HC reprieve for Sony TV over I-T

MUMBAI: Granting reprieve to the Singapore-based parent company running the popular AXN channel, the Bombay high court on Friday exempted it from paying income-tax in India.

Justices FI Rebello and RS Mohite held that Sony Entertainment Television (SET) Satellite (Singapore) Private Limited is not liable to pay tax on advertisements and other revenue generated by its Indian agent, SET India Pvt Ltd.

The court order has saved the company income tax on Rs13.58 crore that the Income Tax (IT) department wanted to levy tax on.

The court was of the view that in cases of tax matters when there is a treaty between the two countries, what should be considered is what benefits the assessee. SET Satellite (Singapore) moved the High Court after the Income Tax Appellate Tribunal (ITAT) in October 2001 held that the advertisement and other revenue generated on behalf of the Singapore company was taxable.

SET Satellite (Singapore) had mainly relied on the Double Taxation Avoidance Treaty (DTAA). As per the agreement between Singapore and India under DTAA, profits earned by a Singapore-based company from its business in India are taxable only if it carries on business in India through a permanent establishment (PE).