Facts of the Case

The present appeal pertains to Assessment Year (AY) 2019–20, wherein the Revenue (Appellant) challenged the order dated 31.01.2023 passed by the Income Tax Appellate Tribunal.

The core issue arose from payments received by the assessee (Intelsat US LLC) for providing satellite transponder services to customers in India. The Assessing Officer had made additions treating such receipts as taxable income in India.

The Revenue preferred an appeal before the Delhi High Court seeking to set aside the Tribunal’s order.

Issues Involved

  1. Whether payments received for satellite transponder services are taxable in India.
  2. Whether such receipts fall within the ambit of royalty under Section 9(1)(vi) of the Income Tax Act, 1961.
  3. Whether the issue is already settled by earlier judicial precedents.

Petitioner’s Arguments (Revenue)

  • The Revenue contended that the amount received for transponder services constitutes royalty under Section 9(1)(vi).
  • It was argued that such payments are deemed to accrue or arise in India and hence are taxable.
  • The Revenue sought reconsideration of earlier judicial precedents, noting that Special Leave Petitions (SLPs) are pending before the Supreme Court.

Respondent’s Arguments (Assessee – Intelsat US LLC)

  • The assessee argued that the issue is squarely covered by binding precedents of the Delhi High Court.
  • It was submitted that transponder services do not amount to royalty, as there is no transfer of control or possession of equipment.
  • Reliance was placed on earlier decisions which held such receipts as non-taxable in India.

Court Order / Findings

The Delhi High Court observed that the issue raised in the present appeal is already covered by its earlier judgment in:

  • Commissioner of Income Tax (International Taxation)-2 vs Intelsat US LLC

The Court further noted reliance on coordinate bench rulings in:

  • M/s Asia Satellite Telecommunications Co. Ltd. v. DIT
  • Director of International Taxation v. New Skies Satellite BV

Following these binding precedents, the Court held:

  • The issue is no longer res integra.
  • The appeal filed by the Revenue is closed.

Important Clarification

  • The Court clarified that SLPs filed by the Revenue against earlier judgments are pending before the Supreme Court.
  • It was observed that:
    • If the Revenue succeeds in those SLPs, the outcome will bind the parties in the present case as well.

Sections Involved

  • Section 9(1)(vi) of the Income Tax Act, 1961 – Income deemed to accrue or arise in India (Royalty)

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60817082023ITA4552023_103959.pdf

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