Payment to Foreign Company for Utilization of Transponder Centered on a Satellite does not amount to ‘Royalty’: ITAT [Read Order]

Payment - Foreign Company - Transponder - Satellite - Royalty - ITAT - Taxscan

The Mumbai bench of the ITAT, while considering a departmental appeal against the assessee, M/s Viacom 18 Media Pvt. Ltd, held that the payment to a foreign company for utilization of transponder centered on a satellite is not in the nature of Royalty in terms of various DTAAs.

The bench comprising Mr. Sandip Singh Karhail (JM) and Mr. Prasanth Maharishi (AM) was hearing a bunch of appeals wherein the Assessee is engaged in the business of marketing advertisement time for different television channels, and distribution of these channels. The assessee has made payment for transponder service fees to three entities namely (1) intelsat Corporation, USA, (2) Intelsat global sales and marketing, UK and (3) MEAST satellite system, Malaysia. While filing the income tax returns, the Assessee applied for an order u/s 195 (2) for Nil withholding tax certificates for payment of transponder services fees payable to the service providers. However, the assessing officer rejected it holding that these payments are chargeable to tax as royalty.

The authorised representative of the assessee submitted that this issue is squarely covered in favour of the assessee by the decision of the coordinate bench in assessee‘s own case on identical facts and circumstances in [TS-66-ITAT-2022(Mum)].

While dismissing the appeal by the Revenue, the Tribunal held that “Therefore, respectfully following the decision of the coordinate bench in assessee‘s own case, which also judicially binds us, we are of the view that there is no infirmity in the order of The ld CIT (A) in holding that payment by assessee to a foreign company for utilization of transponder centered on a satellite is not in the nature of Royalty in terms of various Article of above Three DTAAs.

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