DCIT (IT) 4(1)(2), MUMBAI V. TAJ TV LTD, MUMBAI

ITA 6326/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5500 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 26-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Transfer pricing; Double taxation relief; Deemed to accrue or arise in india; Permanent establishment; Non-deduction of tax
• Section: 143(3); 142(1)

Judgement Text

1 TAJ TV LTD 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.6326/MUM/2016 (ASSESSMENT YEAR: 2009-10) & I.T.A NO.6327/MUM/2016 (ASSESSMENT YEAR: 2010-11) DCIT(IT)-4(1)(2), MUMBAI VS M/S TAJ TV LTD C/O M/S SURESH SURANA & ASSOCIATES, 13 TH FLOOR, BAKHTAWAR, 229, NARIMAN POINT, MUMBAI-400 021 PAN : AABCT6542J APPELLANT RESPONDENT I.T.A NO.6367/MUM/2016 (ASSESSMENT YEAR: 2009-10) & I.T.A NO.6366/MUM/2016 (ASSESSMENT YEAR: 2010-11) M/S TAJ TV LTD C/O M/S SURESH SURANA & ASSOCIATES, 13 TH FLOOR, BAKHTAWAR, 229, NARIMAN POINT, MUMBAI-400 021 PAN : AABCT6542J VS ADDL.DIT(IT) -2, MUMBAI APPELLANT RESPONDENT ASSESSEE BY SHRI MADHUR AGARWAL REVENUE BY SHRI SAMUEL DARSE DATE OF HEARING 16-07-2018 DATE OF PRONOUNCEMENT 20-07-2018 2 TAJ TV LTD O R D E R PER G MANJUNATHA, AM : THESE CROSS APPEALS FILED BY THE REVENUE, AS WELL AS ASSESSEE ARE DIRECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE CIT(A)-58, MUMBAI DATED 29-07-2016 FOR THE ASSESSMENT YEAR, 2009-10 & 2010-11. SINCE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPEALS ARE HEARD TOGETHER AND ARE DISPOSED O F BY THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS A TAX RESIDENT OF MAURITIUS AND IS ENGAGED IN THE BUSINES S OF TELECASTING ON TV CHANNELS(TEN SPORTS). THE ACTIVITIES OF THE ASSESS EE ARE TO PURCHASE BROADCASTING RIGHTS IN RESPECT OF CONTENTS LIKE CRI CKET, FOOTBALL AND OTHER SPORTS, CONSEQUENT UPLINKING OF CHANNELS FROM TRANS PONDERS AND DOWNLINKING THE SAME OVER THE TERRITORY OF INDIA, S ALE OF AIRTIME ON ITS CHANNEL TO INDIAN PERSONS AND COLLECTION OF SUBSCRI PTION FROM CABLE OPERATORS IN INDIA. THE ASSESSEE IS RECEIVING REVN UES IN FORM OF ADVERTISING, DISTRIBUTION INCOME BEING THE PRIMARY SOURCE OF INCOME. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR AY 2009 -10 DECLARING TOTAL INCOME AT NIL. THE ASSESSEE IN ITS RETURN OF INCOM E, FILED NOTES TO THE COMPUTATION OF INCOME AND CLAIMED THAT TAJ TV IS CA RRYING ON BUSINESS FROM OUTSIDE INDIA AND IT DOES NOT HAVE BUSINESS CO NNECTION IN INDIA. IT HAS NEITHER A FIXED PLACE OF BUSINESS IN INDIA, NOR HAS ANY PROJECT / OFFICE 3 TAJ TV LTD IN INDIA AS DEFINED IN PARAS 1 & 2 OF ARTICLE 5 OF THE DTAA BETWEEN INDIA AND MAURITIUS. THE MANAGEMENT AND CONTROL OF TAJ T V IS SITUATED OUTSIDE INDIA. ACCORDINGLY IT WAS STATED THAT THER E IS NO PERMANENT ESTABLISHMENT FOR THE ASSESSEE IN INDIA AND HENCE, THE INCOME EARNED BY IT FROM ITS ACTIVITIES IS NOT LIABLE TO TAX IN I NDIA. 3. