Section 248 of the Income Tax Act
The decision most relied on for Section 248 is Asia Satellite Telecommunications Co. Ltd. v. DIT (332 ITR 340), cited in 356 of the 31 judgments on BharatTax that turn on this section.
Leading authorities on Section 248
Payments for the use of equipment, such as satellite transponders, do not constitute 'royalty' under Section 9(1)(vi) of the Income-tax Act, 1961, or under applicable tax treaties, especially when there is no transfer of the right to use a process or underlying technology.
Sections 4 and 5 of the Income Tax Act, which define total income and chargeability, are subject to Section 90, meaning that Double Taxation Avoidance Agreements (DTAAs) override the Act's provisions in case of a conflict.
The interpretation of the term 'royalty' as defined in tax treaties is not influenced by India's subsequent changes in position to the OECD Commentary or by executive actions. A treaty between sovereign states cannot be unilaterally amended by domestic law or executive policy without incorporating such changes into the treaty itself.
Indian courts should follow Double Taxation Avoidance Agreements (DTAAs) when interpreting similar terms in the Income Tax Act. The case establishes the principle of DTAA primacy over domestic law for such interpretations.
Judgments on Section 248
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