In a major relief to Indian Space Research Organisation (ISRO), the Authority for Advance Rulings (AAR) on Wednesday held that payments ma
de by the Indian space agency to the UK-based Inmarsat Global for hiring latters transponder services could not be taxed here. The ruling which favours ISROs Satellite Centre (ISAC) comes on a day when its parent body successfully launched countrys maiden lunar mission.

ISRO had entered into a contract with Inmarsat to lease a navigation transponder capacity for its GPS-aided Geo-augmented navigation (Gagan)-TDS project. The services of the transponder which was based on an Inmarsat satellite was accessed through data commands sent by ISRO from its ground station.

A fixed annual charge was paid by ISRO for hiring the satellites transponder services, which it said was used for better navigational accuracies of its Gagan project. The income tax department contended that ISRO had used the transponder equipment making it liable to deduct tax on its payment to Inmarsat for use of the facility. AAR, however, has ruled that the Indian space body did not operate the transponder as it received satellites access through its own network.

ISRO in submission to AAR said that it could not operate the transponder itself. It also raised questions over the territorial nexus of the equipment as it was placed in the space. Brushing aside the income tax departments contention that ISRO operated the satellite facilities, the AAR said that contractual terms did not provide for ISRO possessing or taking control of the satellite equipment.

It also turned down the revenues contention of drawing an analogy between the transponders operation to that of a television remote control. Remote control device is an accessory of the TV and the possessor of the TV himself operates the TV with that gadget, whereas ISROs ground station is an independent unit and not an accessory of the satellite, the ruling said.