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCO RDINGLY, NOTICES U/S 143(2) & 142(1) OF THE ACT, WERE ISSUED. IN RE SPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE APPEARED FROM TIME TO TIM E AND FILED VARIOUS DETAILS, AS CALLED FOR. A DRAFT ASSESSMENT ORDER WAS PASSED ON 05-03- 2013 U/S 144C(1) R.W.S. 143(3) OF THE ACT. THE ASS ESSEE, IN REPLY, VIDE LETTER DATED 04-04-2013 HAS COMMUNICATED THAT IT IS EXERCISING THE OPTION TO APPEAL BEFORE THE CIT(A) INSTEAD OF FILIN G OBJECTIONS BEFORE THE DRP AGAINST VARIOUS PROPOSED ADDITIONS IN THE DRAFT ASSESSMENT ORDER. THE AO REJECTED THE CLAIM OF THE ASSESSEE AND ASSES SED THE INCOME FOR THE YEAR UNDER CONSIDERATION AT RS.49,32,74,156 FOR THE REASON THAT TAJ INDIA CONDUCTS A HOST OF ACTIVITIES IN INDIA ON BEH ALF OF THE ASSESSEE WHICH IS A DEPENDENT AGENT AND CARRIED OUT VARIOUS SERVICES FOR ITS PRINCIPAL LIKE FACILITATING ARRANGEMENT WITH ADVERT ISING AGENCIES, SALES REPRESENTATIVES, CONDUCTING MARKET STATUS PROMOTING AWARENESS REGARDING CHANNEL AND OTHER SERVICES INCIDENTAL TO ACTING AS DEPENDENT FOR BOOKING ADVERTISEMENTS. ACCORDINGLY, HE CONCLU DED THAT TAJ INDIA 4 TAJ TV LTD CONSTITUTED DEPENDENT AGENT PE WITH RESPECT TO ACTI VITY OF ADVERTISEMENT REVENUE AND ACCORDINGLY ASSESSED INCOME ATTRIBUTABL E IN INDIA. THE AO, ALSO DISALLOWED PROGRAMMING COST AND TRANSPONDER FE ES PAID TO PANAM SAT INTERNATIONAL SYSTEM INC FOR RENDERING SERVICES , SATELLITE LAUNCH OUTSIDE INDIA IN TELECASTING THE SPORTS CHANNEL TO VARIOUS COUNTRIES U/S 40(A)(I) OF THE ACT, FOR FAILURE TO DEDUCT TAX AT S OURCE FROM SAID PAYMENTS AS ACCORDING TO HIM IT IS IN THE NATURE OF ROYALTY AND FALLS UNDER CLAUSE (IVA) OF EXPLANATION 2 TO SECTION 9(1)(VI) OF THE A CT. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS TO ARGUE THAT THE ASSESSEE DOES NOT HAVE ANY PERMAN ENT ESTABLISHMENT IN INDIA AND HENCE, NO PART OF ITS INCOME IS LIABLE TO TAX IN INDIA, THEREFORE, THE AO WAS INCORRECT IN HOLDING THAT THE OPERATIONS CARRIED OUT BY TAJ INDIA CONSTITUTE A DEPENDENT AGENT PE AND AC CORDINGLY, ASSESSEE IS LIABLE FOR TAX IN INDIA. THE ASSESSEE ALSO CHAL LENGED ADDITIONS MADE BY THE AO TOWARDS