ADIT Circle 2 (2), v. Shin Satellite Public Co. Ltd,

ITA 914/DEL/2008 | 2002-2003
Pronouncement Date: 11-03-2011 | Result: Dismissed

Appeal Details

RSA Number 91420114 RSA 2008
Assessee PAN AAGCS4481E
Bench Delhi
Appeal Number ITA 914/DEL/2008
Duration Of Justice 3 year(s) 1 day(s)
Appellant ADIT Circle 2 (2),
Respondent Shin Satellite Public Co. Ltd,
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 11-03-2011
Date Of Final Hearing 25-02-2011
Next Hearing Date 25-02-2011
Assessment Year 2002-2003
Appeal Filed On 10-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `D: NEW DELHI BEFORE SHRI C.L.SETHI JUDICIAL MEMBER AND SHRI B.C. MEENA ACCOUNTANT MEMBER I.T. A. NOS.4394 4395 4396 & 4397/DEL/2005 ASSESSMENT YEARS : 1998-99 1999-2000 2000-01 & 2001-02 SHIN SATELLITE PUBLIC CO. LTD. DY. DIRECTOR OF IN COME-TAX THAICOM SATELLITE STATION VS. (INTERNATIONAL TAXAT ION)-2(2) 41/103 RATTANATHIBET ROAD NEW DELHI. NONTHABURI 11000 THAILAND. PAN: AAGCS4481E I.T. A. NO.914/DEL/2008 ASSESSMENT YEAR : 2002-03 ASSTT. DIRECTOR OF INCOME-TAX SHIN SATELLITE PUB LIC CO. LTD. CIRCLE 2(2) INTERNATIONAL TAXATION) VS. THAICOM S ATELLITE STATION 41/103 RATTANATHIBET ROAD NONTHABURI 11000 THAILAND. PAN: AAGCS4481E (APPELLANTS) (RESPONDENTS) ASSESSEE BY: SHRI F.V. IRANI SR. ADVOCATE. DEPARTMENT BY: SHRI ASHWANI MA HAJAN CIT-DR. O R D E R PER BENCH THE APPEALS PERTAINING TO THE ASSESSMENT YEARS 1998 -99 1999-2000 2000-01 AND 2001-02 ARE FILED BY THE ASSESSEE AGAIN ST ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING THE PENALTY LEVIED BY THE 2 ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE IN COME-TAX ACT 1961 (THE ACT). 2. ITA NO.914/DEL/2008 PERTAINING TO THE ASSESSMENT YEAR 2002-03 IS FILED BY THE REVENUE AGAINST THE ORDER DATED 31.12. 2007 OF THE LEARNED CIT(A) DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SEC. 271(1)(C) OF THE ACT. 3. IN ALL THESE ASSESSMENT YEARS THE RECEIPTS RECE IVED BY THE ASSESSEE FROM TELECASTING COMPANIES OR INTERNET SERVICES PRO VIDERS TOWARDS PROVIDING TRANSPONDERS WAS HELD TO BE ROYALTY CHARGEABLE TO T AX IN INDIA BY THE ASSESSING OFFICER. THE AOS ORDER IN QUANTUM HAS B EEN UPHELD BY THE LEARNED CIT(A) FOLLOWING THE DECISION OF ITAT DELHI BENCH IN THE CASE OF ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. (85 ITD 478). THE DECISION OF THE TRIBUNAL IN THE CASE OF ASIA SATELLITE TELECOMM UNICATIONS CO. LTD. HAS NOW BEEN REVERSED BY THE HONBLE DELHI HIGH COURT I N THE CASE OF CIT VS. ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. IN ITA 1 31 TO 134 OF 2003 DATED 31 ST JANUARY 2011. 4. THE HONBLE HIGH COURT OF DELHI IN THE ABOVE REF ERRED CASE OF ASIA SATELLITE TELECOMMUNICATION CO. LTD. IN ITA NOS. 13 1 TO 134/2003 HAS HELD THAT RECEIPTS EARNED FROM PROVIDING DATA TRANSMISSI ON SERVICES THROUGH PROVISION OF SPACE SEGMENT CAPACITY ON SATELLITES D OES NOT CONSTITUTE ROYALTY 3 WITHIN THE MEANING OF SEC. 9(1)(VI) OF THE ACT. IN DOING SO THE HONBLE HIGH COURT HAS CONCLUSIVELY HELD THAT WHILE PROVIDI NG TRANSMISSION SERVICES TO ITS CUSTOMERS THE CONTROL OF THE SATELLITE OR T HE TRANSPONDER ALWAYS REMAINS WITH THE SATELLITE OPERATOR AND