Agence France Presse (AFP), New Delhi V. DDIT, New Delhi

ITA 909/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8115 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 17-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUJ ARORA
• Keywords: Double taxation relief
• Section: 234B; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.909/DEL./2014 (ASSESSMENT YEAR : 2010-11) AGENCE FRANCE PRESSE (AFP), VS. DCIT, CIRCLE 1 (1) , C/O VISHWANATH, SINGH & ASSOCIATES, INTERNATIONAL TAXATION, FLAT 10, SHANKER MARKET, NEW DELHI. CONNAUGHT CIRCUS, NEW DELHI 110 001. (PAN : AAFCA3976K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ALKESH BABBAR, ADVOCATE REVENUE BY : SHRI ANUJ ARORA, CIT DR DATE OF HEARING : 11.04.2016 DATE OF ORDER : 29.04.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, AGENCE FRANCE PRESSE (AFP) (HEREINAFTER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESENT APPEAL , SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 17.12.2013 PASSED BY DRP/TPO/AO QUA THE ASSESSMENT YEAR 2010-11 ON THE G ROUNDS INTER ALIA THAT:- 1. THAT THE ORDER OF THE LEARNED DISPUTE RESOLUTION PANEL-1 [HEREINAFTER REFERRED TO AS DRP-1] IS BAD IN LAW AN D ON FACTS. ITA NO909/DEL./2014 2 2. THAT THE LEARNED DRP-1 HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.7,34,06,339/- RECEIVE D BY THE APPELLANT AS ROYALTY WITHOUT APPRECIATING THE FACT THAT THE PAYMENT HAS BEEN RECEIVED UNDER THE AGREEMENTS FOR SALE OF INFORMATION AND NOT FOR TRANSFER OF ANY COPYRIGHT. 3. WITHOUT PREJUDICE TO GROUND NO.2 ABOVE, THE LEAR NED DRP- 1 HAS GROSSLY ERRED IN IGNORING THE SETTLED POSITIO N THAT NEWS REPORTING IS BEYOND THE PURVIEW OF COPYRIGHT AS STI PULATED IN SECTION 52 OF THE COPYRIGHT ACT. 4. WITHOUT PREJUDICE TO GROUNDS 2 AND 3 ABOVE, THE LEARNED DRP-1 IS NOT CORRECT IN LAW AND IN FACTS IN HOLDING THAT NEWS REPORTING IS COVERED UNDER SECTION 13 OF THE COPYRI GHT ACT. 5. THAT THE LEARNED DRP-1 HAS ERRED IN LAW IN UPHOL DING THE ACTION OF THE ASSESSING OFFICER IN CHARGING INTERES T UNDER SECTION 234B OF THE ACT OF RS.29,65,937/- BY REFERRING TO T HE DELHI HIGH COURT JUDGEMENT IN THE CASE OF ALCATEL LUCENT USA I NC. THOUGH THE FACTS IN THE ASSESSEE'S CASE ARE ENTIRELY DISTI NGUISHABLE. 6. THAT ANY CONSEQUENTIAL RELIEF TO WHICH THE ASSES SEE MAY BE FOUND ENTITLED UNDER THE FOREGOING GROUNDS OF APPEA L MAY KINDLY BE GRANTED TO THE ASSESSEE. 7. THAT THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, AL TER, DELETE, RESCIND, FOREGO OR WITHDRAW ANY OF THE ABOVE GROUND S OF APPEAL EITHER BEFORE OR DURING THE COURSE OF THE APPELLATE PROCEEDINGS IN THE INTEREST OF JUSTICE. 