DISALLOWANCE OF PROGRAMMING COST FOR ACQUIRING TELECASTING RIGHTS AND TRANSPONDER FEES PAID TO M/S PANAM SAT INTERNATIONAL SYSTEM INC. ARE IN THE NATURE OF ROYA LTY AS DEFINED UNDER EXPLANATION (2) TO SECTION 9(1)(VI) AND SUCH INCOME DEEMED TO ACCRUE OR ARISE IN INDIA, WITHOUT APPRECIATING THE FACT THAT THE PAYMENTS MADE TO NON RESIDENTS IS FOR SERVICES RENDERED OUTSIDE INDI A AND NO PART OF 5 TAJ TV LTD INCOME IS ACCRUED OR DEEMED TO ACCRUE OR ARISE IN I NDIA. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSES SEE AND ALSO RELYING UPON CERTAIN JUDICIAL PRECEDENTS, HELD THAT THE ASS ESSEE IS LIABLE TO TAX IN INDIA ON THE INCOME WHICH IS ATTRIBUTABLE TO ITS AC TIVITIES IN INDIA CARRIED OUT BY THE TAJ INDIA WITH RESPECT TO ITS ADVERTISIN G RECEIPTS BASED ON THE FUNCTIONAL ANALYSIS OF THIS ACTIVITY. THE AO CONCL UDED THAT 75% OF THE INCOME IS LIABLE TO TAX IN INDIA. THEREFORE, HE OP INED THAT THE AO WAS RIGHT IN CONCLUDING THAT THE ASSESSEE IS HAVING PE IN INDIA AND INCOME ATTRIBUTABLE TO ITS ACTIVITIES IN INDIA IS ASSESSAB LE IN INDIA. ACCORDINGLY, HE UPHELD THE FINDINGS OF THE AO AND REJECTED GROUN D RAISED BY THE ASSESSEE. INSOFAR AS DISALLOWANCE OF PROGRAMMING C OST AND TRANSPONDER CHARGES PAID TO M/S PANAM SAT INTERNATI ONAL SYSTEM INC., THE CIT(A), AFTER CONSIDERING RELEVANT FACTS AND AL SO RELYING UPON VARIOUS JUDICIAL PRECEDENTS INCLUDING, THE DECISION OF ITAT , MUMBAI IN ASSESSEES OWN CASE OBSERVED THAT DISALLOWANCE COUL D NOT HAVE BEEN MADE BY THE AO AS THE AMENDMENT TO SECTION 9(1)(VI) HAD NOT BEEN EFFECTED AT THE TIME OF MAKING THE REMITTANCE AND A CCORDINGLY, THE QUESTION OF DISALLOWANCE OF PROGRAMMING COST AND TR ANSPONDER CHARGES U/S 40(A)(I) FOR FAILURE TO DEDUCT TAX U/S 195 IS I NCORRECT. ACCORDINGLY, DIRECTED THE AO TO DELETE ADDITION MADE TOWARDS PRO GRAMMING COST AND TRANSPONDER CHARGES. AGGRIEVED BY THE ORDER OF CIT (A), THE ASSESSEE 6 TAJ TV LTD AS WELL AS THE REVENUE ARE IN APPEALS BEFORE US. 5. WE SHALL FIRST TAKE UP THE ASSESSEES APPEALS. THE ASSESSEE HAS TAKEN MORE OR LESS, COMMON GROUNDS OF APPEAL FOR BO TH THE ASSESSMENT YEARS UNDER APPEAL. FOR THE SAKE OF BREVITY, THE G ROUNDS OF APPEAL FOR AY 2009-10 ARE EXTRACTED BELOW:- GROUND NO 1 ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE COMMISSIONER (APPEALS) ERRED IN CONCLUDING THAT APPELLANT HAS A PERMANENT ESTABL ISHMENT IN INDIA IN RESPECT OF ADVERTISEMENT REVENUE. WITHOUT PREJUDICE TO ABOVE, EVEN IF THE APPELLANT H AS A PERMANENT ESTABLISHMENT IN INDIA, THE COMMISSIONER (APPEALS) ERRED IN CONCLUDING THAT INCO ME IS ATTRIBUTABLE TO THE PERMANENT ESTABLISHMENT WITHOUT REBUTTING THE FACT THAT IT HAS REMUNERATED ITS AGENT AT THE ARM'S LENGTH PRICE IN RESPECT OF ADVERTISING REVENUE. 