DIRECTOR OF INCOME TAX vs. SHIN SATELLITE PUBLIC CO LTD

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ITA/500/2012HC DelhiDLHC01029508201208 February 2016Bench: CASES PERTAINING TO SPL.DIVISION BENCHES2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Director of Income Tax. The judgment refers to a detailed decision dated 08.02.2016 in ITA 473/2012. While the specific reasoning for dismissing these appeals is not detailed in this excerpt, it is implied that the High Court found no merit in the revenue's contentions. The dismissal suggests that the High Court agreed with the ITAT's findings, which likely held that the income in question was not taxable in India as royalty or business income attributable to a Permanent Establishment. The operative direction is the dismissal of the appeals, with no order as to costs. No issue was expressly left undecided.

What were the facts?

These appeals by the Director of Income Tax (DIT) challenge orders passed by the Income Tax Appellate Tribunal (ITAT). The cases involve respondents New Skies Satellite BV and Shin Satellite Public Co. Ltd. The appeals concern assessment years not explicitly stated in this excerpt. The core dispute revolves around the taxability of income earned by these foreign satellite companies from providing satellite transponder capacity to Indian customers. The DIT is aggrieved by the ITAT's decision to delete the additions made to the total income of the assessees, which had been confirmed by the Commissioner of Income Tax (Appeals). The procedural history indicates these are appeals filed by the revenue against the ITAT's rulings.

What were the issues?

1. Whether the income earned by the foreign satellite companies from providing satellite transponder capacity to Indian customers constitutes 'royalty' under Section 9(1)(vi) of the Income Tax Act, 1961, and is therefore taxable in India. 2. Whether the income is taxable as 'business income' in India, and if so, whether the assessees have a Permanent Establishment (PE) in India. Assessee's Contentions (implied from the revenue's challenge and typical arguments in such cases): The assessees likely argued that the income was not royalty as it pertained to the use of a satellite in space and not the 'right to use any patent, invention, model, design, secret formula or process, or for information concerning industrial, commercial or scientific knowledge, experience or skill'. They may have also argued that the income was not business income attributable to a PE in India, as their operations were outside India and no services were rendered within India. Revenue's Contentions: The revenue contended that the payments received for satellite transponder capacity constituted royalty under Section 9(1)(vi) of the Act. Alternatively, they argued that the income was taxable as business income in India, and that the assessees had a Permanent Establishment (PE) in India, making the income attributable to such PE taxable.

Which sections of the Income-tax Act were involved?

Section 9(1)(vi)

AI-generated summary — verify with the full judgment below

ITA 474/2012, 500/2012 & 244/2014 Page 1

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 30.11.2015 Pronounced on: 08.02.2016

+ ITA 474/2012

DIRECTOR OF INCOME TAX

…….Appellant

Versus

NEW SKIES SATELLITE BV

……Respondent

+ ITA 500/2012

DIRECTOR OF INCOME TAX

…….Appellant

Versus SHIN SATELLITE PUBLIC CO. LTD.

……Respondent

+ ITA 244/2014, C.M. APPL.9724/2014

DIRECTOR OF INCOME TAX-II

…….Appellant

Versus

SHIN SATELLITE PUBLIC CO. LTD.

……Respondent Through: Sh. Rohit Madan, Sh. Ruchir Bhatia and Sh. Akash Vajpai, Advocates, for DIT in ITA 244/2014, ITA 473/2012, ITA 474/2012 & ITA 500/2012 Sh. M.S. Syali, Sr. Advocate with Sh. Mayank Nagi and Ms. Bhawna Bakshi, Advocates, for respondent in ITA 473/2012 and ITA 474/2012. Sh. T.V.S. Raghavendra Sreyas and Sh. N. Sai Vinod, Advocates, for respondent in ITA 474/2012. Sh. F.V. Irani, Sh. Nikhil Nayyar, Sh. Arun. H. Mehta and Ms. Akansha, Advocates, for respondent in ITA 500/2012.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K. GAUBA

MR. JUSTICE S. RAVINDRA BHAT

ITA 474/2012, 500/2012 & 244/2014 Page 2

% The appeals are dismissed without any order as to costs. For detailed decision, the judgement dated 08.02.2016 in ITA 473/2012 may be referred to.

S. RAVINDRA BHAT (JUDGE)

R.K. GAUBA (JUDGE) FEBRUARY 08, 2016

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