The Income Tax Appellate Tribunal (ITAT), Delhi bench consisting of B.R.R. Kumar, Accountant Member, and Yogesh Kumar U.S, Judicial Member held that receipts in the nature of Royalties of India- USA DTAA are not taxable in India.
The grounds of appeal raised by the assessee, Intelsat Corporation, C/o. Price water House Coopers Pvt. Ltd states that the Assessing Officer (AO) has erred in assessing the income of the appellant at Rs 123,08,08,095/- for the subject year and that the Dispute Resolution Panel (referred to as Panel hereinafter) erred in not directing the AO to hold that the appellant is not liable to tax in India. The assessee also submitted that the Panel erred in not directing the AO to follow the orders issued by the High Court of Delhi in the appellant’s own case for Assessment Year 2006-07 to Assessment Year 2008-09, wherein the Delhi High Court has dismissed the appeals filed by the Revenue Department against the favorable orders of the Income Tax Appellate Tribunal, New Delhi.
The Counsels for the assessee, Vishal Kalra, and S. S. Tomar further submitted that the Panel and the AO erred in holding that the receipts of the appellant are in the nature of Royalties within the ambit of Explanation 2 to section 9(i)(vi) of the Income-tax Act, 1961 and Article 12(3) of the India-USA Double Taxation Avoidance Agreement (DTAA) and the formerly mentioned authorities erred in not appreciating that appellant is a resident of USA is covered by the beneficial provisions of DTAA between India and USA and accordingly, could not be taxed under the provisions of the Income Tax Act. The counsels also submitted that the authorities failed to interpret the definition of Royalties as defined in Article 12(3) of DTAA.
The Tribunal considered the orders issued by the High Court of Delhi in the appellant’s own case for Assessment Year 2006-07 to Assessment Year 2008-09 and said “we direct the Assessing Officer to treat the income of the assessee as not liable to tax in India.”
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