The amendment brought in by the Finance Act with retrospective effect, which was passed in the year subsequent to the year under consideration, should not be considered for penalizing the assessee by way of dis allowance u/s 40(a)(ia) of the Act. The Ld Counsel submitted that the Hon’ble Delhi High Court in the case of Asia Satellite Telecommunications Co. Ltd Vs. DIT (332 ITR 340) had taken the view that the transmission of television signals through Satellite / transponders would not fall in the category of “royalty” as defined under Explanation 2 to sec. 9(1) of the Act. He submitted that the Explanation 6, which expanded the scope of the expression “process” has been inserted by the Finance Act, 2012 withretrospective effect, was brought into the Act only to nullify the decision rendered by the Hon’ble Delhi High Court. Accordingly, the Ld A.R submitted that the view entertained by the assessee that the payment of “Pay channel charges” will not fall in the category of royalty was supported by the decision of Hon’ble Delhi High Court referred above. Accordingly he submitted that the dis allowance u/s 40(a)(ia) should not be made on the basis of subsequent amendment made with retrospective effect. In this regard, he placed reliance on the following case law:-
(a) Sonata Information Technology Ltd Vs. DCIT (2012)(TaxCorp (INTL)4659 (Mumbai-Trib)
(b) Info tech Enterprises Limited Vs. Addl. CIT (2014) TaxCorp (INTL) 6945 (ITAT – Hyderabad)
(c) Channel Guide India Limited Vs. ACIT (2013) TAxCorp (INTL) 6702 (ITAT-Mum)
We have gone through the above said decisions rendered by different benches of the Tribunal. We notice that they have held that the assessee cannot be held to be liable to deduct tax at source relying on the subsequent amendments made in the Act with retrospective effect.
In the instant case, the view entertained by the assessee that the pay channel charges cannot be considered as royalty is in fact gets support from the decision rendered by Hon’ble Delhi High Court in the case of Asia Satellite Telecommunication Co. Ltd (supra). Though the Explanation 6 to sec. 9(1)(vi) inserted by Finance Act, 2012 is clarificatory in nature, yet in view of the fact that the view entertained by the assessee gets support from the decision of Delhi High Court, referred above, we are of the view that the assessee cannot be held to be liable to deduct tax at source from the Pay Channel Charges. Hence, we are of the view that the assessing officer was not justified in disallowing the claim of pay channel charges by invoking the provisions of sec. 40(a)(ia) of the Act. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to delete the impugned dis allowance.