TaxTMI 
TaxTMI 
TaxTMI 
2020 (6) TMI 409
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....f Income Tax (Appeals) {hereinafter referred to as "CIT(A)" erred in not appreciating that the order of assessment dated 3rd August 2008 passed by the Assistant Commissioner of Income Tax, Circle-13(1), New Delhi {hereinafter referred to as the "AO"} under section 143(3) of the Income Tax Act, 1961 {hereinafter referred to as "the Act"} is barred by limitation and hence bad in law. 1.1 That on facts and in law, the CIT (A) erred in law in holding that the impugned assessment completed under section 143(3) of the Act is valid in light of the extended time limit provided under section 153 of the Act. 2. That on facts and in law the CIT(A) erred in upholding that the expenditure of Rs. 22,16,476/- incurred by the appellant for obtaining licenses for use of accounting software were capital in nature without appreciating that acquisition of same is merely enhancement and up gradation of accounting software already in use. 3. That on facts and in law the CIT (A) erred in upholding the action of AO to himself determine Arms Length Price (ALP) of alleged "Transaction" / "International Transaction" of issue of Corporate Guarantee by the appellant dehors the fact that the Transfer Pric....
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....hargeable to tax in India as income from "Royalty" so defined under section 9(1 )(vi) of the Act and under the relevant Agreement for Avoidance of Double Taxation (AADT). 6.2 That on facts and in law the CIT(A) erred in holding that by virtue of Article 3(2) of the India-US AADT the meaning of the word "process" as defined in the Act would apply to the provisions of AADT also. 7. Without Prejudice, that on facts and in law the CIT(A) erred in not appreciating that the provisions of section 9(1 )(vi) were amended by the Finance Act 2012 w.e.f 1st June 1976 and as such the said amendments cannot be invoked/relied upon for TDS related issues / defaults. 8. That on facts and in law the CIT(A) erred in not appreciating / considering the submission made by the appellant that since the entire amount of Rs. 7,38,43,516/- was paid by the appellant to M/s Intelsat Corporation and nothing was payable as on 31st March 2008 hence in view of the decision of the Special Bench of Tribunal in the case of Merilyn Shipping and Transport vs. ACIT, reported in 136 ITD 23 (S8) the disallowance made u/s 40(a)(i) was uncalled for. 9. That on facts and in law the CIT(A) erred in upholding the actio....
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....e Charges by relying on the decision of Hon'ble DRP in assessee's own case in the AY 2009-10 ignoring the fact that the department is already in appeal against the order and the decision is still pending." 4. Briefly, the fact shows that appellant is engaged in the business of television news broadcasting through its three different channels namely NDTV 24 x 7, NDTV profit and NDTV India. It also produces customized software programs for broadcasters. The assessee filed its return of income on 29/9/2008 declaring loss of Rs. 5 319275/-. 5. The case of the assessee was referred to for seeking further information under the provisions of Exchange of Information article of Double Taxation Avoidance Agreement with UK and Mauritius. The information under the exchange of information article of Indo- UK Double Taxation Avoidance Convention was received in the office of The Chief Commissioner of Income Tax - V, New Delhi on 7/6/2012. Therefore the limitation in the case was extended as per the provisions of section 153 (4) (vii) read with the first proviso. Information was sought with respect to the corporate guarantee fee, if any paid by NDTV Network Plc to the appellant with res....
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....account as it is a ‗benefit' conferred on the employee which could not be taken back by the employer company. The learned assessing officer disallowed the above expenditure stating that these expenses are notional expenses. 9. On appeal before the learned CIT - A, the assessee submitted that the employee stock option plan 2004 was instituted by the company to grant equity-based incentive to its entire eligible employees. It was approved by the board of directors in their meeting held on 5 January 2004 and by the shareholders in their meeting on January 29, 2004 and September 22, 2004 for grant of 4057000 options to the employees of the company at an exercise price of Rs. 4/- each, representing one share for each option upon exercise. The maximum tenure of these options granted was seven years from the date of grant, the balance option available for grant as on 31/3/2007 was 35 5000. According the company applying the intrinsic value method recognize the excess of the market price over the exercise price of the option as an expense during the year. The assessee contested that the above company has formulated policy and scheme in compliance with the strict SEBI guidelines and ....
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....sion of the honourable Delhi High Court in assessee's own case for assessment year 2006 - 07 and 2007 - 08. The order of the honourable High Court for assessment year 2007 - 08 reported in 99 taxmann.com 401 (Delhi)/[2017] 398 ITR 57 (Delhi) has held as under:- "2. Learned counsel for the assessee appearing on advance notice, on the other hand, urges that there is no infirmity with the approach of the Income-tax Appellate Tribunal and that this Court had on July 12, 2016 given reasons for not entertaining the appeal which was not dismissed merely on the ground of delay. The previous order of the Court records inter alia as follows : "7. As far as this issue is concerned, it is pointed out by the learned counsel for the assessee that the issue stands covered in favour of the assessee and against the Revenue by the order of this Court dated August 18, 2015 in I.T.A. No. 107 of 2015 (CIT v. Lemon Tree Hotels Ltd.). The Court had affirmed the order of the Income-tax Appellate Tribunal deciding the issue in favour of the assessee in the said case where the addition made by the Assessing Officer by way of disallowance of the expenses debited as cost of ESOP in profit and loss account....
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....f jurisdiction under section 263 of the Act." 4. The Special Bench ruling in Biocon Ltd. (supra) considered the matter rather elaborately and also examined all the previous decisions. It scrutinised different accounts of ESOPs and the points of time when they could have vested. The observations of the Special Bench in this regard, inter alia, are as follows (page 623 of 25 ITR (Trib)) : "When we consider the facts of the present case in the backdrop of the ratio laid down by the Hon'ble Supreme Court in Bharat Earth Movers v. CIT [2000] 245 ITR 428 and Rotork Controls India (P.) Ltd. v. CIT [2009] 314 ITR 62 (SC), it becomes vivid that the mandate of these cases is applicable with full force to the deductibility of the discount on incurring of liability on the rendition of service by the employees. The factum of the employees becoming entitled to exercise options at the end of the vesting period and it is only then that the actual amount of discount would be determined, is akin to the quantification of the precise liability taking place at a future date, thereby not disturbing the otherwise liability which stood incurred at the end of the each year on availing of the servic....
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....ployees)' shall be taken as fringe benefit. The Explanation to this clause clarifies that for the purposes of this clause,-(i) 'specified security' means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees' stock option has been granted under any plan or scheme thereof, includes the securities offered under such plan or scheme. Thus it is discernible from the above provisions of the Act that the Legislature itself contemplates the discount on premium under ESOP as a benefit provided by the employer to its employees during the course of service. If the Legislature considers such discounted premium to the employees as a fringe benefit or 'any consideration for employment', it is not open to argue contrary. Once it is held as a consideration for employment, the natural corollary which follows is that such discount (i) is an expenditure; (ii) such expenditure is on account of an ascertained (not contingent) liability; and (iii) it cannot be treated as a short capital receipt. In view of the foregoing discussion, we are of the considered opinion that discount on shares under t....
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....e dismiss ground number [1] of the appeal of the learned assessing officer. 14. The second [2] ground of appeal is against the order of the learned CIT Appeal in reducing the disallowance of software expenses from Rs. 2782791/- to Rs. 505378 holding the same to be revenue in nature. During the year the assessee has claimed software expenses amounting to Rs. 6066309/- in its profit and loss account. The above expenditure pertaining to a. annual maintenance contract expenditure Rs. 2732939/- b. Up gradation of software Rs. 21528 c. Accounting software Rs. 2216476 d. license and right to use software Rs. 3 9410 e. other software is having limited life Rs. 5 05378 f. Amount wrongly booked under software expenditure Rs. 550577/- The learned assessing officer treated the annual maintenance cost of Rs. 2732939/- as revenue expenditure and disallowed the balance expenditure of Rs. 2782792 including the up gradation of the software, accounting software and license cost et cetera, treating them as capital expenditure. He allowed depreciation at the rate of 60% on these expenditure and therefore the net expenditure of Rs. 1113116/- was disallowed and added back to the taxa....
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....s. 8245612/- on account of software expenses. During the year the assessee has incurred expenditure of Rs. 32435619/- on software expenses and claimed the same as revenue expenditure. The ld Assessing Officer was of the view that it is capital in nature and therefore depreciation @60% thereon is allowable and not the whole expenditure. After considering the submission of the assessee ld Assessing Officer held that computer software expenses to the extent of Rs. 20614030/- shown by the assessee is disallowable as it is capital expenditure. Therefore he allow depreciation @60% on Rs. 20614030/- amounting to Rs. 12368618/- and thus disallowed a sum of Rs. 8245612/-. The Assessing Officer was of the view that assessee has purchased accounting software and its upgradation and also on software such as google earth, pro Microsoft server calls are purchased which gives the assessee an advantage of enduring nature. The assessee aggrieved with the order of the ld Assessing Officer preferred objection before the ld DRP who directed the ld Assessing Officer delete the above disallowance vide para No. 8 of its order as under:- '8. Disallowance of software expenses amounting to Rs. 82,45,6....
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....." As there is no change in the facts and circumstances of the case, respectfully following the decision of the coordinate bench in assessee's own case for assessment year 2009 - 10, ground number [2] of the appeal of the learned assessing officer is dismissed. 20. Ground number [3] of the appeal is with respect to the deletion of the disallowance of commission expenditure of Rs. 4 5,53,30,999/- under section 40 (a) (ia) of the act. As the appellant earns income through sale of advertisement time on its various channels, this advertisement time is sold generally through advertisement agencies. These advertisement agencies in turn sales this advertisement time to the advertisers. The appellant assessee raises invoice on such advertisement agencies after allowing 15% trade discount as per the industry practice. The appellant also accounts for only 85% of its revenue in its books of account. The appellant submits that it has offered the discount to the advertising agencies and it is not the commission as the appellant and advertisement agencies act on principal to principal basis. The learned assessing officer held that advertisement agencies were agents of the appellant and amount....
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....tronic media whereas the decision quoted is on the facts of print media company. The assessee's submission is extracted below: "The assessee/companies who are engaged in the business of running of print and electronic media houses, the main source of revenue is advertisement charges. The advertisers approach classified agents or accredited advertising agencies to advertise. The agents/agencies upon receipt of advertisement requirement procure the airtime from the media companies at a discount. Advertisers while making payment to accredited agencies duly deduct tax as required under law under section 194C of the Act on the amount paid by the advertiser. This customary practice is consistently followed in this above business and is governed in accordance with guidelines of Indian Newspaper Society (in short INS) for print or Indian Broadcasters Federation (in short IBF) for electronic. An advertiser engages an advertising agency and the advertising agency in turn approaches print and electronic media for publication/broadcast of the advertisement. There is no direct link between the print and electronic media and the advertiser. In the normal course when orders are released b....
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....ee's own case for assessment year 2009 - 10 we confirm the order of the learned CIT A and dismiss ground number [3] of the appeal of the revenue. 25. Ground number [4] is with respect to the order of the learned CIT - A in deleting the addition of Rs. 18720000 on account of corporate guarantee charges by relying on the decision of the Dispute Resolution Panel in assessee's own case for assessment year 2009 - 10 ignoring the fact that the Department is already in appeal against the order under decision is still pending. The learned authorised representative submitted that this is directly related to the ground number 3 and 4 of the appeal of the assessee, wherein the assessee challenges the action of the learned assessing officer himself determining the arm's length price of the alleged international transaction of the issue of corporate guarantee by the appellant , dehorse the fact that the transfer pricing Officer vide order dated 14 September 2011 accepted the ALP of the all international transactions undertaken by the appellant. He further stated that the CIT - A has also erred in upholding the addition on account of the alleged transaction of issue of corporate guarantee witho....
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....g software holding that same were capital in nature. This issue has already been decided while deciding the appeal of the revenue wherein following the order of the coordinate bench for assessment year 2009 - 10 the software expenditure disallowed by the learned assessing officer deleted. Therefore this ground of appeal of the assessee deserves to be allowed. Even otherwise the assessee has not purchased the software but has purchased the license to use this software for its accounting purposes. That is not capital expenditure but revenue expenditure. In view of this ground [2] of the appeal of the assessee is allowed. 33. Ground no [3] and [4] of the appeal are related and linked with ground no 4 of the appeal of the ld AO. The facts of the case show that reference was made under section 92CA to the Addl Director of Income tax [TPO] -ii(4) , New Delhi [ The Ld Transfer Pricing Officer, TPO ] after obtaining necessary approval of The Commissioner of Income Tax-5, Delhi. On reference, The TPO examined international transaction as reported in form number 3CEB submitted by the assessee. On 6/6/2011, the ld AO informed about corporate guarantee issued by the appellant to its subsidiar....
