IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “I”, MUMBAI BEFORE MS. PADMAVATHY S, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA NO. 832/MUM/2024(A.Y: 2018-19)

iSAT Africa Limited FZC Vs. The Deputy Commissioner Office No. 5 Pre-Fab, C Phase II, of Income Tax Fujairah Free Zone Fujairah, Dubai, International Tax Circle-

United Arab Emirates, Dubai - 2(2)(2)

999999 Mumbai, Maharashtra.

PAN – AAGCI8661Q (Appellant) (Respondent)

Assessee Represented by : Shri Dinesh Kukreja, Ld. AR Department Represented by : ShriKrishna Kumar, Ld. DR Date of conclusion of Hearing : 19.06.2025 Date of Pronouncement : 22.09.2025

O R D E R

PER RAJ KUMAR CHAUHAN (J.M.):

1. This appeal is filed by the appellant/assessee against thefinal assessment order dated 16.01.2024 passed u/s 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 („the Act‟), in pursuant to the direction of Ld. Dispute Resolution Panel-1, Mumbai-2 (Ld. DRP) u/s 144C(5) of the Act for AY.

2018-19.

2. The brief facts as culled out from the order of authorities below are that theassesseei.e.ISAT Africa Ltd FZC is a Non-Resident entity, tax resident in UAE. As per the official website, it is involved in the business of providing integrated communications services to its customers. The entity doesn't have PAN in India, but during the course of assessment proceedings, the assessee had obtained PAN and the same is AAGCI8661Q. As per the information available insight portal of Income-tax Department, it is noticed that M/s. BT Global Communication (BTGC) India Pvt. Ltd. had made various remittances to non-resident entities, including ISAT Africa Ltd FZC, on which it had not deducted any TDS. It was found that the transactions for which remittances were made are in the nature of Royalty within the meaning of Section 9(1)(vi) of the Act and as such withholding tax required to be deducted u/s 195 of the Act on these transactions. An order u/s 201/201(1A) of the Act was also passed on 25.03.2022 in the case of M/s. BT Global Communications India Pvt Ltd, wherein M/s. BT Global was held to be in default for non-deduction of tax to these recipients. M/s. BTGC had entered into an agreement with the assessee on 01.04.2016 wherein the assessee was to provide services related to communication technology, which included provisioning of network on VSAT medium, providing separate router at the customer premises, provisioning of network bandwidth etc. It was noticed that the payment under consideration is for the use or right to use of the equipment for bandwidth, and hence it qualified as royalty for the use of the process. M/s. BTGC has paid the total amount of Rs. 1,55,55,344/- whichwas liable to be taxed in the hands of the assessee as its Royalty income. However, the assessee has not filed any return of income for the relevant assessment year. Accordingly, a show-cause notice u/s.148A(b) of the Act was issued on 31.03.2022 and the order u/s.148A(d) of the Act was passed on 06.05.2022. Subsequently, a notice u/s.148 of the Act was issued on 06.05.2022. In reply to the show cause notice, the assessee submitted thatISAT Africa Ltd FZCis a tax resident of UAE and is duly entitled to be governed in accordance with the provisions of the IndiaUAE Double Taxation Avoidance Agreement ('DTAA') in the present context in respect of its income earned from BTGC. ISAT does not have any Permanent Establishment ('PE') in India. It was also submitted that the assessee was duly entitled to be governed by the provisions of the Article 12 of the India- UAE DTAA on 'Royalties'. It was further submitted that the services rendered to BTGC are utilized by BTGC for its business activities outside India and accordingly, the income earned by ISAT from the same does not fall within the scope of total income taxable in India. It was further submitted that the income earned by iSAT does not qualify as income in the nature of 'royalty' and is not taxable in India.

3. This submission of the assessee has been duly cons