2011 (11) TMI 790 - AT - Income Tax

Summary

Issues involved: Assessment years 2006-07 & 2008-9; Reopening of assessment u/s 147 of the Income Tax Act.

ITA No. 4176 (Del)2011:

1. The assessee challenged the proceedings u/s 147 of the Act, arguing lack of valid reasons for income escapement.
2. Dispute over tax liability in India despite no change in facts from previous years.
3. Classification of payments for data transmission services as 'royalty' u/s 9(1)(vi) of the Act and Article 12(4) of the India Netherlands DTAA.
4. Assessability of payments for data transmission services via Space Segment Capacity as business profits and tax liability in absence of Permanent Establishment.
5. Taxability of income from non-resident companies u/s 12(4), 12(2), and 12(8) of India Netherlands DTAA.
6. Burden of proof regarding Permanent Establishment and Royalty payments.
7. Qualification of payments as 'fee for technical services' u/s 9(1)(vii) of the Act and Article 12(5) of the India Netherlands DTAA.
8. Issue of arbitrary attribution of receipts from customers covering India.
9. Levy of interest u/s 234B of the Act.
10. Levy of interest u/s 234D of the Act.
11. Withdrawal of interest u/s 244A of the Act.

The assessee withdrew ground No.1. The issue of tax liability for data transmission services was decided in favor of the assessee based on the decision of the Hon'ble Delhi High Court in the case of "Asia Satellite Telecommunications Co. Ltd." The Tribunal held that the receipts from data transmission services were not taxable under the Act. The Department's appeal against this decision was dismissed by the High Court. As a result, the appeal of the assessee for assessment year 2006-07 was allowed.

ITA No. 4177(Del)2011:

The appeal for assessment year 2008-09 was similar to that of 2006-07, with the exception that the issue of reopening the assessment u/s 147 was not raised. The decision in ITA No. 4176(Del)2011 was applicable to this case as well, resulting in the allowance of the appeal.

In conclusion, both appeals filed by the assessee were allowed based on the findings and decisions made in the respective cases.