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TMI Blog2006 (8) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... arsat Ltd. was constituted by 83 Governments including Government of India. The original convention on the International Maritime Satellite Organization (in short referred as Inmarsat ) was executed on 16th July, 1979 in pursuance to the Resolution No. 1721 of the General Assembly of the UN, dated 20th December, 1961 which provided for the formation of the Inmarsat. The Operating Agreement on Inmarsat was executed on 16th July, 1979 and an Headquarters Agreement between Inmarsat and Government of UK was subsequently executed on 25th February, 1980. As Inmarsat was formed in pursuance of the Resolution of the General Assembly of UN, the privileges and Immunities of the UN adopted for 13th February, 1946 were made applicable to Inmarsat and the Protocol on the Privileges, Exemptions and Immunities of Inmarsat was made on 30th July, 1983. This protocol was refuted by the President of India on 18th August, 1987. Vide letter dated 7th October, 1987 the High Commission of India also reaffirmed and renewed India s Instrument of Accession to the Protocol of 1981 on the Privileges and Immunities of the International Maritime Satellite Organization. Vide Notification dated 30-6-1995 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall specify the units of measurement for the various types of utilization of the Inmarsat space segment and shall establish charges for such utilization. These charges shall have the objective of earning sufficient revenues for the Organization to cover its operating, maintenance, and administrative costs, the provision of such operating funds as the Council may determine to be necessary, the amortization of investment made by Signatories, and compensation for use of capital in accordance with the Operating Agreement. (2) The rates of utilization charge for each type of utilization shall be the same for all Signatories for that type of utilization. (3)******." The Headquarter Agreement made in pursuance of Article 26 of the Convention of Inmarsat regulated the activities of the Inmarsat and also provided for exemption from tax etc. The relevant articles of this agreement are as under : "Article 7 Exemption from Taxes (1) Within the scope of its official activities, the Organization and its property and income shall be exempt from all direct taxes including income-tax, capital gains tax and corporation tax. The Organization shall be granted relief from municipal rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axes and related charges on the Inmarsat space segment and on equipment connected with the launching of satellites for use in the Inmarsat space segment. (4) Goods acquired by Inmarsat within the scope of its official activities shall be exempt from all prohibitions and restrictions on import or export. (5) No exemption shall be accorded in respect of taxes and duties which represent charges for specific services rendered. (6) No exemption shall be accorded in respect of goods acquired by, or services provided to, Inmarsat for the personal benefit of staff members. (7) Goods exempted under this article shall not be transferred, hired out or lent, permanently or temporarily, or sold, except in accordance with conditions laid down by the Party to the Protocol which granted the exemption. (8) Payments from Inmarsat to Signatories, pursuant to the Operating Agreement, shall be exempt from national taxes by any Party to the Protocol, other than the Party which has designated the Signatory." 5. The Assessing Officer after conducting enquiry from VSNL issued a notice under section 142(1) on 30-12-1999. However, the assessee did not file the return and submitted that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed all the documents including the following : ( i )Basic Documents of Inmarsat - 4th Edition, ( ii )Convention on Inmarsat entered into force on 16-7-1979, ( iii ) Protocol on Privileges and Immunities of the IMSO, entered into force on 30-7-1983, ( iv )The Instrument of accession and confirmation signed by President of India on 18th August, 1987, ( v )Process-verbal of accession to the Protocol by India, signed by India and the Director General, IMSO on 17-10-1987, ( vi )Letter dated 7-10-1987 issued by High Commission of India to the Director General of IMSO, and ( vii )List of signatories to the Operating Agreement. The Learned CIT(A) first of all considered and held that in consequence of the reorganization of Inmarsat, the Inmarsat Limited was competent to file the appeal as successor of Inmarsat on the ground the Inmarsat has been succeeded by Inmarsat Limited as per the Master Transition Agreement, Business Transfer Agreement and the Novation Agreement. So far as the merits are concerned, it was argued before him that the Protocol accords such Privileges and Immunities to the Inmarsat and the exemption from taxes are similar to those accorded to Internatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " In view of the above observations the learned first appellate authority held that the assessee is not liable to pay tax. 9. Before us the Learned DR placed reliance on the order of the Assessing Officer and submitted that the assessee was not immune from tax. She also submitted that onus was on the assessee to prove that its income was exempt. According to her, the assessee could not discharge its onus. The Learned DR further submitted that as the matter has not been properly examined by the Learned CIT(A) the matter should be set aside to the Assessing Officer to be examined afresh. 