Income Tax Officer (International Taxation) v/s Bennett Coleman & Co. Ltd.

Parties Involved

Facts Summary

The assessee, Bennett Coleman & Co. Ltd., is a company incorporated in India engaged in media publishing services. It entered into an agreement with Intelsat Global Sales and Marketing Limited (Intelsat UK) for up-linking and down-linking of satellite signals for broadcasting television channels in India. The assessee made regular payments to Intelsat UK for transponder service fees. The assessee withheld taxes on a grossed-up basis while making these payments, believing that the transponder service fees were not chargeable to tax in India under the Income Tax Act and the India-UK Double Taxation Avoidance Agreement (DTAA). The assessee filed an appeal before the Commissioner of Income Tax (Appeals) (CIT(A)), which was decided in favor of the assessee. The Revenue filed appeals against this decision, arguing that the transponder service fees should be considered as Royalty and thus taxable under section 195 of the Act.…

Legal Issues

• 1. Whether the assessee was required to deduct tax at source under section 195 of the Act on payment of transponder charges/transponder service fees, considering it as payment of Royalty.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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