6. THE LD.AR FOR THE ASSESSEE, AT THE TIME OF HEARI NG SUBMITTED THAT THE ISSUE INVOLVED IN THESE APPEALS IS SQUARELY COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT, L BENCH IN ASSE SSEES OWN CASE FOR AY 2006-07 IN ITA NO.9097/MUM/2010, WHEREIN UNDER S IMILAR SET OF FACTS, THE ITAT HELD THAT TAJ INDIA DOES NOT CONSTI TUTE AGENCY PE IN TERMS OF INDIA MAURITIUS DTAA. INSOFAR AS ADVERTIS EMENT REVENUE INCOME, THE ITAT HELD THAT SINCE TAJ INDIA IS BEING REMUNERATED AT ARMS LENGTH, SO NO FURTHER INCOME OR PROFIT CAN BE SAID TO BE ATTRIBUTABLE TO THE ASSESSEE IN INDIA FROM ITS PE. IT IS AN UNDISPUTED FACT THAT THE TPO HAS ACCEPTED THE TRANSACTION BETWEEN ASSESSEE AND TAJ I NDIA AT AN ARMS LENGTH PRICE. THEREFORE, NOTHING FURTHER SHOULD BE ATTRIBUTABLE TO THE ASSESSEE WHICH HAS TO BE TAXED IN INDIA. THE LD.DR PRESENT FOR REVENUE, FAIRLY ACCEPTED THAT ISSUE IS SQUARELY COV ERED IN FAVOUR OF THE 7 TAJ TV LTD ASSESSEE BY THE EARLIER DECISION OF THE ITAT FOR EA RLIER ASSESSMENT YEARS. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE ISSUE OF PE AND CONSEQUENT TAXABILI TY OF INCOME IN INDIA IS NO LONGER RES INTEGRA. THE ITAT, IN ASSESSEES OWN CASE FOR AY 2006- 07 IN ITA NO.9079/MUM/2010, AFTER CONSIDERING THE R ATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF DIT VS MOR GAN STANLEY & CO & OTHER CASES REPORTED IN (2007) 292 ITR 416 (SC) H ELD THAT SINCE TAJ INDIA IS BEING REMUNERATED AT ARMS LENGTH PRICE, N O FURTHER INCOME OR PROFIT CAN BE SAID TO BE ATTRIBUTABLE TO THE ASSESS E IN INDIA FROM ITS PE. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELO W:- 9. AS REGARDS THE AO'S CONCLUSION AND FINDING THAT DISTRIBUTION INCOME EARNED BY THE ASSESSEE FOR THE PERIOD 01.04,2002 TO 12.07.2002, THAT IS, FOR THE PERIOD OF LITTLE OVER 3 MONTHS, THE DISTRIBUTION IN COME EARNED BY THE ASSESSEE IS BE TREATED AS 'ROYALTY' INCOME WITHIN THE MEANING O F SECTION LJ(VI), BECAUSE PRIOR TO 13.07.2002, ASSESSEE WAS NOT RESIDENT OF M AURITIUS AND THEREFORE, THE BENEFIT OF DTAA WILL NOT BE APPLICABLE AND ACCORDIN GLY THE INCOME SHALL BE TAXABLE AS PER THE DOMESTIC LAW, THAT IS, INDIAN IN COME-TAX ACT; LD, CIT(A) HELD THAT POST 12.07.2002, THE AO HIMSELF HAS HELD THAT DISTRIBUTION INCOME IS NOT 'ROYALTY' ALBEIT IS A BUSINESS INCOME AND WILL NOT FALL