By K. B. Bhujle Advocate
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DIT vs. New Skies Satellite BV; 382 ITR 114 (Del):
The assessee, a non-resident, derived income from the “lease of transponders” of their respective satellites. This lease was for the object of relaying signals of their customers; both resident and non-resident television channels, that wished to broadcast their programs for a particular audience situated in a particular part of the world. The assessees were chosen because the footprint of their satellites, i.e. the area over which the satellite could transmit its signal, included India. Having held the receipts taxable u/s. 9(1)(vi), the Assessing Officer held that the assessee would not get the benefit of DTAA between India and Thailand and between India and Netherlands. The Tribunal held that they were not taxable in India in view of the DTAA .
On appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal and held as under:
“i) Just because there is a domestic definition similar to the one under the DTAA , amendments to the domestic law, in an attempt to counter, restrict or expand the definition under its statute, cannot extend to the definition under DTAA . In other words, the domestic law remains static for the purpose of DTAA . Consequently, the Finance Act, 2012 will not affect article 12 of the DTAA , and it would follow that the first determinative interpretation given to the word ”royalty” in the case of Asia Satellite, when the definitions were in fact pari materia, will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve DTAA , unless the DTAA s are amended jointly by both parties to incorporate income from data transmission services as partaking the nature of royalty, or amend the definition in a manner so that such income automatically becomes royalty.
ii) T he receipts of the assessee from providing data transmission services were not taxable in India.”
