Intelsat US LLC (erstwhile Intelsat Corporation), New Delhi V. ACIT, Circle-2(1)(1), New Delhi

ITA 876/DEL/2022

AI Insights

The case involves Intelsat US LLC, which appealed against the order of the Assessing Officer (AO) and the Dispute Resolution Panel (DRP) that assessed the appellant's income from satellite transmission services as royalty, taxable in India. The appellant contested the assessment, arguing that similar cases in previous years had been ruled in their favor, and the income should not be taxed as royalty. The Tribunal reviewed the decisions from earlier assessment years and the rulings of the Hon'ble High Court, which supported the appellant's position. The Tribunal decided in favor of the appellant, stating that the income from satellite transmission services is not taxable in India as royalty.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 116228 (ITAT-DELHI)
• Duration Of Justice: 12 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-12-2022
• Assessment Year: misc
• Appeal Filed On: 01-06-2010
• Other Referred Cases: Asia Satellite Telecommunications Co. Ltd vs ADIT, New Skies Satellites N.V. vs ADIT
• Laws Referred To: Income-tax Act, 1961, Double Taxation Avoidance Agreement between India and United States of America
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; TDS
• Section: 2; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘D’, NEW DELHI BEFORE SH. N.K. BILLAIYA, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR US, JUDICIAL MEMBER ITA No.876/Del/2022 Assessment Year: 2018-19 Intelsat US LLC (erstwhile Intelsat Corporation) Unit 1 B, First Floor, Aria Signature Towers, Hotel J W. Marriott, Aerocity, New Delhi-110037 PAN No.AADCP6533D Vs ACIT Circle -2 (1) (1) New Delhi (APPELLANT) (RESPONDENT) Appellant Sh. S. S. Tomar, Advocate Sh. Vishal Kalra, Advocate Respondent Sh. Gangadhar, CIT DR Date of hearing: 20/12/2022 Date of Pronouncement: 20/12/2022 ORDER PER N.K. BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 07.03.2022 framed u/s. 143 (3) r.w.s. 144C(13) of the Act. 2. The grievance of the assessee read as under :- 2 1. That on the facts and in the circumstances of the case and in law, the learned Assessing Officer ('Ld. AO') has erred in assessing the income of the Appellant at Rs 1,12,88,65,689 as against the returned income of Rs 60,73,430. 1.1 That on the facts and in the circumstances of the case and in law, the Hon'ble Dispute Resolution Panel ('Hon'ble DRP') erred in not directing the Ld. AO to delete the addition amounting to Rs 1,12,88,65,689 as the receipts from satellite transmission services are not taxable in India. 2. That on the facts and in the circumstances of the case and in law, the Hon'ble Dispute Resolution Panel erred in not directing the Ld. AO to follow the decisions of the Hon'ble jurisdictional High Court of Delhi in Appellant's own case for AY 2006-07 to AY 2013-14, wherein the Hon'ble Delhi High Court has dismissed the appeals filed by Income-tax Department against the favourable orders of the Hon'ble Income-tax Appellate Tribunal, New Delhi ('Hon'ble Delhi Tribunal'). 3. That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO erred in holding that receipts from satellite transmission services earned by the Appellant are in the nature of 'royalties' within the ambit of Explanation 2 to Section 9(l)(vi) of Income- tax Act, 1961 ('the Act') and Article 12(3) of Double Taxation Avoidance Agreement between India and United States of America ('India-USA DTAA'). 4. That on the facts and in the circumstances of the case 3 and in law, the Hon'ble DRP and the Ld.AO erred in differentiating the decision of the Hon'ble jurisdictional High Court of Delhi in the case of Asia Satellite Telecommunications Co. Ltd (332 ITR 340) by relying on the decision of Hon'ble special bench of Delhi Tribunal in the case of New Skies Satellites N.V. vs ADIT (ITA nos. 1167/2009) without appreciating that Hon'ble Delhi High Court has set- aside the decision of the Hon'ble special bench with a direction to decide the case in view of the decision of Asia Satellite Telecommunications Co. Ltd (supra). 