PR. COMMISSIONER OF INCOME TAX (INTL TAX 2) vs. M/S PLANETCAST INTERNATIONAL PTE.

PDF · subscribers
ITA/601/2023HC DelhiDLHC01043772202309 February 2024Bench: HON'BLE MR. JUSTICE YASHWANT VARMA,HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court found that once the ITAT concluded that the services in question did not qualify as 'managerial', 'technical', or 'consultancy' services, there was no occasion to further delve into the interpretation of Article 12(4)(b) of the DTAA. The ITAT's findings of fact, which determined that the playout services were integral to broadcasting and transmission and did not involve decision-making, were considered conclusive. Consequently, the High Court held that the appeal raised no substantial question of law. The question regarding the interpretation of Article 12(4)(b) of the DTAA was left open for consideration in an appropriate future case. The appeal was dismissed.

What were the facts?

The Principal Commissioner of Income Tax (International Taxation 2) appealed an order from the Income Tax Appellate Tribunal (ITAT) dated December 19, 2022, concerning Assessment Year 2017-18. The dispute involved playout services provided by the assessee, M/s Planetcast International Pte. These services involved providing equipment, infrastructure, and manpower for continuous channel content playing based on a schedule. For disaster recovery, playout equipment at a Singapore facility was kept pre-configured and ready to activate if the main equipment failed, with 24x7 monitoring by trained operators.

What were the issues?

1. Whether the playout services provided by the assessee constitute Fee for Technical Services under the Income Tax Act, 1961, and the relevant Double Taxation Avoidance Agreement (DTAA). Assessee's Contention: The ITAT correctly held that the playout services did not fall within the ambit of managerial, technical, or consultancy services. The services were an integral part of broadcasting and transmission, ensuring consistency and uninterrupted availability, and did not involve decision-making. Therefore, they did not qualify as Fee for Technical Services. Revenue's Contention: The ITAT incorrectly appreciated the scope of the expression 'making available' and other facets of Article 12(4)(b) of the DTAA, which pertains to enabling the recipient to apply the technology.

Which sections of the Income-tax Act were involved?

Section 12

AI-generated summary — verify with the full judgment below

Cited by 12 judgments on BharatTax

See all citing judgments →

Counted from the text of the judgments hosted here. Most recent first.

$~12 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 601/2023

PR. COMMISSIONER OF INCOME TAX (INTL TAX 2) ..... Appellant Through: Mr. Sanjeev Menon, Jr. Standing Counsel for Mr. Zoheb Hossain, Sr. Standing Counsel.

versus

M/S PLANETCAST INTERNATIONAL PTE. ..... Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Kishore Kunal, Mr. Mahesh Singh and Mr. Jayesh S., Advs.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV

O R D E R %

09.02.2024

1.

The Department in the instant appeal seeks to question the correctness of the view expressed by the Income Tax Appellate Tribunal [‘ITAT’] as per the impugned order dated 19 December 2022 for Assessment Year [‘AY’] 2017-18. The dispute itself emanates out of a playout service which was being provided by the respondent/assessee and which as per the explanation tendered embodied the following features :- “Playout Service

Playout services are inextricably linked to Uplinking services and encompasses provision of equipment, infrastructure and manpower to manage continuous playing of channel content based on minute to minute schedule. 2.

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/12/2024 at 15:08:11

For providing Disaster recovery Uplinking and Playout services, the up linking and playout equipment installed at the teleport facility of Adore at Singapore is kept pre-configured and in readiness. In the event that the main uplink and playout equipment becomes unavailable/non-functional, the uplink at Singapore facility immediately gets activated. All operations are monitored by highly trained operators and supervisors of Adore in Singapore on a 24 x 7 basis.”

2.

The ITAT has while dealing with the aforesaid aspect come to conclude that the nature of the service being provided would not fall within the ambit of managerial, technical or consultancy services. It has ultimately and on an appreciation of the facts as well as the structure of the playout service come to hold that it was an integral feature of broadcasting and transmission of channels and thus did not involve any decision making. It has been found that the service was essentially to ensure consistency in the broadcasting of channels and thus ensure uninterrupted availability thereof. It has ultimately and on that basis come to conclude in Para 42 that the recovery playout services would not fall within the scope of Fee for Technical Services. 3. While this would have been sufficient, the ITAT appears to have proceeded further to also notice the provisions made in Article 12(4)(b) of the Double Tax Avoidance Agreement [‘DTAA’] and alluded to the added requirement of the service including “making available of” technical knowledge, experience, skill, knowhow or processes enabling the person acquiring the service to apply the technology contained therein. 4. According to Mr. Menon, the ITAT has in that respect incorrectly appreciated the scope of the expression „making available‟ as well as the other facets of Article 12(4)(b) of the DTAA and which speak of enablement to apply the technology contained therein. 5. In our considered opinion, once the ITAT had come to conclude This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/12/2024 at 15:08:11

that the service in question would not qualify within the meaning of the expressions „managerial‟, „technical‟ or „consultancy‟, there perhaps was no occasion to travel further. 6. While we thus leave the question of the interpretation liable to be accorded to Article 12(4)(b) of the DTAA open to be addressed by the Department in an appropriate case, in light of the findings of fact which have ultimately been rendered by the ITAT and have been referred to above, we find that the appeal raises no substantial question of law. Consequently, it shall stand dismissed.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. FEBRUARY 09, 2024/RW This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/12/2024 at 15:08:11

More judgments on Section 12

All 2,391 judgments and leading authorities on Section 12 →

Recent GST High Court judgments

Search GST case law →