THE CUSTOME RS ARE MERELY GIVEN ACCESS TO THE TRANSPONDER CAPACITY. ACCORDINGLY SINCE TH E CUSTOMER DOES NOT UTILIZE THE PROCESS OR EQUIPMENT INVOLVED IN ITS OPERATIONS THE CHARGES PAID TO THE SATELLITE OPERATORS ARE NOT COVERED WITHIN THE MEAN ING OF ROYALTY AS PROVIDED UNDER EXPLANATION 2 TO SEC. 9(1)(VI) AND THEREFORE THE SAME CANNOT BE TREATED AS ROYALTY. IN THIS CASE THE REVENUE ALSO RAISED THE QUESTION REGARDING APPLICABILITY OF SEC. 9(1)(VII) FOR THE F IRST TIME BEFORE THE TRIBUNAL. ALTHOUGH THIS GROUND WAS ADMITTED IT WAS NOT DECI DED AS THE RECEIPT WAS HELD TO BE ASSESSABLE UNDER SEC. 9(1)(VI) OF THE AC T BY THE TRIBUNAL. NO ARGUMENT WAS ADVANCED BY THE LEARNED COUNSEL FOR TH E REVENUE BEFORE THE HONBLE HIGH COURT IN THIS MATTER. THEREFORE THE SUBMISSION OF THE REVENUE REGARDING APPLICABILITY OF SEC. 9(1)(VII) WAS NOT A CCEPTED. THE RESULT OF THE DECISION OF THE HONBLE HIGH COURT IS THAT THE RECE IPT RECEIVED BY THE ASSESSEE IS NOT TAXABLE EITHER UNDER SEC. 9(1)(VI) OR SEC. 9(1)(VII) OF THE ACT. 5. IN THE LIGHT OF THE AFORESAID DECISION OF THE DE LHI HIGH COURT IN THE CASE OF ASIA SATELLITE TELECOMMUNICATION CO. LTD. ( SUPRA) WE HAVE REVERSED THE ORDERS OF THE ASSESSING OFFICER AS WELL AS OF T HE LEARNED CIT(A) AND 4 DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE VIDE OUR ORDER OF EVEN DATE IN ITA NOS. 2598 2599 2600 & 2601/DEL/2004 AND ITA NO.496/DEL /2006 PERTAINING TO THE A.Y. 1998-99 TO 2002-03 HOLDING THAT THE RECEIPTS RECEIVED BY THE ASSESSEE FROM PROVIDING TRANSPONDERS TO VARI OUS CHANNELS IS NOT TAXABLE IN INDIA. 6. SINCE THE VERY ADDITION MADE BY THE AO STANDS DE LETED IN THE LIGHT OF OUR ORDER IN THE QUANTUM APPEAL THE PENALTY LEVIED BY THE ASSESSING OFFICER DOES NOT SURVIVE. WE THEREFORE DELETE THE PENALT Y. 7. EVEN OTHERWISE THOUGH THE QUANTUM APPEAL IN THE CASE OF ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. WAS DECIDED B Y THE TRIBUNAL AGAINST THE ASSESSEE THE PENALTY LEVIED BY THE AO UNDER SE C. 271(1)(C) WAS DELETED BY THE TRIBUNAL VIDE ORDER DATED 20 TH FEBRUARY 2007 BY OBSERVING THAT THE ISSUE REGARDING TAXABILITY OF THE RECEIPTS IN THE C ASE WAS HIGHLY DEBATABLE. 8. IN THE PRESENT CASE THE ASSESSEE HAS FURNISHED ALL THE DETAILS ABOUT THE RECEIPTS RECEIVED FROM THE TV CHANNELS AND MADE A B ONA FIDE CLAIM THAT THE SAME IS NOT TAXABLE IN INDIA WHICH VIEW HAS NOW BE EN ACCEPTED BY THE HONBLE DELHI HIGH COURT AND THEREFORE THE ASSESS EES CLAIM CANNOT BE SAID TO BE MALA FIDE SO AS TO ATTRACT PENALTY UNDER SEC. 271(1)(C) OF THE ACT. 9. IN THE RESULT WE REVERSE THE ORDERS OF THE AUTH ORITIES BELOW PERTAINING TO THE ASSESSMENT YEARS 1998-99 TO 2001-02 AND DELE TE THE PENALTY LEVIED BY 5 THE AO AND UPHOLD THE ORDER OF THE CIT(A) IN DELET ING THE PENALTY FOR THE ASSESSMENT YEAR 2002-03. 10. IN THE RESULT THE APPEALS FOR THE ASSESSMENT Y EARS 1998-99 TO 2001-02 FILED BY THE ASSESSEE ARE ALLOWED AND THAT OF THE REVENUE FOR THE ASSESSMENT YEAR 2002-03 IS DISMISSED. 11. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 11 TH MARCH 2011. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH MARCH 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.