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IN THE HIGH COURT OF DELHI
Manmohan, Manmeet Pritam Singh Arora, JJ.
Commissioner of Income Tax -International Taxation - Appellant
Versus
New Skies Satellite BV - Respondent
ITA 375 of 2022
Decided On : 28-09-2022
| Table of Content |
|---|
| 1. introduction of appeal against itat order. (Para 1) |
| 2. appellant argues tax treatment of satellite services. (Para 2 , 4) |
| 3. court references past judgments and pending appeal. (Para 3 , 5 , 6) |
| 4. no substantial question of law; appeal dismissed. (Para 7) |
| 5. order subject to supreme court's final decision. (Para 8) |
JUDGMENT
Manmohan, J. (Oral)--Present income tax appeal has been filed challenging the impugned order dated 30th September, 2019 passed by the Income Tax Appellate Tribunal (`ITAT') in ITA No. 5054/Del./2019 for Assessment Year 201617.
2. Learned counsel for the Appellant states that the ITAT has erred in holding that receipts of the assessee, earned from providing satellite transmission services do not fall within the term 'royalty' under the India-Netherlands DTAA even after insertion of Explanation 5 and 6 to section 9(1)(vi) of the Income Tax Act,1961 by Finance Act, 2012 and without considering the position of India on OECD commentary on this issue.
3. Admittedly, the question of law urged in the present appeal is covered by the decision of this Court in assessee's own case in Director of Income Tax vs. New Skies Satellite BV, (2016) 382 ITR 114.
4. Learned counsel for the Appellant states that the Revenue has not accepted the aforesaid decision and has preferred a Special Leave Petition against the same being Civil Appeal No.1380/2016.
5. Though the judgment of this Court has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date.
6. Consequently, in view of the judgments passed by the Supreme Court in Kunhayammed and Others vs. State of Kerala and Another, (2000) 6 SCC 359 and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras, (1992) 3 SCC 1, the present appeal is covered by the judgment passed by the learned predecessor Division Bench in New Skies Satellite BV (supra).
7. Accordingly, no substantial question of law arises for consideration in the present appeal and the same is dismissed.
8. However, it is clarified that the order passed in the present appeal shall abide by the final decision of the Supreme Court in the aforesaid Civil Appeal.
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.
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 High Court upheld the ITAT's ruling that software receipts are not taxable as royalty under the India-UK DTAA, following binding Supreme Court precedent.
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.
Income from the supply of CAS and middleware products does not constitute 'royalty' under the Income Tax Act or the India-Swiss DTAA, as reaffirmed by the Supreme Court.
The principle of judicial discipline mandates that the High Court is bound to follow the judgment and order of the apex Court till it is set aside.
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