Payments received for leasing of transponder capacity and bandwidth cannot be taxed as ‘royalty’ under the Section 9(1)(vi) of the Act

Delhi bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of Intelsat Corporation (ITA No. 5443/D/2010) (Judgment Date: 4 March 2011, Assessment Year: 2007- 08) held that income received by the non-resident taxpayer from leasing of transponder capacity and bandwidth cannot be taxed as ‘royalty’ under the provisions of Income-tax Act, 1961 (the Act). Facts of the Case The taxpayer, a tax resident of USA, was owner and operator of global network of telecommunication satellites located in outer space. It was engaged in the business of transmitting telecommunication signals t...