INCOME TAX OFFICER(IT)(TDS), NEW DELHI, CIVIC CENTRE vs. BHARTI TELEPORTS LTD. (NOW KNOWN AS INDO TELEPORTS LTD.), DELHI

ITITA 29/DEL/2025Status: DisposedITAT Delhi03 June 2026AY 2014-159 pages
AI SummaryDismissed

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2014-15. The assessee, Bharti Teleports Ltd. (now Indo Teleports Ltd.), paid Rs. 15,49,45,416/- to Intelsat Global Sales and Marketing Ltd. (IGSML), a UK resident, for satellite bandwidth services. The Assessing Officer (AO) initiated proceedings under Section 201(1)/201(1A)/195 of the Income Tax Act, 1961, holding that these payments constituted royalty and the assessee was in default for not deducting TDS. A demand of Rs. 6,07,28,711/- was raised. The CIT(A) allowed the assessee's appeal, leading to the present appeal by the Revenue.

What did the Tribunal hold?

The Tribunal held that the order of the CIT(A) was justified and no interference was called for. The Tribunal noted that the CIT(A) had passed a reasoned order after considering various judicial pronouncements. The Tribunal specifically referred to the Hon'ble Delhi High Court's decisions in Asia Satellite Telecommunications Co. Ltd. and Directorate of Income-tax v. New Skies Satellite BV, which held that payments for satellite bandwidth services were not royalty under Section 9(1)(vi) of the Act. The Tribunal emphasized that the Hon'ble Delhi High Court, in New Skies Satellite BV, had considered the Finance Act, 2012 amendments and held that domestic law amendments cannot extend to the terms of an international treaty unless the treaty itself is amended. This position was further upheld by the Hon'ble Supreme Court in M/s. Engineering Analysis Centre of Excellence Private Limited. The Tribunal also noted the Hon'ble Supreme Court's decision in Vodafone Idea Ltd., which held that bandwidth charges paid to foreign telecom operators are not chargeable as royalty, and that this ratio applies equally to satellite bandwidth charges. The Tribunal concluded that the addition made by the AO was not sustainable and directed its deletion. The demand of Rs. 6,07,28,711/- was deleted.

What were the issues?

1. Whether the payments for satellite bandwidth services made by the assessee to IGSML constitute royalty under Section 9 of the Income Tax Act, 1961, requiring TDS deduction under Section 195. Assessee's Contention: The assessee argued that the issue is covered by various decisions of the Hon'ble Jurisdictional High Court, and the CIT(A) correctly allowed relief based on these decisions. The assessee relied on the judgments in Asia Satellite Telecommunications Co. Ltd. v. DIT, Directorate of Income-tax v. New Skies Satellite BV, and Vodafone Idea Ltd. The assessee also contended that the payments were not royalty or Fee for Technical Services (FTS) and that amendments to domestic law cannot override Double Taxation Avoidance Agreements (DTAA) unless the DTAA is also amended. Revenue's Contention: The Revenue strongly relied on the order of the AO. The Revenue argued that the CIT(A) erred in allowing the appeal and holding that payments for bandwidth services do not qualify as royalty under Section 9, despite the Explanation introduced by the Finance Act, 2012. The Revenue also argued that beneficial provisions of DTAA do not override retrospective amendments in domestic tax laws, especially when such amendments are clarificatory.

Which sections of the Income-tax Act were involved?

Section 9(1)(vi),Section 195,Section 201(1),Section 201(1A),Section 206AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, D: NEW DELHI

Before: SHRI VIKAS AWASTHY & SMT. RENU JAUHRI

For Appellant: Shri Rohit Jain, Adv, Shri Deepesh Jain, Adv. &, Ms. Aditi Garg, CA
For Respondent: Shri Vikram Singh Sharma, Sr. DR
Hearing: 13.05.2026Pronounced: 03.06.2026

Per Renu Jauhri, Accountant Member:

This appeal by the Revenue is directed against the order dated 05.08.2025 of the Commissioner of Income Tax, (Appeal), Delhi-42, [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the Assessment Order dated 30.03.2021 passed under section 201(1)(201(1A)/ 195 of the Income Tax Act, 1961 (hereinafter referred to as IT(IT)A No.- 29/Del/2025 Bhar" Teleports Ltd. (Now known as Indo Teleports Ltd.) the ‘the Act’) by the ITO, Ward (International Taxation)-1(1)(2), New Delhi, (hereinafter referre

The order continues below.

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