Receipts from Disaster Recovery Up-Linking Services are not Royalty: ITAT deletes Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that receipts from disaster recovery up-linking services are not Royalty. Therefore the bench deleted the addition made by the assessing officer.

The assessee, Planetcast International Pte. Ltd.e is a non-resident corporate entity and a tax resident of the Republic of Singapore. principal activities of the assessee are that of satellite telecommunication network operations and wholesale of electronic and telecommunication equipments and parts.

During the course of assessment proceedings, the Assessing Officer noticed that the assessee had receipts from disaster recovery up-linking services, disaster recovery play-out services, down-linking and distribution services, digital satellite news gathering services etc. But assesee not offered tax in India.

Thereafter, the AO concluded the Assessment and made addition and treated the receipts as royalty.

Aggrieved, the order assesee filed an objection before the Dispute Resolution Panel (DRP) who upheld the addition. Therefore the assessee filed appeal before the tribunal.

Before the tribunal Ajay Vohra C, Counsel for assessee submitted that identical issue was decided in favour of assessee in the assessment year 2017-18.Hence

Vizaya Vasanta, Counsel for Revenue, supported the decision of the lower authorities.

The tribunal observed that the assessee provides services to its customers using its equipment outside India. Various satellite based telecommunication services provided by the assessee to its customers are standard services, provided by various other service providers in the industry.

Thus, there is no ‘know-how’ or ‘intellectual property’ involved in the provision of such services by the assessee.

Further, the customers are not granted the use of or the right to use any process by the assessee during the course of providing various satellite-based telecommunication services.

Therefore, the amount received by the assessee from its customers in India as consideration for the provision of a service could not  be characterized as royalty for the use or right to use of a process.

After reviewing the facts and submissions of both parties, the two-member bench of B.R.R. Kumar,(account member)  and Saktijit Dey, (Vice-President) held that receipts from disaster recovery up-linking services are not Royalty.

To Read the full text of the Order CLICK HERE

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