5. That without prejudice to above, on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO erred in not appreciating that Appellant being a resident of USA is covered by the beneficial provisions of India-USA DTAA and accordingly, should not be taxed under the provisions of the Act. 6. That without prejudice to above, on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO erred in concluding that the expanded definition of 'Royalties' contained in Section 9(l)(vi) of the Act as retrospectively amended by Finance Act, 2012, is applicable on the definition of 'Royalties' as provided under Article 12(3) of India-USA DTAA, whereas it is settled law that amendment in the Act cannot automatically apply to DTAA unless the provision of the DTAA are amended. 7. That on facts and circumstances of the case and in law, the Ld. AO erred in granting short credit of taxes deducted at source. 4 8. That on the facts and circumstances of the case and in law, the Ld. AO erred in levying interest under section 234B of the Act. 9. That the Id. AO erred in initiating penalty proceedings under section 270A of the Act. Each of the above ground is independent and without prejudice to other grounds of appeal preferred by the Appellant. That the Appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal. 3. At the very outset the Counsel for the assessee stated that the substantive quarrel is now well settled by the decisions of the coordinate Bench given in earlier assessment years in assessee’s own case in favour of the assessee and against the revenue. 4. Per contra the DR could not bring any distinguishing decision in favour of the revenue. 5. We have carefully considered the orders of the authorities below. We find force in the contention of the Counsel the impugned issue was considered by this Tribunal in earlier assessment years since A.Y. 2006-07 to A.Y.2015-16 and the orders of this Tribunal for A.Y.2014-15 and 2015-16 has been 5 affirmed by the Hon’ble High Court in ITA No.346 and 347 of 2022. All these decisions find place in the findings of the coordinate Bench in ITA No.918/Del/2021 for A.Y. 2017-18 which read as under :- “5. We have considered rival submissions and perused materials on record. A reading of the impugned assessment order and the directions of learned DRP would clearly reveal that by relying upon the approach adopted by them in assessee’s case in preceding assessment years beginning from assessment year 2006-07 onwards, they have concluded that the receipts of the assessee from Satellite Transmission Services are in the nature of royalty. However, it is a fact on record that disputing the decision of the departmental authorities’ assessee carried appeals to the Tribunal in preceding assessment years. While deciding the issue, the Tribunal has consistently expressed the view that the amount received by the assessee is not taxable as royalty in India. In fact, the Tribunal’s decision in assessment years 2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 and 2015-16 has been upheld by the Hon’ble Jurisdictional High Court. The latest order of the Hon’ble High Court in ITA No. 346 86 347 of 2022 pertains to assessment years 2014-15 and 2015-16 and has been passed on 21.09.2022. In fact, while deciding identical issue arising in assessee’s own case in the immediately preceding assessment year, i.e., AY: 2016-17 in ITA No. 4412/Del/2019, dated 20.05.2022, the Tribunal has followed its earlier decision and held that the amount received from Satellite Transmission Services is not taxable in India as royalty. Thus, respectfully following the consistent view of the Tribunal and the Hon’ble Jurisdictional High Court in assessee’s own 6 case, as discussed above, we hold that the amount received by the assessee from Satellite Transmission Services is not taxable in India as royalty. Grounds are allowed.” 6. Respectfully following the decision of the coordinate Bench read with the decision of the Hon’ble High Court (supra) we hold that the amount received by the assessee from Satellite Transmission Services is not taxable in India as royalty. Ground No. 1 to 6 are allowed. 7. Ground No.7 relates to the short credit granted by the AO. 8. We direct the AO to allow the credit of taxes deducted at source to the assessee as per provisions of the law and the assessee is directed to furnish necessary evidences for the credit of TDS. With the above direction the appeal of the assessee is allowed. 9. Decision announced in the open court on 20.12.2022. Sd/- Sd/- (YOGESH KUMAR US) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA, Sr. Private Secretary* Date:- .12.2022