2. BRIEFLY STATED, THE FACTS OF THIS CASE ARE : DUR ING THE SCRUTINY PROCEEDINGS INITIATED AGAINST THE ASSESSEE QUA THE RETURN OF INCOME FILED BY IT QUA ASSESSMENT YEAR 2010-11, MR. ALEKES H BABBAR, PARTNER OF VISHWANATH SINGH & ASSOCIATES, CAS PUT I N APPEARANCE, FILED REQUISITE INFORMATION AND DETAILS. THE ASSES SEE COMPANY (AFP) IS AN INTERNATIONAL NEWS AGENCY HAVING ITS HE ADQUARTERS SITUATED AT FRANCE, WHICH BEING A FOREIGN NEWS AGEN CY REQUIRED TO ADHERE TO THE 1956 CABINET RESOLUTION PROVIDING THA T DISTRIBUTION OF NEWS IN THE TEXT FORM WITHIN INDIA NEEDS TO BE A FFECTED THROUGH ITA NO909/DEL./2014 3 THE INDIAN NEWS AGENCY, SUCH AS, PTI, UNI, INS, ETC ., OWNED AND MANAGED BY INDIAN HAVING FINAL AUTHORITY IN SELECTI ON OF FOREIGN NEWS FOR DISTRIBUTION. AFP HAS BEEN DISTRIBUTING I TS TEXT NEWS ALONG WITH PHOTOS IN INDIA THROUGH INDIAN AGENCIES VIZ. PRESS TRUST OF INDIA (PTI), INS INDIA PVT. LTD. AND THE NEWS ON THE WEBCAM HAS DIRECTLY BEEN PROVIDED TO THE SUBSCRIBERS IN INDIA ON THEIR WEBSITES BY AFP. 3. ASSESSEE, DURING ASSESSMENT PROCEEDINGS, FILED D ETAILS OF FEES AMOUNTING TO RS.7,34,06,339/- AS RECEIVED FROM CLIENTS IN INDIA ON ACCOUNT OF DISTRIBUTION OF NEWS, TEXTS AND PHOTO NEWS AND STATED TO BE RECEIVED BY THE ASSESSEE FOR PROVIDING REPORTS OF CURRENT NEWS AND NOT FOR TRANSFER OF ANY COPYRIGHTS UNDER THE COPYRIGHTS ACT NOR THE PAYMENT PARTAKE THE NATURE O F ROYALTY IN THE CONTEXT OF THE MEANING OF ROYALTY IN THE COMMON PAR LANCE. HOWEVER, ASSESSMENT WAS COMPLETED BY HOLDING THAT T HE PAYMENTS RECEIVED BY THE ASSESSEE ARE TAXABLE IN INDIA AS RO YALTY. ASSESSEE VIDE ITS REPLY CONFIRMED THAT THERE WAS NO CHANGE I N THE FACTS AND BUSINESS MODEL DURING THE ASSESSMENT YEAR UNDER CON SIDERATION AS COMPARED TO THE EARLIER YEARS AND THE FEE RECEIVED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS FOR THE SAME TY PE OF INFORMATION PROVIDED IN AY 2006-07. ITA NO909/DEL./2014 4 4. ASSESSEE HAS CARRIED THE MATTER BEFORE THE DRP, NEW DELHI WHO HAS AFFIRMED THE ORDER PASSED BY THE AO. FEELI NG AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE . GROUNDS NO.1, 2, 3 & 4 6. THE LD. AR FOR THE ASSESSEE CONTENDED THAT THE I SSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY ORDER DATED 1 5.09.2014 PASSED BY THE ITAT, DELHI BENCH A IN CASE ENTITLED AS AGENCE FRANCE PRESSE VS. ADIT, CIRCLE 1 (1), INTERNATIONAL TAXATI ON, NEW DELHI- (2014) 51 TAXMANN.COM 186 (DELHI TRIB.), IN ASSESSEES OWN CASE QUA AYS 2002-03, 2005-06 AND 2008-09 BY CO NCEDING THAT VIDE ORDER IN AGENCE FRANCE PRESSE VS. ADIT (SUPRA), ITAT, DELHI BENCH A OF THE TRIBUNAL DETERMINED THESE GR OUNDS AGAINST THE ASSESSEE WHICH HAS BEEN ACCEPTED AND HAS NOT BE EN FURTHER CHALLENGED IN THE HONBLE DELHI HIGH COURT. 