Commissioner Of Income-Tax (International Taxation) -2, Delhi v. Planetcast International Pte. Ltd., (Formerly Known As Adore Technologies Pte. Ltd

$~1 to 3 IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 201/2024, CM APPL. 18460-61/2024 COMMISSIONER OF INCOME-TAX (INTERNATIONAL TAXATION) -2, DELHI ..... Appellant ..... Appellant Through: Mr. Sunil Aggarwal, SSC with Mr. Shivansh Pandya, Mr. Utkarsh Tiwari, Advs. versus PLANETCAST INTERNATIONAL PTE. LTD., (FORMERLY KNOWN AS ADORE TECHNOLOGIES PTE. LTD.) ..... Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Kishore Kunal, Ms. Ankita Prakash, Mr. Mahesh Singh, Advs. 2 + ITA 202/2024, CM APPL. 18470-71/2024 COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-2, DELHI ..... Appellant ..... Appellant Through: Mr. Sunil Aggarwal, SSC with Mr. Shivansh Pandya, Mr. Utkarsh Tiwari, Advs. versus PLANETCAST INTERNATIONAL PTE LTD (FORMERLY KNOWN AS ADORE TECHNOLOGIES PTE LTD)) ..... Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Kishore Kunal, Ms. Ankita Prakash, Mr. Mahesh Singh, Advs. 3 + ITA 203/2024, CM APPL. 18472-73/2024 COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-2, DELHI ..... Appellant Through: Mr. Sunil Aggarwal, SSC with versus PLANETCAST INTERNATIONAL PTE LTD (FORMERLY KNOWN AS ADORE TECHNOLOGIES PTE LTD) ..... Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Kishore Kunal, Ms. Ankita Prakash, Mr. Mahesh Singh, Advs. CORAM:HON'BLE MR. JUSTICE YASHWANT VARMAHON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV O R D E R% 29.04.2024 CM APPL. 18460/2024 in ITA 201/2024; CM APPL. 18470/2024in ITA 202/2024; CM APPL. 18472/2024 in ITA 203/2024 Bearing in mind the disclosures made, the delay in filing the appeals is condoned. The applications shall stand disposed of. ITA 201/2024, CM APPL. 18461/2024, ITA 202/2024, CM APPL. 18471/2024 & ITA 203/2024, CM APPL. 18473/2024 1.The instant appeals impugn the order of the Income Tax Appellate Tribunal [“ITAT”] dated 14 July 2023 and propose the following questions of law for our consideration: - “(a)Whether on the facts and circumstances of the case and in law, the Hon‟ble ITAT erred in holding that the amount received by the assessee from its customers in India from the provision of Disaster Recovery Uplinking Services, Digital Satellite News Gathering Services, Could Playout Services, Diaster Recovery Playout Services, and Space Segment Capacity Services cannot be characterized as royalty for the use or right to use of a process relying on the judgment of the jurisdictional Hon‟ble High Court of Delhi in the case of New Skies Satellite 382 ITR 114? (b) Whether on the facts and circumstances of the case and in law, without prejudice to the above, the Hon‟ble ITAT erred in holding that receipts from Disaster Recovery Playout Services and Disaster Recovery Uplinking Services are not in the nature of FTS as they do not make available any technical knowledge, experience, skill, knowhow, or process or consist of the development and transfer of any technical plan or technical design? (c) Whether on the facts and circumstances of the case and in law, the Hon‟ble ITAT erred in holding that the amount received by the assessee on account of internet bandwidth services do not constitute equipment / process royalty? (d) Whether on the facts and circumstances of the case and in law, the Hon‟ble ITAT erred in holding that the assessee does not have an installation PE in India for its supply and installation of goods under Article 5(3) of India-Singapore DTAA? (e) Whether on the facts and circumstances of the case and in law, the Hon‟ble ITAT erred in holding that the assessee does not have a supervisory PE in India for its supply and installation of goods under Article 5(4) of India Singapore DTAA? (f) Whether on the facts and circumstances of the case, the Hon‟ble ITAT has erred in holding that no income of the assessee can be attributed to the assessee‟s Permanent Establishment in India based on the finding of the AO? (d) Whether on the facts and circumstances of the case and in law, the Hon‟ble ITAT erred in holding that the assessee does not have an installation PE in India for its supply and installation of goods under Article 5(3) of India-Singapore DTAA? (e) Whether on the facts and circumstances of the case and in law, the Hon‟ble ITAT erred in holding that the assessee does not have a supervisory PE in India for its supply and installation of goods under Article 5(4) of India Singapore DTAA? (f) Whether on the facts and circumstances of the case, the Hon‟ble ITAT has erred in holding that no income of the assessee can be attributed to the assessee‟s Permanent Establishment in India based on the finding of the AO? (g) Whether on the facts and circumstances of the case, the Hon‟ble ITAT has erred in holding that the profits attributable to the assessee‟s PE at 13.38% of its total receipts from sale of goods and installation services were not taxable in India?” 