PR COMMISSIONER OF INCOME TAX, DELHI-1 vs. M/S BHARAT SANCHAR NIGAM LIMITED

Analysis. Thus it is clear that an assessee is entitled to take the benefit under a Double Taxation Avoidance Agreement between two countries. Hence, the Income-tax Appellate Tribunal's view that Double Taxation Avoidance Agreement cannot be considered in proceedings under section 201 of the Act is untenable. 19. The second question for consideration is whether the Income- tax Appellate Tribunal was correct in holding that the amendment to provisions of section 9(1)(vi) inserting the Explanations will result in amendment of Double Taxation Avoidance Agreement. The answer to this question must be in the negative because in Engineering Analysis, the apex court has held that Explanation 4 to section 9(l)(vi) of the Act is not clarificatory of the position as on June 1, 1976 and in fact expands that position to include what is stated therein vide Finance Act, 2012. 20. Explanations 5 and 6 to section 9(1)(vi) of the Act has been inserted with effect from June 1, 1976. This aspect has also been considered in Engineering Analysis holding that the question has been answered by two Latin Maxims, lex no cogit ad impossibilia, i.e., the law does not demand the impossible, and impotentia excusat legem, i. e., when there is disability that makes it impossible to obey the law, the alleged disobedience of law is excused and it is held in Engineering Analysis as follows (page 558 of 432 ITR): “It is thus clear that the “person” mentioned in section 195 of the Income-tax Act cannot be expected to do the impossible, namely, to apply the expanded definition of "royalty" inserted by Explanation 4 to section 9(1)(vi) of the Income-tax Act, for the assessment years in question, at a time when such Explanation was not actually and factually in the statute……. Also, any ruling on the more expansive language contained in the Explanations to section 9(1)(vi) of the Income-tax Act would have to be ignored if it is wider and less beneficial to the assessee than the definition contained in the Double Taxation Avoidance Agreement, as per section 90(2) of the Income-tax Act read with Explanation 4 thereof, and article 3(2) of the Double Taxation Avoidance Agreement.” 21. The third question is, whether the payments made to NTOS for providing interconnect services and transfer of capacity in foreign countries is chargeable to tax as royalty. It was argued by Shri Pardiwala, that for subsequent years in the assessee’s own case, the Income-tax Appellate Tribunal has held that tax is not deductible when payment is made to non-resident telecom operator. This factual aspect is not refuted. Thus the Revenue has reviewed its earlier stand for the subsequent assessment years placing reliance on Viacom, etc., W. P. No. 36 of 2018, rendered by the Income-tax Appellate Tribunal. In that view of the matter this question also 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 15/10/2024 at 12:03:32

needs to be answered against the Revenue. 22. The fourth question is whether the Income-tax authorities have jurisdiction to bring to tax income arising from extra-territorial source. Admittedly, the NTOs have no presence in India. The assessee's contract is with Belgacom, a Belgium entity which had made certain arrangement with Omantel for utilisation of bandwidth. In substance, Belgacom has permitted utilisation of a portion of the bandwidth which it has acquired from Omantel. It is also not in dispute that the facilities are situated outside India and the agreement is with a Belgium entity which does not have any presence in India. Therefore, the tax authorities in India shall have no jurisdiction to bring to tax the income arising from extra- territorial source. 23. The fifth question is whether the Revenue is right in holding that withholding tax liability should be levied at a higher rate. It was contended by Shri Pardiwala that this issue is covered in the assessee's favour in CIT v. Wipro Ltd. [2023] 22 ITR-OL 371 (Karn); I. T. A. No. 181 of 2019 dated November 29, 2022 and the same is not disputed. Hence, this question also needs to be answered against the Revenue. 24. The sixth question is whether the assessee can be held liable for non-deduction of tax at source for payments made for the assessment years on the basis of amendment to section 9(1)(vi) of the Act. This aspect has been considered by us while answering question No. 2. It is held in Engineering Analysis that an assessee is not obliged to do the impossible. Admittedly, the assessment years under consideration are 2008-09 to 2012-13 and the Explanation has been inserted by the Finance Act, 2012. In addition, we have also held that the assessee is entitled for the benefits under the Double Taxation Avoidance Agreement” 3. Mr. Nagi, learned counsel for the respondent draws our attention to the order passed by Supreme Court on the Special Leave Petition in Deputy Director of Income Tax & Anr. v. M/s Vodafone Idea Ltd.3 which was taken against the said decision and which too has come to be dismissed on 26 July 2024. 4. We are thus of the considered opinion that these appeals fail to raise any substantial questions of law and shall consequently stand dismissed. 5. The cross objections which sought to raise the issue of Section 3 SLP(C) Diary No(s). 24154/2024 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 15/10/2024 at 12:03:32

194H would stand disposed of in light of our finding that the questions posited do not survive in light of the decision in Commissioner of Income-tax v. Idea Cellular Ltd.4 having been overruled by the Supreme Court in Bharti Cellular Limited. YASHWANT VARMA, J. RAVINDER DUDEJA, J. SEPTEMBER 23, 2024/ib 4 2010 SCC OnLine Del 757 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 15/10/2024 at 12:03:32