7. SO, BY RESPECTFULLY FOLLOWING THE FINDINGS RETUR NED BY THE COORDINATE BENCH IN THE ORDER IN AGENCE FRANCE PRESSE VS. ADIT (SUPRA), WE HEREBY UPHOLD THAT THE AO/DRP HAVE RIGH TLY MADE THE ITA NO909/DEL./2014 5 ADDITION OF RS.7,34,06,339/- RECEIVED BY THE ASSESS EE ON ACCOUNT OF ROYALTY IN TERMS OF CLAUSE 5 OF EXPLANATION 2 TO CL AUSE 6 OF SUB- SECTION (1) OF SECTION 9 OF THE ACT AND ALSO ARTICL E 13 (3) OF THE INDO FRANCE DTAA. MOREOVER, THESE FINDINGS HAVE BE EN ACCEPTED BY THE ASSESSEE AS FINAL. GROUND NO.5 8. THE COORDINATE BENCH IN THE ORDER PASSED IN AGENCE FRANCE PRESSE VS. ADIT (SUPRA), IN ASSESSEES OWN CASE, ALSO DEALT WITH THIS GROUND AND ULTIMATELY DECIDED AGAINST THE ASSE SSEE. 9. HOWEVER, THE LD. AR FOR THE ASSESSEE RELIED UPON THE JUDGMENT DELIVERED BY HONBLE DELHI HIGH COURT IN C ASE ENTITLED AS DIRECTOR OF INCOME-TAX VS. GE PACKAGED POWER INC. & ORS. DECIDED ON 12.01.2015 AND ORDER PASSED BY ITAT, DELHI BENCH D, NEW DELHI ON 11.02.2016 IN CASE OF KAWASAKI HEAVY INDUSTRIES LIMITED VS. ACIT IN ITA NO.1321/DEL/2015 BY FOLLOWING THE JUDGMENT OF GE PACKAGED POWER INC. (SUPRA). 10. THE QUESTION ARISES OUT OF THIS GROUND TO BE DE TERMINED IS AS TO WHETHER THE ASSESSEE IS LIABLE TO PAY THE IN TEREST U/S 234B OF THE ACT AMOUNTING TO RS.29,65,937/-? 11. THE AO/DRP HAVE CHARGED THE INTEREST TO THE TUN E OF RS.29,65,937/- U/S 234B OF THE ACT BY RELYING UPON THE JUDGMENT ITA NO909/DEL./2014 6 IN CASE OF ALCATEL LUCENT USA INC. DELIVERED BY THE HONBLE JURISDICTIONAL HIGH COURT. 12. TO PROCEED FURTHER, FINDINGS RETURNED BY THE AO TO CHARGE THE INTEREST U/S 234B AND 234C OF THE ACT ARE REPRO DUCED FOR FACILITY OF REFERENCE AS UNDER :- 4.2.1 THE SECOND OBJECTION RAISED BY THE ASSESSEE IS IN RESPECT OF CHARGEABILITY OF INTEREST U/S 234B AND 2 34C OF THE ACT. THE ASSESSEE HAS REFERRED TO THE PROVISIONS OF THE ACT AND HAS RELIED UPON CASE LAWS TO CONTEND THAT INTEREST UNDE R THESE SECTION SIS NOT CHARGEABLE IN ITS CASE. 13. THE COORDINATE BENCH IN THE CASE CITED AS KAWASAKI HEAVY INDUSTRIES LTD. (SUPRA) BY RELYING UPON THE JUDGMENT CITED AS DIT VS. M/S JACAB CIVIL INC. 330 ITR 578 (DELHI) 330 ITR 578 (DEL.) AND DIT (INTERNATIONAL TAXATION) VS. GE PACKAGED POWER INC. JUDGMENT DATED 12.01.2015 IN ITA 352/201 4 , DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE MEANING THEREBY INTEREST LEVIED U/S 234B IS NOT SUSTAINABLE. THIS ISSUE HAS ALSO BEEN DETERMINED IN FAVOUR OF THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE IN ITA 222 TO 225 /2015 DATED 23.03.2015 BY FOLLOWING THE JUDGMENT IN GE PACKAGED POWER INC. AND ORS. (SUPRA) DELIVERED BY THE HONBLE JURISDICTIONAL HI GH COURT. IN VIEW OF THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN JUDGMENTS REFERRED ABOVE, WE ARE OF T HE CONSIDERED VIEW THAT INTEREST AMOUNTING TO RS.29,65,937/- LEVI ED U/S 234B BY ITA NO909/DEL./2014 7 THE AO/DRP ARE NOT SUSTAINABLE IN THE EYES OF LAW, HENCE, WE HEREBY DETERMINE GROUND NO.5 IN FAVOUR OF THE ASSES SEE. GROUNDS NO.6 & 7 15. THESE GROUNDS ARE GENERAL IN NATURE, HENCE NEED NO ADJUDICATION. 16. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE P RESENT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF APRIL, 2016. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF APRIL, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.