2023 (2) TMI 364 - AT - Income Tax

Income deemed to accrue or arise in India - receipts from satellite transmission services - royalty receipts - HELD THAT - As decided in own case 2022 (11) TMI 1315 - ITAT DELHI amount received by the assessee from Satellite Transmission Services is not taxable in India as royalty - Decided in favour of assessee.

Summary

Issues:
1. Assessment of income against returned income
2. Taxability of receipts from satellite transmission services
3. Application of Double Taxation Avoidance Agreement (DTAA)
4. Interpretation of 'royalties' under Section 9(l)(vi) of the Income-tax Act
5. Taxation of resident of USA under beneficial provisions of India-USA DTAA
6. Applicability of amended definition of 'Royalties' under Finance Act, 2012
7. Short credit of taxes deducted at source
8. Levying interest under section 234B
9. Penalty proceedings under section 270A

Analysis:
1. The appellant challenged the assessment of income at a higher amount than the returned income. The appellant argued that the Assessing Officer erred in assessing the income at a significantly higher value. The Dispute Resolution Panel also did not direct the deletion of the additional amount, leading to the appeal against the order.

2. The main issue revolved around the taxability of receipts from satellite transmission services. The appellant contended that these receipts should not be taxable in India. The authorities erred in treating these receipts as 'royalties' under the Income-tax Act and the India-USA DTAA. The appellant relied on previous decisions in their favor for the same issue.

3. The appellant argued that being a resident of the USA, they should be covered by the beneficial provisions of the India-USA DTAA, which should exempt them from taxation under the Income-tax Act.

4. There was a dispute regarding the interpretation of 'royalties' under Section 9(l)(vi) of the Income-tax Act. The appellant disagreed with the authorities' classification of the receipts from satellite transmission services as 'royalties' and cited previous court decisions in their favor.

5. The appellant contended that the amended definition of 'Royalties' under the Finance Act, 2012, should not automatically apply to the India-USA DTAA unless the provisions of the DTAA are amended accordingly.

6. The appellant raised concerns about the short credit of taxes deducted at source and the imposition of interest under section 234B by the Assessing Officer.

7. The Tribunal considered the appellant's arguments, previous decisions in their favor, and upheld that the amount received from Satellite Transmission Services is not taxable in India as royalty. The Tribunal directed the Assessing Officer to allow the credit of taxes deducted at source to the appellant and allowed the appeal accordingly.

8. The decision was announced in open court on 20.12.2022, providing relief to the appellant regarding the taxability of receipts from satellite transmission services and directing the proper allowance of credits and evidence for taxes deducted at source.