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TMI Blog2016 (11) TMI 1528X X X X Extracts X X X X X X X X Extracts X X X X ..... stands allowed in terms of earlier order of the Tribunal which shall apply mutatis mutandis on the issue raised in this appeal before us. Accordingly we hold that the assessee was not liable to deduct tax at source. - Decided in favour of assessee. Interest u/s 244A on refund of extra TDS deposit u/s 195 - Held that:- This issue has been sent by the Tribunal in its aforesaid order back to the file of the AO to be decided after considering latest CBDT circular No.11 of 2016 dated 26th April, 2016. Thus, we direct the AO to follow earlier order of the Tribunal on this issue. This issue should be decided afresh by the AO accordingly. - I.T.A. No.5171/Mum/2013, I.T.A. No.5172/Mum/2013 , I.T.A. Nos.5173/Mum/2013, I.T.A. Nos.5174/Mum/2013, I.T.A. Nos.5175/Mum/2013, I.T.A. Nos.5176, I.T.A. Nos.5177, I.T.A. Nos.5178, I.T.A. Nos.5179, I.T.A. Nos.5180, I.T.A. Nos.5181/Mum/2013 - - - Dated:- 28-11-2016 - SHRI AMIT SHUKLA (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) Appellant by Shri Madhur Agarwal Respondent by Smt Rampriya Raghavan, Sr DR O R D E R Per Bench: These appeals have been filed by the aforesaid assessee against the consolidated o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are without prejudice to each other. 3. During the course of hearing it was stated at the outset by the Ld. Counsel of the assessee that the issue arising in this appeal is identical to the issues which arose in the earlier years in the case of assessee which had reached before the Tribunal in appeals for A.Yrs. 2011-12 and 2012- 13 where the Tribunal has decided the issue in favour of the assessee vide its order dated 25-10-2016 in ITA Nos 2841 to 2856/Mum/2012. The only distinction in this year is that the appeals before the CIT(A) were filed belatedly and therefore, prayer was made for condonation, but the Ld.CIT(A) did not grant condonation and rejected the prayer of the assessee. However, the Ld. CIT(A) also decided the appeals on merits. The Ld. Counsel drew our attention upon copy of the order of the Tribunal and also upon the petition seeking condonation of delay as well as supporting documentary evidences and also affidavit filed by Shri Manoj Sharma for justifying the delay. 4. Per contra, the Ld. DR submitted that the delay occurred on the part of the assessee due to careless approach and, therefore, the Ld. CIT(A) rightly rejected the prayer for condonation. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Group has entered into an agreement with Intelsat Global Sales and Marketing Limited', UK (,Intelsat'), effective from 1 January 2011 for availment of transponder facility. 2. In consideration for the availment of transponder facility, the Appellant pays a monthly service fee to Intelsat. The contract between Intelsat and the Appellant is tax protected ie the withholding tax liability (if applicable) on such payments would be on the Appellant. 3. The Appellant has been filing monthly appeals with the CIT(A) under Section 248 of the Income Tax Act, 1961 ('Act') against the order issued by the assessing officer under Section 195(2) of the Act, which held that Intelsat's receipts from the Appellant for the provision of transponder facility was taxable in India as royalty and hence was subject to tax withholding. 4. The Appellant had filed monthly appeals to the CIT(A) for the period prior to February 2012 within the time prescribed under Section 249 of the Act. 5. For the same matter, there was an inadvertent delay in filing the appeals before the CIT(A) for the period February 2012 to January 2013. Accordingly, the Appellant while filing the appeal wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord. Our attention was also drawn on the detailed affidavit filed by Mr. Manoj Sharma wherein he deposed on oath the facts as were narrated in the aforesaid petition, which reads as under:- AFFIDAVIT I, Manoj Sharma, am employed by The Wait Disney Company (India) Private Limited as Senior Manager, Taxation (Direct Tax), Corporate and do hereby state as under: 1. THAT I was appointed by my current employer on 22 October 2012 as part of the centralized tax function of the Disney India Group, which inter alia consisted of The Wait Disney Company (India) Private Limited, United Home Entertainment Private Limited, UTV Software Communications Limited and its subsidiaries. 2. THAT I was on probation for the first three months from my appointment date and my employment was confirmed thereafter. 3. THAT I was appointed to assist Venkata Subramanian who prior to my appointment was thesole personnel in the centralised tax function of the Disney India Group and was entrusted with additional responsibilities on account of Disney's acquisition of UTV Software Communications Limited and its subsidiaries in February 2012 and tax matters of these companies. 