WITHIN THE M EANING OF 'ROYALTY' AS DEFINED UNDER ARTICLE 12 OF THE INDIA MAURITIUS DTAA POST 13.07.2002. THUS, THERE CANNOT BE TWO DIFFERENT TRE ATMENTS FOR SAME INCOME. THE ASSESSEE'S CASE BEFORE THE C1T(A) IN THIS REGAR D WAS THAT, BUSINESS OF TELECASTING OF CHANNELS PROCESS IS CONTINUOUS AND N ON-STOP, WHICH IS INITIATED BY THE CHANNEL COMPANIES AND ULTIMATELY ENJOYED BY THE VIEWERS. THE BUSINESS CARRIED ON BY THE CHANNEL COMPANIES IS AN INDIVISIB LE AND WHOLESOME CHAIN OF ACTIVITIES, WHICH CANNOT BE SEGREGATED AND PACKED A S INDEPENDENT MODULES. ALL THE PLAYERS INVOLVED IN THE BUSINESS TAKE PART SIMU LTANEOUSLY IN CARRYING ON OF THE TELECASTING BUSINESS WHICH RUNS INSTANTLY. IN S UPPORT THE ASSESSEE HAS REFERRED AND RELIED UPON THE DECISION OF ITAT, MUMB AI BENCH IN THE CASE OF SATELLITE TELEVISION ASIAN REGION LTD. IN ITA NO.50 66/MUM/2004 DATED 18.01.2006. THUS, IT WAS SUBMITTED BY THE ASSESSEE THAT, SUBSCRIPTION/DISTRIBUTION REVENUE EARNED DOES NOT F ALL IN THE NATURE OF 'ROYALTY' 8 TAJ TV LTD AS DEFINED IN SECTION 9(L)(VI). THE LD. CIT(A) AFTE R EXAMINING THE DEFINITION OF 'ROYALTY' AS GIVEN IN NATION 2 TO SECTION 9(L)(VI) HELD THAT, THE DISTRIBUTION INCOME EVEN UP TO 12TH JULY, 2002 CANNOT TO BE TAXE D AS A ROYALTY UNDER SECTION 9(L)(VI) OF THE ACT, AS COPYRIGHT OVER THE PROGRAMS BELONG TO THE ASSESSEE COMPANY, WHEREAS THE DISTRIBUTORS OR CABLE OPERATORS ONLY TRANSMIT THE SIGNALS RECEIVED FROM THE ASSESSEE COMPANY. THE Y DO NOT MODIFY, ALTER, OR REPLACE THE CONTENT OF THE TELECAST BUT BROADCAST T HE CONTENT AS IT IS RECEIVED BY THEM FROM THE ASSESSEE COMPANY. THEREFORE, IT DOES NOT AMOUNT TO TRANSFER OF ANY RIGHT OVER THE COPYRIGHT OR GRANTING ANY LICENS E OVER THE COPYRIGHT TO THE CABLE OPERATORS. THEREFORE, THE AO HAS ERRED IN TAX ING DISTRIBUTION INCOME AS 'ROYALTY' UNDER THE ACT. 8. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH T HE VIEW TAKEN BY THE CO-ORDINATE BENCH, WE ARE OF THE VIEW THAT TAJ INDI A DOES NOT CONSTITUTE AGENCY PE IN TERMS OF INDIA MAURITIUS DTAA. CONSEQ UENTLY, NO FURTHER INCOME / PROFIT CAN BE SAID TO BE ATTRIBUTABLE TO T HE ASSESSEE IN INDIA FROM ITS PE, SINCE TAJ INDIA IS BEING REMUNERATED A T ARMS LENGTH PRICE. ACCORDINGLY, WE DIRECT THE AO TO DELETE ADDITIONS M ADE TOWARDS COMPUTATION OF INCOME ATTRIBUTABLE TO THE ASSESSEE IN INDIA. 