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MANMOHAN, MANMEET PRITAM SINGH ARORA
Commissioner Of Income Tax (international Taxation)-2 – Appellant
Versus
Intelsat Corporation – Respondent
JUDGMENT
Manmohan, (Oral) J. - Present income tax appeals have been filed challenging the order dated 13th December, 2021 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No. 4946/Del./2017 for the Assessment Year 2014-15 and the order dated 11th October, 2021 in ITA No. 3199/Del./2018 for the Assessment Year 2015-16.
2. Learned counsel for the Appellant states that the ITAT has erred in holding that the amount received by the Intelsat Corporation, USA for lease of transponder facility are not chargeable to tax under Section 9(1)(vi) of the Income Tax Act, 1961 ('the Act') read with Article 12(3) of the DTAA between India and USA as royalty. She states that the ITAT has erred in not appreciating that amount received by Intelsat Corporation, USA represented income by the way of royalty as defined in Explanation 2 read with Explanation 5.6 to Section 9(l)(vi) of the Act as well as Article 12(3) of the India-USA DTAA. She further states that the ITAT has erred in not appreciating that the transmission of signals/data through satellite transponder would fall within the meaning of word process, as appearing in Clauses (i), (ii) & (ii) of explanation 2 of Section 9(l)(vi) and Ar
The interpretation of Section 9(1)(vi) of the Income Tax Act, 1961 and Article 12(3) of the India-USA DTAA regarding the taxability of amount received for lease of transponder facility as royalty.
Income received for leasing transponder facilities is not chargeable to tax as royalty under the Income Tax Act and applicable DTAA, based on established judicial precedent.
The classification of income as 'royalty' under the India-Netherlands DTAA remains subject to the precedent set in a related judgment, unaffected by pending appeals.
Payments for bandwidth services via international private leased circuit to non-resident not 'royalty' under pre-2012 law; Explanations 4-6 to Section 9(1)(vi) prospective, not clarificatory. No TDS ....
The main legal point established in the judgment is the application of the Supreme Court judgment in determining the classification of income under the 'royalty' definition.
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