4. THAT subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main issue involved in this appeal is that amount paid to M/s Intelsat Inter Corporation, USA under the transponder service agreement for the transponder service charges paid by the assessee to Intelsat under the said agreement has been treated as royalty under the provisions of the Act. According to the assessee, it was neither royalty nor Fee for Technical Services (FTS). It is noted by us that this issue has been dealt in extenso by the Tribunal in its order dated 25-10-2016. Relevant part of the same is reproduced hereunder:- 7. We have carefully considered the rival submissions, perused the relevant finding given in the impugned orders as well as various decisions as relied upon by the parties before us. At the threshold it is noticed that, in the case of the payee, i.e., Intelsat Corporation US, the Hon'ble Delhi High Court vide order dated 19.08.2011 and then again reaffirmed vide order dated 28.09.2012 in ITA No. 530 545/2012, following the order of its own court in Asia Satellite Communications Ltd (ITA 131/2003 decided on 31.01.2011),have categorically held that payment received by Intelsat is not taxable in India under the provisions of Indo-US-DTAA. Once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to use of any copyright effecting work, secret formula, process etc or any other term described in para 3 of Article 12. The Ld. CIT(A) has held that it is not a 'royalty' and secondly, even otherwise also by virtue of Article' 12(7) such a royalty cannot be taxed 'in India, because it is not borne by PE or fixed place of the US company in India. The Ld. DR has strongly relied upon amended definition of the 'royalty' under the Act, wherein the scope and definition of 'royalty' has been enlarged by the newly inserted Explanation (v) and (vi)by the Finance Act, 2012 with retrospective effect from01-06-19761 and has contended that the said definition into DTAA also, that is, the definition of royalty has to be taken from the Domestic Law. In support, the Ld.DR has strongly relied upon the decision of _ High Court in the case of Verizon Communications Singapore Pte Ltd. (supra) and the ITAT decision in the case of Viacom.18 Media Pvt Ltd. 19. First of all, let us examine the definition of royalty as been defined under Article 12 of the lndo- US-DTAA, which has been defined in the following manner: 3. The term royalties as used in this Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the reading of amended definition of royalty as given in section 9(1)(vi) into treaty, Hon ble Delhi High Court in its latest judgment in the case of DIT vs New Skies Satellite (supra), wherein it has considered Hon ble Madras High Court decision in the case of Verizon Communications Singapore Pte Ltd (supra) also, have discussed the issue threadbare and came to the conclusion in the following manner:- 60. Consequently, since we have held that the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word royalty in Asia Satellite, supra note 1, when the definitions were in fact pari material (in the absence of any contouring explanations), will continue to hold the filed for the purpose of assessment years preceding (ne-Finance Act, 2012 and in all cases which involve a, Double Taxation Avoidance Agreement, unless the said DTAAs are amended jointly by both partners to incorporate income from data transmission services as partaking of the nature Of royalty, or amend the definition in a manner so that such income , automatically becomes royalty. It is reiterated that the Court has not returned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 320 (Bom), the Bombay High Court citing R v. Melford Developments Inc. held that The ratio of the judgment, in our opinion, would mean that by a unilateral amendment it is not possible for one nation which is party to an agreement to tax income which otherwise was not subject to tax. Such income would not be subject to tax under the expression laws in force . * While considering the Double Tax A voidance Agreement the expression laws in force would not only include a tax already covered by the treaty but would also include any other tax as taxes of a substantially similar character subsequent to the date of the agreement as set out in article 1(2). Considering the express language of article 1(2) it is not possible to accept the broad proposition urged on behalf of the assessee that the law would be the law as applicable or as define when the Double Tax Avoidance Agreement was entered into . 49. It is essential to note the context in which this judgment was delivered. There, the Court was confronted with a situation where the word royally was not defined in the German DTAA. Following from our previous discussion on the bifurcation of terms within the treaty, in situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, assessee was not required to deduct TDS or withhold any tax on such payments. This proposition has been upheld by Hon 'ble Supreme Court in the case of GE Technology Centre, 327 ITR 456. 7. So far as the issue relating to FTS is concerned, we find that, this Tribunal in B4u International Holdings (supra) on similar payment made to Panamsat, it was held that they do not satisfy the test of make available as enshrined in Article 12(3) in Indo-US-DTAA and thus, the said payment cannot be held to be taxable as being for technical services and secondly, on this ground also, the provision of TDS is' not attracted. In any case Ld. CIT '(A) cannot hold that same payment would fall in the nature of 'royalty' and at same time would be reckoned as 'FTS' also. Lastly, as regards the issue of business communication in India, as pointed by the Ld Counsel, Shri Madhur Agarwal that Hon ble Delhi High Court in the case of Intelsat has taken note of this fact while deciding the issue of taxability of receipts in favour of Intelsat that, it has leased its transponder capacity and bandwidth to the various customers in India and outside India who have used the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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