9. THE FACTS AND ISSUES INVOLVED IN ITA NO.6366/MUM /2016 FOR AY 2010-11 IS IDENTICAL TO THE FACTS AND ISSUES DISCUS SED IN ITA NO.6367/MUM/2016. THEREFORE, FOR THE SAME REASONS, WE DIRECT THE AO TO DELETE ADDITION MADE TOWARDS COMPUTATION OF INCO ME ATTRIBUTABLE TO THE ASSESSEE IN INDIA. ITAS NO.6326 & 6327/MUM/2016 10. THE LD.AR FOR THE ASSESSEE, AT THE OUTSET, SUB MITTED THAT THE ISSUES INVOLVED IN THESE APPEALS ARE ALSO SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT, IN ASSESSEES OWN CASE FOR AY 9 TAJ TV LTD 2006-07 IN ITA NO.9079/MUM/2010, WHEREIN UNDER SIMI LAR SET OF FACTS, THE ITAT HAS DELETED ADDITION MADE BY THE AO TOWARD S PROGRAMMING COST PAID TO VARIOUS NON RESIDENTS AND ALSO PAYMENT S MADE TO M/S PANAM SAT INTERNATIONAL SYSTEM INC. AND OTHER NON R ESIDENTS TOWARDS TRANSPONDER CHARGES U/S 40(A)(I) FOR FAILURE TO DED UCT TAX U/S 195 OF THE INCOME-TAX ACT, 1961. THE LD.DR, ON THE OTHER HAND , FAIRLY ACCEPTED THAT THE ISSUES INVOLVED IN THESE APPEALS ARE COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT FOR EARLIER ASSESS MENT YEARS. 11. HAVING HEARD BOTH THE SIDES AND CONSIDERED THE MATERIAL ON RECORD, WE FIND THAT THE CO-ORDINATE BENCH OF ITAT, L BEN CH IN ITA NO. 9079/MUM/2010 FOR AY 2006-07 HAS CONSIDERED SIMILAR ISSUE AND AFTER CONSIDERING RELEVANT PROVISIONS OF THE ACT, AND ALS O BY FOLLOWING ITS OWN ORDER FOR AY 2003-04 TO 2005-06 HELD THAT NO DISALL OWANCE CAN BE MADE U/S 40(A)(I) ON ACCOUNT OF PROGRAMMING COST PAID TO VARIOUS NON RESIDENTS AND ALSO PAYMENTS MADE TO M/S PANAM SAT I NTERNATIONAL SYSTEM INC. TOWARDS TRANSPONDER CHARGES FOR FAILURE TO DEDUCT TAX AT SOURCE. THE RELEVANT PORTION OF THE ORDER IS EXTRA CTED BELOW:- 10. IN RESPECT OF DISALLOWANCE OF US $ 3,29,966, PA ID TO PANAMSAT AS TRANSPONDER FEES, UNDER SECTION 40(A)(I) OF THE ACT , LD. CIT(A) OBSERVED THAT THE DELHI TRIBUNAL IN THE CASE OF DCIT VS. PANAMSAT INTERNATIONAL SYSTEM (9 SOT 100) ITSELF HAS HELD THAT PAYMENT MADE FOR TRAN SPONDER FACILITY IS CONSIDERED TO BE PAID FOR THE USE OF SERVICE AND NO T FOR USE OF ANY EQUIPMENT, THEREFORE, IT DID NOT AMOUNT TO 'ROYALTY'. THE HONT DLE TRIBUNAL ALSO HELD THAT FEES PAID FOR TRANSPONDER FACILITY DOES NOT AMOUNT TO 'ROYALTY* AS IT IS NOT FOR A SECRET PROCESS; OR 'FEES FOR INCLUDED SERVICES' A S IT DOES NOT MAKE AVAILABLE TECHNICAL KNOWLEDGE AS PER ARTICLE -12 OF INDIA-US DTAA. THE ID. CIT(A) 10 TAJ TV LTD ALSO HELD THAT THE PAYMENT OF 'TRANSPONDER FEES' WA S NOT BORNE BY THE PE IN INDIA, HENCE, EVEN IF PAYMENT IS HELD TO BE 'ROYALT Y', IT IS STILL NOT TAXABLE AS IT IS NOT BORNE BY PE OF US COMPANY IN INDIA THEREFORE , THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE IN VIEW OF