Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: Central Excise rule to resale the machines to a new company :: cpt :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: empanelment :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: list of goods taxed at 4% :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: ACCOUNTING STANDARDS :: VAT RATES
News Headlines »
 7 Tax-saving investments for the risk averse
 5 Tax tasks you should complete before March 31
 March 31 deadline nears: Check out these last-minute tax-saving investment options
 How to file income tax returns online without having Form 16 in 10 simple steps
 Deadline For Filing Income Tax Return (ITR) Is Just 11 Days Away: 10 Latest Details To Know
  10 incomes you need not pay any tax on
 How To File Income Tax Returns In Three Steps By March 31, 2018
 10 things about income tax every taxpayer should know
 What to do if your TDS is not deposited with the government
 What if you forget to verify your Income Tax return?
 TDS on rent and other tax tasks to complete before March 31

Taxation of satellite companies
September, 12th 2006
As diverse the culture and dialects that India has, so are diverse and varied the 300+ channels currently being beamed over India - partly by foreign telecasting companies (FTCs) located overseas and partly by local telecasting companies. Most of these FTCs broadcast their channels by utilising the telecommunication satellite facility provided by satellite companies located overseas (satellite cos). Satellite cos have their satellites in outer space, which are used for beaming the signals to all the desired countries of broadcast. The taxability of these satellite cos in India in respect of the overseas payments made by FTCs to satellite cos for using the transponder space on their satellites has always been a challenging proposition and the debate has still not seen its end. The moot question is whether these satellite cos, which are situated outside India and whose satellites are used for transmitting signals into India, can be held to be liable to income tax in India by way of 'royalty' or 'fees for included services' (FIS). (These satellite cos generally do not have any presence in India). Recently, the Income Tax Appellate Tribunal (ITAT), Delhi, was faced with a similar issue in the case of PanAmSat International Systems Inc, USA (PanAmSat) for the assessment year 1997-98. This issue was also addressed earlier, inter alia, by a different bench of the Delhi ITAT in the case of Asia Satellite Telecommunication Co Ltd (85 ITD 478). This decision was rendered under the provisions of the Indian Income Tax Act, 1961 (Act), since AsiaSat was tax resident in Hong Kong and India does not have a tax treaty with Hong Kong. The Delhi ITAT in AsiaSat observed that the process of uplinking from overseas and downlinking of signals into India definitely entails a 'process'. Further, the term 'secret', appearing in the definition of royalty under the Act as 'secret formula or process', is a prefix only to the term 'formula' and its scope does not extend to the term 'process'. Also, 'process' refers to a series of actions/steps taken in order to achieve a particular end. Accordingly, it was concluded that payments made by FTCs to AsiaSat constitutes 'royalty' under provisions of the Act and it accrues or arises in India. Consequently, AsiaSat was held to be liable to tax in India. This issue was revisited by a different bench of the Delhi ITAT recently in the case of PanAmSat. One significant factual difference in the case of PanAmSat was that it was analysed both under Act as well as the India-USA tax treaty, the latter being more beneficial in nature. In PanAmSat's case, the Delhi ITAT observed that as opposed to the Act, the Indo-US treaty provided for a comma after the term 'secret formula or process' in the definition of royalty. Hence, it was concluded that the term 'secret' had to be applied as a prefix to both 'formula' and 'process'. In the facts of the case, the process was being made available by PanAmSat off the shelf to several FTCs and also printed in the form of a literature. Consequently, there was no element of 'secrecy' in the process and hence, it was held that the payment for the use of process cannot constitute 'royalty'. Further, the Delhi ITAT analysed whether these payments could be characterised as fees for included services under the Indo-US tax treaty. It was argued by PanAmSat that it only provides a standard facility/ service to all those who are willing to pay for the same, while relying on the decision in the case of Skycell Communications (251 ITR 53). Further, no technology relating to the satellite can be said to have been 'made available' (a concept unique to the Indo-US treaty as against the Act) to the FTCs, since the FTCs are not enabled to utilise the technology in any way. Accordingly, it was held that the payment does not fall within the definition of FIS under the Indo-US treaty, and in the absence of a permanent establishment in India, the payments made by FTCs to PanAmSat are not liable to tax in India. The Delhi ITAT also made an important passing observation (though no conclusive views were provided) that even if the payments were to be construed as 'royalty' or 'FIS', the same may not accrue or arise in India. The PanAmSat decision should breathe a fresh lease of life in those satellite cos who have adopted a similar business model and are enjoying similar treaty protection. SANDEEP LADDA & SUROJIT RAY The authors are with PricewaterhouseCoopers
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Vision

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions