TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 1464
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....d in mechanically granting approval to the AO for referring the case to the TPO merely on the fact that the transaction value exceeded INR 15 Crores to the Instruction issued by Central Board of Direct Tax. For this assessee raised Ground No.1. During the hearing, the assessee's counsel has pointed out that in view of the submissions on other grounds namely, comparables, it would not be necessary to argue on this ground. Despite the same, the Id. DR has preferred written submissions. But this issue is more of academic in nature, hence we leave it as it is and do not adjudicate. 3. The second issue raised by the assessee in AY 2011-12 in IT(TP)A No. 1901/Mum/2016 is as regards to international transactions of provision of support services for distribution of television channels and in relation to international transactions of provision of support services. The assessee has also raised the issue in relation to international transactions captured under the broadcasting segment for franchise channels. For this interconnected issue, the assessee had raised the following Ground Nos. 2 :- "Ground number 2 have erred in rejecting the transfer pricing analysis undertaken, ....
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....nal Role or FAR analysis of the assessee but rejected the comparables selected in the TP Study without giving any reasons. The TPO picked cherry-picked without conducting any search process for the year under consideration. The DRP has upheld the order of the TPO. 8. We further noted that the TPO inserted his comparables but Ld Counsel for the assessee made contentions for exclusion of specific comparables (i.e. APITCO Limited and TSR Darashaw Limited) as to why these companies selected by the TPO as comparable ought to be rejected. The updated chart provided with reasons for rejecting the companies as comparables was filed before the Bench. It was contended that if the ITAT reject the above mentioned two comparables, the assessee shall fit within +/- 5% of the range, and hence the adjustment stands deleted, and the other comparables issues become academic. In light of the above, SIPL does not wish to press for the balance comparables for the statistical purpose for the year under consideration; however, reserves its right if required in future. Provision of services for distribution of television channels (adjustment value of Rs. 2,52,14,041/-). The ld. Counsel also explained in....
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.... Star Den, another step down entity. The AR argues that the assessee undertakes advertisement and publicity of the channels in India, collects fee from Star Den, procures Integrated Receiver and Decoder (IRD) boxes for Star Den; and manages Subscriber Management System. The assets employed are IRD boxes, SMS and smart cards. The risks are claimed to the minimal as it operates on cost plus basis. However, it is apparent that the set of comparables chosen by the assessee do not have the same FAR. 10. He contended that the AR made submissions to dispute the inclusion of only two comparables by the TPO i.e. APITCO Ltd and TSR Darashaw Ltd. The arguments of the Revenue are therefore confined to these two concerns only. He narrated fact that as regards to APITCO Ltd. the AR has argued that this is a Government Company and has cited certain case law to claim that 100% Government owned companies should not be taken as comparable since they do not have a profit motive etc. This contention of the assessee is wrong. The company APITCO Ltd is jointly promoted by All India Financial Institutions like IDBI, IFCI, ICICI along with Government Corporations like APIDC, APSFC besides banks. Present....
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.... Act, 1956 (page 263 of the Assessee Paper Book) in the Final Accounts of the Company mentioned the Generic Name of the Principal Service of the Company as a "Registrar and Share Transfer Agents". This argument is basically unacceptable since the generic description given at the time of incorporation of company is not determinative of the profile of the company and the nature of its activities in the year under consideration. This company provides documentation services which are akin to the services rendered by the assessee of subscriber management system. Besides TSR Darashaw Ltd has earning from Record Management, Payroll business which are Support Service Activities. He further argued that the AR has also argued that the company has made a Provision for Diminution of value of assets which is taken to suggest that the FAR of the company is different. However, the Director's Report at page 235 of the Paper Book Paper Book mentioned that this diminution is only on capital account due to reduction in value of investments of the company in the shares of Ankur Drugs Ltd and Vijay Shanthi Builders Ltd. This expense has in fact reduced the profit of the company for comparability pu....
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....rt Schedule 'J' and as per note 7 revenue recognition of this company provides share registry and transfer services, depository services, record management, pay roll and provident fund management and corporate fixed deposit management services. We also noted from the directors report that this company has completed implementation of a new global pay roll ERP application called RAMCO pay roll business which will enable it to withstand competition and service clients in the overseas market. Accordingly, we are of the view that TSR Darashaw is a registrar and share transfer agent, who has also forayed into pay roll business as in house software development and cannot be compared as a sub agent as the functions are wholly different. Accordingly, we direct the AO to exclude this from comparable to support service provider like SIPL. We direct the AO accordingly. This issue of assessee's appeal is allowed. 14. The next common issue in this appeal of assessee for AY 2011-12 in IT(TP)A No. 1901/Mum/2016 is as regards to international transaction captured under the broadcasting segment for franchise channels and international transaction undertaken by merged entities respectively. For thi....
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.... dispute the FAR analysis neither search process nor the final list of comparable companies. However, out of total nine comparables, the TPO rejected four comparable companies accepted by the assessee in its TP Study Report. The TPO rejected one comparable company stating reasons of consistent loss-making with accumulated losses; one comparable company due to consistent loss-making; one comparable company due to functionally not similar; and one comparable company due to high related party transaction. The DRP upheld the said action of the TPO. Aggrieved, assessee came in appeal before Tribunal. 17. The assessee has made contentions for comparables as to why the companies rejected by the TPO ought to be considered and accordingly to be included as comparable. The arguments to accept the companies as comparables are argued by the learned Counsel for the assessee in detail. He argued and raised objection for comparable companies in broadcasting segment in regard to UTV Software Communication Limited, which is in television segment. It was contended that UTV is an India based integrated media company engaged in broadcasting of television channels, television content production and h....
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....or FY 2007-08 to FY 201011, which is enclosed in assessee's paper book Page No. 872B. The consolidated financial results are also on page No. 776 of the assessee's paper book. The learned Counsel for the assessee also drew our attention to operating margins from FY 2007-08 to FY 2010-11 and a table capturing the segmental profitability of the company for the relevant year is provided at page No. 872B of the paper book, which read as under: - Particulars Financial year (Amounts in INR) 2007-08 2008-09 2009-10 2010-11 Operating Profit/ operating revenue (OP/ OR) (%) 2.23% 32.30% 12.77% 4.33% 19. Hence, the learned Counsel for the assessee stated that the company has earned operating profits in the year under consideration in one out of three preceding previous years. Thus, it is evident that IBN 18 is not a consistent loss-making company. Finally, he argued that functionally comparable companies should not be rejected unless they are persistent loss making. 20. The next comparable argued by the learned counsel for the assessee is as regards to Raj Television Network. He stated that TPO/ DRP rejected Raj on the basis that it is consistent loss making c....
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....refore, the above arguments shall equally apply to broadcasting segment of merged entities also. 22. On the other hand, the learned CIT DR argued that the assessee had obtained exclusive franchise right to exploit certain TV channels of SIML and V Partnership in the territory of India, Nepal. Bhutan etc. (India Territory). The assessee pays 4% of the revenues to the AEs. Then the assessee has also appointed SIML as an intermediary between the assessee and the third parties from whom certain content is procured. The assessee also gets content from the libraries of SIML and TCF. Thus the assessee procures franchise rights/content/services in its capacity of a broadcaster. The assessee had claimed that in respect of these streams clubbed together, it earned a margin on cost at 15.02%. The TPO rejected four comparables of the assessee and determined the margin on cost in the case of the remaining comparables at 28.42%. He contended that the assessee before ITAT now has only contested the rejection of three comparables by the TPO i.e. UTV Software Communications Ltd; IBN 18 Broadcast Ltd and Raj Television. The assessee accepted the rejection of Raj Television as a comparable. 23. A....
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....mpany was running into continuous losses. The assessee has given a comparative chart at Page 872B of the Assessee Paper Book. The contentions of the assessee are wrong and cannot be accepted. The standalone account of TV 18 show continuous losses. The AR wants the ITAT to take the Segment Reporting (Page 776 of Assessee Paper Rook) but this page has segmental reporting of the consolidated accounts of TV 18 and includes the accounts of all its subsidiaries and Joint Ventures like RVT Media Pvt. Ltd (consolidated): IBN 18 Media & Software Ltd (Jagran TV): IBN Mauritius Ltd: IBN Lokmat News Pvt. Ltd and Viacom 18 Media Pvt. Ltd (Colors channel) (pages 679 & 765 of Assessee Paper Book). The inclusion of all these broadcasting companies' accounts further make the argument of the assessee totally irrelevant. Besides TV 18 has a RPT of over 37%, which makes it unfit for comparability. It has been held by the Mumbai ITAT in the case of Capgemini India (P.) Ltd. Vs. ACIT (2013) 33 taxmann.com 5 (Mumbai-Trib.) that consolidated results which include profit from different jurisdictions having different geographical and marketing conditions are not to be taken into consideration while maki....
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....It also operates production of television content, airtime sales and dubbing services. UTV is engaged in the business of broadcasting of channels, and thus, for the purpose of benchmarking the "Television" segment from the consolidated financials of UTV has been considered by the assessee. The assessee is also engaged in broadcasting of similar entertainment channels like Star Plus, Star Utsav, Star Movies, Star Gold, Chanel V, etc., owns dubbing studios, procures contents and over the years it is also engaged in production of television content for one of the channel company. Hence, the 'television segment' of UTV is to be considered appropriate segment as comparable to that of SIPL's broadcasting segment. We also noted that in AY 2003-04 SIPL was only an agent procuring content for its AEs. It was neither a broadcaster nor was the content producer as is the case today, i.e. from AY 2011-12 onwards SIPL is engaged as broadcaster of channels i.e. Star Plus, Star Gold, Channel V, etc. In AY 2003-04, the international transaction being benchmarked was not from channels owned/ franchised by SIPL as in the year under consideration. In the present year, SIPL procures and produces conten....
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....72A of assessee's paper book. Based on the working given in the chart at assessee's paper book page 872A, we noted that the company has earned operating profits in two out of three previous years. Thus, it is evident that Raj is not a consistent loss making company. The learned Counsel for the assessee also contradicted Ld CIT DR's argument that the Departmental Representative during the course of hearing made new arguments for registration of the comparable that were not contested by the TPO that the company is not comparable because it is also involved in movie productions and distribution business in the same broadcasting segment. In view of these facts, we are of the view that Raj Television Network Limited should be considered as a comparable company to broadcasting segment of SIPL. We direct the AO accordingly. 30. This next issue of assessee's appeal for AY 2012-13 in ITA No. 1048/Mum/2017 is as regards to international transaction captured under the broadcasting segment for franchise channels and international transaction undertaken by merged entities respectively. For this assessee has raised following ground Nos. 2 to 5 as under: - "Ground No. 2 Have erred in reje....
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....nces are also same. The facts and circumstances are exactly identical in the present appeals on this issue, hence, taking a consistent view, we allow this issue of assessee's appeal in this year also. 32. The next issue in this appeal of assessee for AY 2011-12 in IT(TP)A No. 1901/Mum/2016 is as regards to international transaction of availing of management services (adjustment value of Rs. 3,56,38,917/-). For this assessee had raised the following ground No. 5: - "Ground number 5 have erred in rejecting transfer pricing analysis undertaken, including the comparable companies identified by the Appellant, thereby undertaking an enhancement of taxable income. Your Appellant prays that the transfer pricing analysis undertaken by the Appellant should be accepted and accordingly, the action of the learned TPO should be held as had in law. In relation to international transaction of availing of management services." 33. Brief facts leading to the above issue are that STAR Ltd. a Group company, based in Hong Kong had over a period of time more than 15 years developed and built a team of resources that include appropriately qualified personnel capable of undertaking corpora....
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....e TPO and AO have accepted the fee in the hands of the assessee to be at arm's length price. The nature of services rendered by STAR Ltd are as under: Human resources Finance and accounting Legal services Administration services The nature of above mentioned services does not tantamount to shareholding functions. Refer page no 878 of the assessee paper book for the details of management services availed by channel companies. The transactions were benchmarked in the study report of the channel companies, and assessee considered the TP study of the channel companies, as the High court approved the scheme of merger in the year 2010 and accordingly the assessee perused the benchmarking study of channel companies for benchmarking the management fee transaction. Further, for benchmarking the said transaction STAR Ltd has been considered as the tested party. Considering the functional and risk profile of the transaction and examining the available comparable data, TNMM using Net Operating Profit Margin based on cost as the Profit Level Indicator ("PLI"), was selected to be the most appropriate methodology. 36. The TPO held that SIPL had not demonstrated the cost alloca....
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....channel companies and for STAR Ltd's own business. The portion of G & A costs were charged to channel companies at a mark-up of 5% as management fees. The management fee is allocated to each channel companies in the proportion of revenues generated by individual channel companies to the consolidated revenues of all the channel companies taken together. At the time of hearing the calculation for monthly invoice of the management fees paid to STAR Ltd. was sought and the details were filed vide Annexure 5. Ld Counsel explained that TPO in its order stated that the assessee has not provided details of personnel involved, their timesheets but the details called for by TPO were not relevant as the management costs were allocated in the ratio of Revenue, which is an accepted methodology internationally and in several judicial precedents. The assessee placed its reliance on the following decision wherein allocation of management charges based on sales revenue were accepted as appropriate cost allocation methodology. The decision of Co-ordinate bench in the case of N LC Nalco (India) Ltd. vs. DCIT - [2016] 71 taxmann.com 57 was referred. The relevant extract is reproduced below: "28. In....
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....ance on OECD guidelines wherein the guidelines acknowledge that turnover is an appropriate method (i.e. indirect charge method) to allocate the intra-group service charges. Relevant extract is reproduced below for reference: - "the allocation should be based on an appropriate measure of the usage of the service that is also easy to verify example turnover, stuff employed, or an (Activity bused key such as orders processed." Page 328 of the OECD TP Guidelines - Chapter on intra Group services. 40. The assessee also argued that there is no intention to shift profits and to explain this it stated that the recipient AK (STAR Ltd) had been regularly assessed to tax in India and had duly offered this income to tax in India even for AY 2011-12. Therefore, the question of India tax base erosion does not arise as contended by the TPO. 41. It is well-established principle that commercial expediency / business rationale of a particular expenditure incurred by an assessee for smooth functioning and furtherance of its business is the prerogative of the assessee. The reasonableness of the expenditure has to be judged from the point of view of the businessman and not of the Revenue authori....
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....mmercial services. After the merger of the three concerns with the assessee, it is not proved that even these shareholder functions were required to be continued. Further it is to be noted that the payment for Management Services expenses have been apportioned on basis of own agreement and not on the basis of actual services rendered. In a similar case the Bangalore ITAT in the ease of Gemplus India P Ltd vs. ACT (2010) 3 taxmann.com 755 (Bangalore-Trib.) has held that it was imperative on part of the assessee to establish that the payments were made commensurate to volume and quality on services and that such costs were comparable. Hence, he urged for upholding of TPO/DRP. 43. We have heard rival contentions and gone through the facts and circumstances on this issue of international transaction of availing of management services. We have noted the arguments of both the sides. We noted from the facts of the case that the above activities are management and administration activities undertaken for STAR Ltd and the channel companies as accepted by the TPO over the years. The STAR Ltd has identified a pool of general and administration costs which were incurred for the purpose of pr....
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....he next issue in this appeal of assessee for AY 2011-12 in IT(TP)A No. 1901/Mum/2016 is in relation to international transaction of payment of brand license fees. For this assessee has raised the following Ground No.6 & 7: - "Ground number 6 have erred in determining the arm's length price in respect of the international transaction of avail' 'of management services by the Appellant from its Associated Enterprise ('AE') at Rs Nil by: * Not providing an opportunity of being heard and rejecting the transfer pricing analysis undertaken by the Appellant including the comparable companies identified by the Appellant; * Not considering that Appellant has supported the claims with appropriate evidences; and * Challenging the commercial rationale and expediency of availing such services by the Appellant. Your Appellant prays that the transfer pricing analysis undertaken by the Appellant should be accepted and accordingly, the transfer pricing adjustment should be held as bad in law and thereby deleted. Ground number 7 have erred in considering the arm's length price of the international transaction relating to the payment of brand licensing -....
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....Accordingly, during AY 2011-12, STAR Ltd, granted SIPL, all right to use the Channel marks and Star corporate marks solely to be incorporated or contained in the applicable Channels for the Indian Territory. SIPI had obtained license to use the Star Mark for Iump sum consideration of USD 36.02 million (i.e. Rs. 1624 million). The consideration for the payment towards brand license was determined based on valuation of the brand by an independent valuer and the said payment towards brand license was capitalized in the books of accounts and depreciation was claimed under the Act only on year basis. The payment for the said consideration was also subjected to RBI approvals. Further, it would be relevant to note that the department has taxed the entire amount received by Star Ltd from the assessee in AY 2011-12. 48. In the light of the above facts the TPO determined the arm's length price of brand licensing fees to be at NIL and disallowed the entire amount of depreciation claim on the brand license for the year under consideration. The DRP upheld the above observations of the TPO. 49. Ld Counsel for the assessee contended that prior to SIPL becoming a broadcaster, SIPL was acti....
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.... his order that the pricing of the aforesaid agreements was justified by assessee on the basis of the TNMM. The TPO did not make any adverse comments in his order upon the arm's length analysis carried out by assessee under the TNMM as per section 92C read with rule 10B. Accordingly, it is felt that TPO made proper enquiry and applied his mind to the details brought on record by assessee. He had agreed with the assessee that the international transactions covered by the TNMM analysis (including the intra-group service charge paid/payable to NP) adhered to the arm's length principle in Transfer Pricing Regulation. Another fact relating to this issue is that the Commissioner (Appeals) confirmed the addition without considering that the aforesaid payments were approved by the Reserve Bank of India. In the instant case assessee made application to the General Manager, Exchange Control Department, Reserve Bank of India. In the aforesaid application, assessee explained the scope of services receivable from NP under the aforesaid agreement, the benefits to be received by it from entering into the aforesaid agreement with NP and the maximum amounts to be remitted as consultancy ....
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....on, the depreciation on the brand license fee as per financial statements is Rs. 166.08 million as against the total revenue of Rs. 27,041.74 million. The effective rate of expenses for brand license fee is 0.61% is significantly lower than the average of above external effective royalty pay-out rates of 4.72%. Accordingly, considering the above external reference points, 0.61% license fee paid should be considered to be at arm's length. 53. Further, he explained that there is no erosion of base of profits taxable in India for the reason that the entire amount of brand license fee paid by the assessee to STAR Ltd has taxed in the hands of STAR Ltd for ÀY 2011-12, in the first year itself. Copy of the final assessment order of STAR Ltd for AY 2011-12 is enclosed in assessee paper book. Even, jurisdiction of the TPO is limited in determining arm's length price and not commercial expediency and without this payment it could not have carried on the business under the Star brand. It was contended that the TPO cannot challenge the business decision made by the assessee and its rationale for making a payment to acquire the exclusive right to use the Star' mark, and its ju....
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....of assessee can never be a criterion to judge allowability of an expense; there is certainly no authority for that. What the TPO has done in the present case is to hold that the assessee ought not to have entered into the agreement to pay royalty/brand fee, because it has been suffering losses continuously. So long as the expenditure or payment has been demonstrated to have been incurred or laid out for the purposes of business, it is no concern of the TPO to disallow the same on any extraneous reasoning. As provided in the OECD guidelines, he is expected to examine the international transaction as he actually finds the same and then make suitable adjustment but a wholesale disallowance of the expenditure, particularly on the grounds which have been given by the TPO is not contemplated or authorised. 54. Ld CIT DR on the other hand, argued that it is to be kept in view that the registered owner of the Brand or the Star Mark is STPL, and not Star Ltd. The assessee has claimed to make payment to Star Ltd only. This makes the payment an internal and mutually benefitting exercise only. Secondly the agreement has been backdated. It was entered into on 30.03.2011 and made effective fro....
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....d nothing else. The TPO also simply accepted the share suo moto given by the Star Ltd and this cannot be called a proof for allowability of payment for Brand Licensing by the assessee to Star Ltd in this current year under consideration. The assessee has no explanation for the basic logic that if there had been no merger of the three channels with Star Ltd, would they be paying Brand License fee in their own cases? They were never paying the same and merely because these companies had merged with the assessee cannot be a trigger to hold that the assessee is required to pay Brand License fees after so many years of operation in India and after building the brand also, if it can be argued like this. The merged companies had a right to use the Star Brand and this cannot be claimed to have been taken away from them after the merger. The assessee has placed a lot of reliance on the RBI approval for payment of Brand License fee. This argument is futile as it is an established law that the RBI is not concerned with the taxability or allowability of income/ deductions from the point of view of the Act. Therefore, such an argument cannot be accepted. The SC has also held that RBI does not g....
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....i promotion of the STAR brand including the logo, along with Channel name in form of Star Cropped box / Star logo. Therefore, it said that STAR Ltd has developed the brand and is the economic owner of the STAR Ltd. Even, the Tribunal in the case of assessee's sister concern for AY 2008-09 in ITA No. 7680/Mum/2012 has approved this FAR analysis of the Transfer Pricing Officer. 59. We noted that the channel companies, i.e. STEL, SAML, SAR, which were owners of various channel at the time of merger, merged with SIPL who then carried on broadcasting business under its own umbrella. The STAR brand, however, continued with STAR Ltd. Thus, the STAR brand which was earlier utilized by the channel companies as part of their arrangements did not form part of the merger since the same was owned by STAR Ltd. Thus, in order to be able to earn from broadcasting business using STAR brand, SIN, had to enter into a license agreement with STAR Ltd. In the current assessment year, the entire profits of the broadcasting business of the channel companies, i.e. STEL SAML and SAR was assessed by the department in SIPL's hands, unlike in the past years wherein it was assessed on the agency commission re....
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.... mark for a tenure of two years on the basis of a valuation by third party valuer. SIPL, intended to pay the above payment in six installments. Considering the deferral in the payments, an interest component was considered to the overall value based on which the total value was determined to of USD 36.95 million. After consideration, the reserve bank refused to permit the assessee to pay the amount of US$ 36.95 Million and only approved all of USD 36.02 Million thereby excluding any interest on the value of brand license fees was approved basis the letter dated 01.08.2011 received by Deutsche Bank AG (authorized representative) from the Reserve Bank of India (RBI') providing approval for the payment of USD 36.02 million to be made by SIPI to STAR Ltd subject to non-payment of interest component. Once the payments including the amount have been approved by the competent authority (RBI), that had specifically considered the value of the brand license, fees paid for the STAR Mark and there cannot be any disallowance of expenses by the TPO that the assessee has not gained any benefits. In view of the above, we are of the view that no disallowance shall be made and we direct the AO ....
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....ent view, we allow this issue of assessee's appeal in this year also. 64. The next issue in this appeal of assessee for AY 2011-12 in IT(TP)A No. 1901/Mum/2016is as regards to corporate ground raised on the issue of disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (hereinafter the Rules). For this assessee has raised the following ground No. 10: - "Ground number 10 a) have erred in making a disallowance under Section 14A read with Rule 8D ignoring the fact that assessee' owned funds are far in excess of value of investments which could potentially yield tax exempt income. b) have erred in making a disallowance of Rs. 33,01,755 under Section 14A without recording a specific finding as to how assessee's claim of no disallowance under Section 14A is incorrect on facts. c) have erred in making a disallowance of Its 33,01,755 under Section 14A after ignoring the fact that no tax exempt income has been earned during the year by the Appellant. d) have erred by ignoring the fact that assessee's investments are strategic investments in subsidiaries, associate ....
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.... no exempt income earned by the assessee. While holding so, the Authorities relied on the judgment of the Delhi High Court in Income Tax Appeal No. 749/2014, which holds that the expression "does not form part of the total income" in Section 14A of the Income Tax Act, 1961 envisages that there should be an actual receipt of the income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. The Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income." 66. This fact is noted by the AO on page 13 para 8.1 of the assessment order stating, "During t....
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....any dispute that the issue relating to payment of rent is normally decided between the land lord and tenant. Though the agreement has fastened the liability about payment of property tax upon the land lord, yet the fact remains that the assessee has reimbursed its property tax which was contrary to the term of license agreement. Under normal circumstances, such kind of violation of agreement does not happen. However, the assessee has drawn support from a letter claimed to have been signed by the assessee and the land lord, which states that the assessee here in should reimburse the property tax. We notice that the monthly rent paid by the assessee was Rs. 1,16,000/-. However, the property tax reimbursed by the assessee works out to Rs. 30,63,248/-, which works out to about 26 months of rent. This proportion appears to be highly disproportionate and beyond human conduct and probabilities. A tenant, under normal circumstances would not agree to bear such a high cost. Hence there appears to be merit in view taken by tax authorities. However, we notice that they have taken adverse view without conducting any enquiry. The learned A.R. contended the reimbursement of property tax pa....
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....ion to the computer software amounting to Rs. 56,12,259 should he allowed as a deduction." 73. We noted that the DRP has already directed the AO to verify records and grant depreciation on opening WDV of software expenses earlier held as capital expenditure. We find no infirmity in the directions and AO can allow depreciation accordingly. 74. This next issue of assessee's appeal for AY 2012-13 in ITA No. 1048/Mum/2017 is against the order of AO/ DRP in not allowing depreciation in relation to computer software held as capital in nature in earlier years. For this assessee has raised the following ground No. 13 as under: - "Ground No 13 Without prejudice to the above, have erred in non-grant of depreciation amounting to Rs. 4,48,08,542/- in respect of the expenditure held as capital in nature incurred during the year and in relation to the computer software in earlier (opening balance)." 75. We find that this issue is already taken into consideration vide paras 72 & 73 of this order for earlier assessment year i.e. AY 2011-12. The Ld. Counsel for the assessee as well Ld. DR also not argued because the issue is same and facts and circumstances are also same. The facts a....
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....the following ground No.1: - "1. On the facts and circumstances of the case and in law, whether the Hon'ble DRP was justified in directing to allow depreciation @ 60% on printers and scanners instead @ 15%? 81. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the devices like Printer, scanner etc. are devices which are connected to the computer and are used for performing functions of the computer viz. storage, processing etc. Hence, the same form part of the block of assets under the head computer and accordingly, are eligible for depreciation at the rate of 60%. We noted that this issue is squarely covered in assessee's own case for AY 2006-07 in ITA No. 4818/Mum/2010 vide order dated 01.04.2016, wherein the Tribunal held in Para 10 as under: - "10. The revenue has raised an objection on account of allowance of depreciation @ 60% on computer peripherals like rack, printer, port, routers, cord etc. This controversy has been decided by the Tribunal in case filed as DCIT Vs. Datacraft India Ltd. cited as (2011)9 ITR (Trib) 712 (Mumbai)(SB) and by the Hon'ble High Court of Delhi while the deciding the case o....
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....e assessment order? 86. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the DRP has accepted the software expenses as revenue in nature amounting to Rs. 5,91,18,868/- by following earlier years precedence vide Para 16.2.2 as under: - "16.2.2 The facts in the year under consideration remain unchanged, following the decision of our predecessor the expenditure of Rs. 1.42 crores incurred for acquisition of software is held to be revenue in nature. As held by the DRP in the proceeding year, expenditure incurred on account of AMCs, maintenance and annual charges can anyway not be categorized as expenditure for acquisition of software. To conclude, the entire expenditure of Rs. 5.91 crores incurred by the assessee is held to be revenue in nature. Accordingly, the AO is directed to allow the same in this entity." 87. We find no infirmity in the order of the DRP and hence, we confirm the same. This issue of Revenue's appeal is dismissed. 88. This next issue of assessee's appeal for AY 2012-13 in ITA No. 1048/Mum/2017 is as regards to allowability of software expenses. For this, assessee has raised the following ground No.....
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....4 and CO No. 72/Mum/2014) has held that there is no requirement to withhold tax at source while making payments of channel placement fees to cable operators/ multi system operators and that with reference to order under section 201(1) and 201 (1A) also the Hon'ble Mumbai Tribunal has decided the channel placement issue in favour of the assessee, been for AY 208-09 and AY 2009-10 (ITA No. 699 & 700/Mum/2012 and CO No. 22/Mum/2012), by upholding the CIT(A) order that the assessee has rightly deducted tax at source under Section 194C of the Act and therefore it should not be treated as an assessee in default under the provisions of Section 201 of the Act. 19.4.2 considering that the issue is squarely covered in favor of the assessee in its own case by the decisions of the Hon'ble Tribunal, the AO is directed not to subject the channel placement fees of Rs. 1,55,30,10,174/- to disallowance under section 40(a)(ia) of the Act." 92. Since, the issue is covered in earlier years' decision for AY 200910 in ITA No. 1414/Mum/2014, we find no infirmity in the order of CIT(A). Hence, this issue of Revenue's appeal is dismissed. 93. This next issue of assessee's appeal for AY 2012-13 in IT....