10. The Learned Counsel for the assessee Ms. Preeti Goel on the other hand, supported the order of the Learned CIT(A) and submitted that in view of the provisions contained in the protocol, convention and agreements and also the notification of the Central Government, the income of the assessee is exempt from tax. In this regard she made reference to various documents on the Paper Book including the contentions, notifications and correspondence. She also made specific reference to Para 5 of the order of the CIT(A). The Learned Counsel for the assessee further submitted that in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e United Nations i.e., Resolution 1721 for International cooperation in the peaceful uses of outer space. S.No. Intelsat Inmarsat 2. Non-profit objective of operating a global communication system and providing telecommunication services including capacity for voice, video, data, corporate/private network and internet service. Non-profit and non-commercial objective of setting up a communication network that would allow nations to ensure maritime safety of ocean going vessels of respective 3. In 1971, the International convention on Intelsat was executed along-with an Operating Agreement, VSNL was lesignated as signatory to the Operating Agreement. In 1976, the International convention on Inmarsat was executed along with an Operating Agreement VSNL was designated as signatory to the Operating Agreement. In addition, a headquarters agreement was also executed between Inmarsat and the Government of UK. 4. In 1978, a Protocol regarding privileges, exemptions and Immunities of Intelsat executed. According to the same, the property of Intelsat was exempt from all National income and direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the appeal of the revenue. Admittedly the assessee is an Intel Government Organization with member countries including India which were established with an object providing services like telecommunication, broadcasting etc. This is apparent from U.N. Resolution No. 1721 (XVI), dated 20-12-1961, copy of which appear at pages 15 and 16 of the paper book filed by the assessee. By virtue of this Resolution, an agreement was entered into amongst the member countries on 20-8-1971 effective from 12-2-1973, copy of which is placed at pages 18 to 70 of the paper book. Subsequently, protocol regarding the privileges, exemptions and Immunities was prepared on 19-5-1978, copy of which appear at pages 72 to 82. According to Article IV of the Protocol, the property of the Intelsat shall be exempt from all National income and Direct National Property Taxation. This protocol was acceded to by the Hon ble President of India, Mr. R. Venkataraman for and on behalf of the Government of Republic of India on 8-9-1987. In view of the same the income of the assessee was immuned from any taxation in India. Further, Ministry of External Affairs, Government of India vide notification dated 5-7-1996 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such, respectfully following the said decision of the Tribunal, we hold that there is no infirmity in the order of the Ld. CIT(A) in treating the income of the assessee as not taxable in India and upholding his impugned order, we dismiss this appeal filed by the revenue." We have also examined the issue on merits. The contention of the Learned DR was that the services rendered by Inmarsat did not fall with the purview of "official activities". 13. We have reproduced objects and purposes of Inmarsat. We have also reproduced Article 4 of Protocol on Privileges Immunities entered into on 30th July, 1983. As per this Article, within the scope of "official activities" Inmarsat and its property and income shall be exempt from all notional direct and other taxes. Clause (5) of this Article provides that no exemption shall be accorded in respect of tax, which represented charges for specific services rendered. As per clause (6), no exemption shall be accorded in respect of goods acquired by or services provided to Inmarsat for the personal benefit of staff members. In order to bring the services rendered by the assessee within the ambit of clause (5) and clause (6), the burden was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d shall accordingly take all reasonable steps to ensure that the Organization is not prejudiced." These specific services were to be provided by the Government of UK to the Inmarsat and were different and distinguishing authority. Official services are to be discharged and rendered by the Organization. The position is therefore, clear that for specific services rendered, the amounts charged for such services are taxable. In view of the latest Headquarters Agreement with the Government of Australia dated 8th September, 1986 also the distinction between official activities and specified services have been maintained under Article 8 which is as under : "Article 8 Exemption from Direct Taxes 1. Within the scope of its official activities, the Commission, its property, premises and assets, and its income, including contributions made to the Commission under the Convention, shall be exempt from all direct taxes including income-tax, capital gain tax and corporation tax, and all State taxes. The Commission shall be exempt from municipal rates with the exception of those which constitute payment for specific services rendered in accordance with Article 4(4)." In view of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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