2.Having heard Mr. Aggarwal, learned counsel appearing in support of the appeals as well as Mr. Vohra, learned senior counsel representing the respondent assessee and on going through the judgment impugned, we find that the issues which are sought to be canvassed in these appeals were identical to those which were considered by us in the matter of Pr. Commissioner of Income Tax (Intl Tax 2) vs. M/s Planetcast International PTE . 3.Dealing with the questions which stand raised, we had in Planetcast Internationalheld as follows:- “1. The Department in the instant appeal seeks to question the correctness of the view expressed by the Income Tax Appellate Tribunal [‘ITAT’] as per the impugned order dated 19 December 2022 for Assessment Year [‘AY’] 2017-18. The dispute itself emanates out of a playout service which was being provided by the respondent/assessee and which as per the explanation tendered embodied the following features :- “Playout Service Playout services are inextricably linked to Uplinking services and encompasses provision of equipment, infrastructure and manpower to manage continuous playing of channel content based on minute to minute schedule. For providing Disaster recovery Uplinking and Playout services, the up linking and playout equipment installed at the teleport facility of Adore at Singapore is kept pre-configured and in readiness. In the event that the main uplink and playout equipment becomes unavailable/non-functional, the uplink at Singapore facility immediately gets activated. All operations are monitored by highly trained operators and supervisors of Adore in Singapore on a 24 x 7 basis.” 2.The ITAT has while dealing with the aforesaid aspect come to conclude that the nature of the service being provided would not fall within the ambit of managerial, technical or consultancy services. It has ultimately and on an appreciation of the facts as well as the structure of the playout service come to hold that it was an integral feature of broadcasting and transmission of channels and thus did not involve any decision making. It has been found that the service was essentially to ensure consistency in the broadcasting of channels and thus ensure uninterrupted availability thereof. It has ultimately and on that basis come to conclude in Para 42 that the recovery playout services would not fall within the scope of Fee for Technical Services. 3.While this would have been sufficient, the ITAT appears to have proceeded further to also notice the provisions made in Article 12(4)(b) of the Double Tax Avoidance Agreement [‘DTAA’] and alluded to the added requirement of the service including “making available of” technical knowledge, experience, skill, knowhow or processes enabling the person acquiring the service to apply the technology contained therein. 4.According to Mr. Menon, the ITAT has in that respect incorrectly appreciated the scope of the expression „making available‟ as well as the other facets of Article 12(4)(b) of the DTAA and which speak of enablement to apply the technology contained therein. 3.While this would have been sufficient, the ITAT appears to have proceeded further to also notice the provisions made in Article 12(4)(b) of the Double Tax Avoidance Agreement [‘DTAA’] and alluded to the added requirement of the service including “making available of” technical knowledge, experience, skill, knowhow or processes enabling the person acquiring the service to apply the technology contained therein. 4.According to Mr. Menon, the ITAT has in that respect incorrectly appreciated the scope of the expression „making available‟ as well as the other facets of Article 12(4)(b) of the DTAA and which speak of enablement to apply the technology contained therein. 5.In our considered opinion, once the ITAT had come to conclude that the service in question would not qualify within the meaning of the expressions „managerial‟, „technical‟ or „consultancy‟, there perhaps was no occasion to travel further. 6.While we thus leave the question of the interpretation liable to be accordedto Article 12(4)(b) of the DTAA open to be addressed by the Department in an appropriate case, in light of the findings of fact which have ultimately been rendered by the ITAT and have been referred to above, we find that the appeal raises no substantial question of law. Consequently, it shall stand dismissed. 4.Accordingly and following the views expressed therein, these appeals shall stand dismissed on identical terms. 5.We also take on board the submission of Mr. Aggarwal who fairly concedes that in light of the conclusions rendered by us in Planetcast International, the questions which stand framed as “(d)” to “(f)” would not arise. YASHWANT VARMA, J. APRIL 29, 2024 neha PURUSHAINDRA KUMAR KAURAV, J.