Law:

Section:

[2008] 175 Taxman 97 (AAR)/[2008] 307 ITR 59 (AAR)/[2008] 220 CTR 13 (AAR) [2008] 175 TAXMAN 97 (AAR - NEW DELHI) AUTHORITY FOR ADVANCE RULINGS (INCOME TAX), NEW DELHI ISRO Satellite Centre [ISAC], In re* JUSTICE P.V. REDDI, CHAIRMAN A. SINHA AND RAO RANVIJAY SINGH, MEMBER AAR NO. 765 OF 2007 OCTOBER 18/22, 2008 Section 9, of the Income-tax Act, 1961, read with article 13 of the Double Taxation Avoidance Agreement between UK and India - Income - Deemed to accrue or arise in India - Applicant, which is a part of Department of Space, Government of India, has objective of developing satellite technology and application of space technology for socio-economic development and space research - It has entered into a contract with 'IGL' of UK for taking on lease space segment capacity consisting of L-1 and L-5 transponder centered on an Inmarsat 4th Generation Satellite for its project - Capacity is utilized through data commands sent from a ground station set up by applicant - Under contract, applicant pays a fixed annual charge to IGL regardless of actual use of transponder capacity - Whether when by earmarking a space segment capacity of transponder for its use applicant does not get possession or control of equipment of 'IGL', charges paid by applicant can be regarded as payment for use of IGL's equipment - Held, no - Whether technical and operating requirements and procedures and system's definition manual containing service requirements are annexed to agreement so as to ensure uninterrupted access to space segment capacity and it does not amount to making available any technical knowledge, skill, experience, know-how or process to applicant - Held, yes - Whether therefore, income arising to IGL out of payments received from applicant is neither in nature of 'royalty' under Act nor is fee for technical service under Treaty - Held, yes FACTS The applicant, which is a part of the Department of Space, Government of India, has the objective of developing satellite technology and the application of space technology for socio-economic development and space research. It has entered into a contract with 'IGL' of the UK for 'leasing of Inmarsat navigation transponder…

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