NO LIABILITY ON THE PART OF THE ASSESSEE (THE PAYER) TO DEDUCT TAX AT SOURCE ON THE SIMILAR 19 ITA 618/MUM/2017 PAYMENT MADE TO THE SAME PAYEE. HENCE, THE ASSESSEE SUCCEEDS ON THE ADDITIONAL GROUND. 8. WE FURTHER NOTICE THAT THE HONBLE DELHI HIGH CO URT, IN THE CASE OF DIT (INTERNATIONAL TAXATION) VS INTELSAT CORPORATIO N (SUPRA), HAS CONSIDERED THE ISSUE OF PAYMENT RECEIVED BY M/S INT ELSAT CORPORATION, USA FOR RENDERING TRANSPONDER SERVICE WITHIN THE ME ANING OF SECTION 9(1)(VI) OF THE ACT AND ARTICLE 12 OF THE INDIA-USA TAX TREATY AND HELD THAT AMOUNT RECEIVED FROM INDIAN SUBSCRIBERS FOR RE NDERING TRANSPONDER SERVICES DOES NOT CONSTITUTE ROYALTY WITHIN THE MEA NING OF SECTION 9(1)(VI) AND ARTICLE 12 OF THE INDIA US TAX TREATY. THE HON BLE DELHI HIGH COURT, WHILE ANSWERING THE QUESTION IN FAVOUR OF THE ASSES SEE HAS CONSIDERED OECD CONVENTION, COMMENTARY THEREON AND THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF UOI & ANOTHER VS AZADI BACHAO ANDOLAN & ANOTHER (2003) 263 ITR 706 (SC). 9. IN THIS VIEW OF THE MATTER AND CONSIDERING THE R ATIOS OF THE CASE LAWS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT / WITHHOLD TAX U/S 195 IN RESPECT OF PAYMENT MADE TO M/S INTELSAT CORPORATION, USA FOR RENDERING TRANSPONDER SERVICES. THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND ALLOWED APPEAL FILED BY THE ASSESSEE. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. 20 ITA 618/MUM/2017 10. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 12 TH OCTOBER, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI