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5. Applicability of Section 9(1)(i) 5.1. Ground No. 1 of the Revenue's appeal is directed against the finding of the learned CIT(A) that Section 9(1)(i) was not attracted. Before tendering any submissions in this regard, it was submitted by the learned Departmental Representative that no precedent, namely, any High Court or Supreme Court judgment was available on this issue and as such it was a novel case on its own facts. Referring to the cycle of business operations in this case it was submitted that briefly the business of the assessee was only to help the customers, namely, the TV channels, in relaying their programmes in the footprint area including India. It was stated that the TV channels were uplinking their programmes and after the receipt of the signals at the satellite and processing through various processes embedded in the transponders, the assessee was making available the signals in the footprint area including India. It was asserted that the only purpose for entering into a contact by the customers with the assessee was to ensure that the programmes are made available in India and it was the duty of the assessee to make available these programmes in India. As the very spirit of the agreement between the assessee and the TV channels was to make available their programmes in India, the learned Departmental Representative contended that it established a business connection in India as contemplated by Clause (i) of Section 9(1). It was pleaded that the chain of the activities involved in the entire process included four persons, namely, TV channels (customers), the assessee, the cable operators and the viewers in India. It was submitted that all these persons were working in a cycle and the main focus of the entire exercise was to show programmes in India. It was, therefore, urged that there was a direct business connection of the assessee in India. It was further stated that there was no requirement in the provisions of this section that the business connection should be that of the assessee only. If in the chain of events any business connection is found to have been established in India, the income accruing therefrom was liable to be considered in Section 9(1)(i). It was still further pointed out that the income which is received or is deemed to be received or accrues or arises in India is straightway covered in the later part of Section 5(2). If any income is directly accruing or arising in India there is no point in considering the applicability of Section 9(1) which deals with income deemed to accrue or arise in India. It was pleaded that Section 9(1) includes within its abmit only those incomes which are actually not accruing or arising in India but are deemed to accrue or arise in India. The deeming provision as contained in Section 9(1), as stated by the learned Departmental Representative, assumes a particular state of affairs which is actually not there. Referring to the words 'directly or indirectly' used in Clause (i) of Section 9(1) it was stated that the business connection in India was not only confined directly to the assessee but where the business connection was established indirectly or through someone else also the same did fall within Clause (i). As the viewers and the cable operators were located in India who were the customers of the TV channels with whom the assessee was directly connected, the learned Departmental Representative submitted that there was indirect business connection of the assessee in India. As the feeders to the TV channels were advertisers and the cable operators in India and these TV channels were in turn the feeders to the assessee-company, the learned Departmental Representative stated that there was a business connection of the assessee in India. It was still further pointed out if any link in the chain of the persons referred to above is missing there would remain no necessity for the customers to enter into agreement with the assessee for relaying the programmes from the satellite in the footprint including India. Referring to the decision of the Hon'ble apex Court in the case of CIT v. R.D. Aggarwal & Co. and Anr. (1965) 56 ITR 20 (SC) the learned Departmental Representative submitted that in this case it was held that the expression 'business connection' postulated real and intimate relation between the trading activity carried on outside the taxable territories and the trading activity within the territories and the relation between the two contributed to the earning of the income by the non-resident in his trading activity. Applying the ratio of this judgment to the facts of the present case it was pointed out that there was a business connection of the assessee in India and as such the income was taxable under Section 9(1)(i). It was also submitted that all the customers of the assessee, namely the TV channels were assessed in India and that was the biggest evidence to show that there was a business connection of the assessee in India.

5.5. Now we shall examine the applicability of the guidance gathered from the above case law to the facts of the present case to determine whether there was any business connection of the assessee in India or not. The assessee is amplifying and relaying the signals in the footprint area after having been uplinked by the TV channels. The essence of the agreement of the TV channels with the assessee is to relay their programmes in India. If India is not in the footprint then the entire exercises become futile. The responsibility of the assessee is to make available programmes of the TV channels in India through transponder on its satellite. It is not the mere user of any goods or information/technology in India, which is supplied by the assessee. The decisions in R.D. Aggarwal (supra) and other Cases referred to : before us and the authorities below are all confined to the situation where the goods/technology was sold outside India and when such goods or technology was utilised by the customers in India it was held to be not the case of any business connection of the non-residents in India. But the facts before us are distinguishable from all those cases because the duty of the assessee is to amplify the programmes and then pass over the same in India. Assessee would acquire the right to receive the income only when these programmes are made available in India. So the crux of the contacts with the TV channels is to ensure that the assessee provides the signals in India after carrying out certain processes in the space. Similarly all the TV channels approach the assessee only because it has India in its footprint. Had India been not in its footprint, no customer interested in showing their programmes in India would have availed the services of the assessee. If the assessee had only amplified the programmes and passed over to its customer outside India, who in turn had made arrangement for sending the same to cable operators for use in India, it would have been the case of no business connection of assessee in India. Since the signals are provided by the assessee for direct use in India, it is certainly, in our considered opinion, the case of assessee having business connection in India. In the present case it is not merely the user of any goods sold by the TV channels in India but a continuous process through which the TV channels are showing their programmes in India by the medium of the assessee. As such we are of the considered opinion that the assessee has business connection in India.

(i) Programmes are uplinked by the TV channels (admittedly not from India).

(ii) After receipt of the programmes at the satellite (at the locations not situated in Indian airspace), these are amplified through complicated process (discussed infra).

(iii) The programmes so amplified are relayed in the footprint area including India where the cable operators catch the waves and pass them over to the Indian population.

5.7. There is no dispute that the first two steps are not carried out in India. The contention of the Department is that the third step namely, the relaying of the programmes in India amounts to the operations carried out in India. It is no doubt true that the footprint area of the assessee's satellite includes India and the programmes of the TV channels are ultimately viewed in India. The question arises that merely because the footprint area includes India and the programmes are viewed in India, is it sufficient enough to hold that the business operations are also carried out in India ? The answer to this question, in our considered opinion has to be in negative. The key words used in Expln. (a) are the "operations" and "carried out in India". In order to establish that the business operations are carried out in India it is necessary to point out any part of the assessee's operations which were being carried out in the territory of India. No office or agent or subsidiary of the assessee is situated in India which acts between it and the cable operators in facilitating the receipt of the signals. No machinery or computer, etc. is installed by the assessee in India through which the programmes are reaching India. The process of amplifying and relaying the programmes is performed in the satellite which is not situated in the Indian airspace. Except for the fact that the footprint includes India, and the payment to the assessee is only for relaying signals in India, the Department has not brought to our notice any operation which is done by the assessee in India. The act of relaying the signals in the footprint area is also done outside India. The tracking, telemetering and control (TTC) operations are also performed outside India in Hongkong. No man, material or machinery or any combination thereof is used by the assessee in the Indian territory. The assessee has not entered into any contact with cable operators or viewers for reception of signals in India. In the light of these facts we are of the considered opinion that no part of the operations of the assessee's business is carried out in India and as such the provisions of Section 9(1)(i) are not attracted despite the fact that the assessee has business connection in India.

8. In view of our decision on the applicability of Section 9(1)(vi) to the facts of the present case in the preceding paras we do not consider it expedient to deal with the facts and rival contentions on the applicability of Clause (vii) of Section 9(1). Our view finds support from the decision of Special Bench of Tribunal in Rahul Kumar Bajaj v. ITO (1999) 64 TTJ (Nag)(SB) 200 : (1999) 69 ITD 1 (Nag)(SB).

9. Computation of Income 9.1. Ground Nos. 2 and 3 of the Revenue's appeal and 11 to 19 and 22 of the assessee's appeal deal with the determination of the quantum of income chargeable to tax in India. The AO held that the income of the assesses arose on account of business connection in India within the meaning of Section 9(1)(i) of the Act. When the question of determination of its quantum arose, he determined the quantum of assessable income by taking gross income at 90 per cent of the net revenue earned by the assessee from such channels as were popularly viewed in India and programmes directed for India and allowed deductions therefrom on account of expenditure incurred by way of lease rents, maintaining of satellites, depreciations, etc. and further 5 per cent of the total administrative expenses under Section 440 of the Act. It was claimed before him on behalf of the assessee that the quantum of the Revenue should be determined only by dividing its gross receipts with 47 and 82, respectively, representing the number of countries covered by the footprint of the concerned beams of Asiasat-I and Asiasat-H. The learned CIT(A) in the first appeal held that the provisions of Section 9(1)(i) were not applicable to the facts of the case and accordingly the income was taxable under Section 9(1)(vi) of the Act. By so holding it was further observed that no deduction for expenses was eligible from the gross revenue of the assessee. As regards the quantification of revenue it was held that the division factor of 47 and 82 countries was not appropriate. The learned AO was directed to recompute the business income according to another formula, namely, on the basis of ration of area of the country to the area of footprint of the beam. While working out the area of the footprint at a beam, the area of large water bodies like inland lake, sea and ocean, etc. was directed to be ignored. The learned CIT(A) further proceeded towards apportionment of expenses on the ground that if his view on the applicability of Section 9(1)(vi) was reversed by higher appellate authorities and that of the AO restored, then the AO may calculate income under Section 9(1)(i) by deducting expenses from the Revenue in the way as mentioned in the first appellate order. Both the assessee and the Revenue have challenged the finding of the learned CIT(A) on the issue of computation of income.