ARTICLE J2(7). I N RESPECT OF ALLOWANCE OF PAYMENT OF US $ 305,347, TO PANAMSAT AND VARIOUS OT HER NON-RESIDENTS AS UP CHARGES WHICH HAS BEEN DISALLOWED UNDER SECTION BY THE AO, THE ID, CIT(A) HELD THAT UP LINKING CHARGES PAID BY THE ASSESSEE C OMPANY ARE IN CONNECTION WITH THE EVENTS TAKING PLACE OUTSIDE INDIA FOR SEND ING THE SIGNAL FROM THE VENUE OF THE EVENT TO THE SATELLITE. THE PAYMENT IS MADE FOR RENDERING SERVICES BY PANAMSAT TO UPLINK THE SIGNAL FROM THE VENUE OF THE EVENT TO THE SATELLITE THEREFORE, IT IS NOT IN THE NATURE OF 'ROYALTY' OR TEES FOR INCLUDED SERVICES'. LD. CIT(A) FURTHER HELD THAT THE PAYMENT OF UP LINKING CHARGES IS NEITHER INCURRED IN CONNECTION WITH THE PE IN INDIA NOR BORNE Y THE PE IN INDIA, THEREFORE, THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE. IN RESPE CT OF PROGRAMMING COST PAID TO VARIOUS CRICKET BOARD AND SPORT ASSOCIATIONS, WH ICH HAS BEEN DISALLOWED UNDER SECTION 40(A)(I) OF THE ACT, THE ID. CIT(A) H ELD THAT PROGRAMMING COST PAID TO ACQUIRE LIVE TELECAST RIGHTS OF EVENTS WAS NOT IN THE 1 NATURE OF 'ROYALTY 1 AS THERE IS NO COPYRIGHT INVOLVED IN LIVE TELECAST OF EVENTS. HE FURTHER HELD THAT IN ANY CASE, PROGRAMMING COST ARE NEITHER IN CONNEC TION WITH THE PE NOR IS IT BORNE BY THE PE IN INDIA, THEREFORE, EVEN IF THE PA YMENTS ARE CHARACTERIZED AS 'ROYALTY' IT WILL NOT BE TAXABLE AS PER ARTICLE 12( 7) OF DTAA. HENCE, THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE ON PROGRAMMIN G COST PAID TO ACQUIRE LIVE TELECAST RIGHTS. THUS, AFTER DETAILED DISCUSSION, I D. CIT(A) HELD THAT NONE OF THE PAYMENTS WOULD BE TAXABLE IN INDIA EVEN IF IT IS DE EMED TO BE 'ROYALTY', BECAUSE THE PAYMENT TO THE PARTIES DO NOT HAVE THEIR PE IN INDIA, THEREFORE, VIRTUE OF ARTICLE 12(7) THE SAME CANNOT BE TAXED IN INDIA. \ REGARDING PROGRAMMING FEE ALSO, HE HAS RELIED UPON THE OF CIT(A) IN THE ORDER PASSED UNDER SECTION DATED 17.03.2004. 12. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH IN ASSESSES OWN CASE FOR EARLIER YEARS, WE DIRECT THE AO TO DELETE ADDITION MADE TOWARDS DISALLOWANCE OF PROGRAMMING COST AND TRANSPONDER CHARGES U/S 40(A)(I) OF THE INCOME- TAX ACT, 1961 FOR AYS 2009-10 & 2010-11. 13. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E IN ITAS NO.6367 & 6368/MUM/2016 ARE ALLOWED AND APPEALS FILED BY THE REVENUE IN ITA NOS ITAS NO.6326 & 6327/MUM/2016 ARE DISMISSED. 11 TAJ TV LTD ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 20 TH JULY, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI