Anuvu UK Operations Limited Vs DCIT (ITAT Delhi)
IFE Content Is Not Royalty: ITAT Delhi Applies DTAA Override Deletes Tax on In-Flight Entertainment Fees
Delhi ITAT held that fees received for providing in-flight entertainment (IFE) content to Indian airlines are neither royalty nor fees for technical services (FTS) under the India-UK DTAA. The Tribunal noted that the assessee merely procured licensed audio-visual content and undertook activities such as encoding and integration for display on IFE systems, without transferring any copyright or technical know-how to the airline. Relying on its own decisions in assessee’s earlier years and applying Article 13 of the DTAA read with section 90(2), the ITAT ruled that the expanded definition of royalty u/s 9(1)(vi) cannot override the narrower DTAA definition. It further held that the “make available” test for FTS was not satisfied. Accordingly, the addition of ₹2.68 crore was deleted, interest u/s 234B held consequential, and penalty proceedings u/s 270A rendered unsustainable. The appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The Assessee Anuvu UK Operations Ltd (hereinafter referred to as ‘assessee) by filing the present appeal sought to set aside the impugned order dated 22.01.2025 passed by the Assessing Officer (AO) under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (for short ‘the Act’) inconsonance with the order passed by the Dispute Resolution Panel (DRP)-1, New Delhi dated 04.12.2024 u/s 144C(5).