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....ational transaction. 36. Further on 31/05/2012, assessee explained that the above bonds were repurchased by the UK company in November 2009 at US$ 72.4 million to significantly reduce its outstanding borrowing and also to cut down on interest burden. The assessee further stated that entire exercise of fund raising and repayment thereon have been done by a UK company which is a separate legal entity. The role of the assessee in raising the above fund by the subsidiary was only limited to undertake to provide a corporate guarantee for and behalf of subsidiary as and when required. It was also stated that such an undertaking was contingent in nature and in fact such contingency never arose as in November 2009 the bonds were repurchased. 37. on 11/06/2012, assessee submitted that appellant had merely provided an undertaking that it shall provide a guarantee (120 days prior to 3 years from the issuance of the bond,) which was never provided by the assessee as the bond were redeemed before the expiry of 120 days prior to the three-year period. The assessee further explained clause 2.2 of the terms and conditions of the bond issue. The assessee further referred to the note to accounts o....
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....a corporate guarantee. He referred to the agreement under reference which clearly shows that in the event of default or potential default by the subsidiary company, the assessee was liable for all the dues along with accrued interest to the step-up coupon bonds holders within 60 days of the default. The above clause did not mention anywhere that the assessee would be a liable only after three years as claimed by the assessee. So he held that there is a corporate guarantee issued by the assessee company in favour of its subsidiary. 40. Thereafter the learned assessing officer rejecting all the arguments of the assessee applied the CUP method and determined the arm's length price of Gurantee charges at the rate of 4.68 percentage on the value of the bank guarantee on Rs. 400 crores ( 100 million US dollars) at Rs. 18.72 crores. Such an adjustment was made by the AO on account of arms length price of the guarantee issued by the assessee to the subsidiary company. 41. The assessee aggrieved with the order of the assessing officer preferred an appeal before the learned CIT - A. The learned CIT - A upheld the addition made by the learned assessing officer vide para number 7.1 of his or....
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....the order of the learned Dispute Resolution Panel in case of the assessee for assessment year 2009 - 10. He held that the learned DRP has observed that considering the credit rating of the subsidiary, nobody would have subscribed to its bonds without undertaking given by the appellant and it was an implicit guarantee which needed benchmarking. Since the assurance of the appellant was for the issue of corporate guarantee to the extent of 40% of the transactions involved, the learned the DRP has directed the TPO to calculate the guarantee for 40% of the underlying sum for assessment year 2009 - 10. He further held that facts in the present case are exactly similar to the facts as in assessment year 2009 - 10 and therefore he directed the learned assessing officer to calculate the guarantee for 40% of the underlying some. Thus he partly allowed the appeal of the assessee. 43. By the direction of the learned CIT - A, assessee as well as the revenue both are aggrieved and therefore the appeal of the assessing officer challenges the same as per ground number[4] and appeal of the assessee challenges it by ground number [3] & [4] of the appeal. 44. The learned authorised representative, ....
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....subsidiary company. He further submitted that on the basis of this the learned transfer pricing officer did not make any adjustment. He stated that the AO referred to the foreign tax division for exchange of information before the UK authority which is mentioned at page number one of the assessment order. He further referred that such information was sought by The Additional Commissioner Of Income Tax, Range - 13 to the Joint Secretary FT and TR division by letter dated 20/12/2011. These documents are placed at page number 4-6 of the paper book. He further referred to the communication received from HM Revenue and Customs [ HMRC] dated 13 February 2012 wherein that authority requested the PricewaterhouseCoopers LLP for the relevant information. On 23 April 2012, PricewaterhouseCoopers informed to the senior intelligence officer of HMRC Centre for exchange of intelligence, London that with respect to US dollar hundred million convertible bonds issued on 30 May 2007 by the subsidiary company , services of Jefferies international Ltd, a leading global securities and investment banking group was obtained as an underwriter and the placing agent for issuance of bond. It also confirmed th....
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.... an undertaking and not a corporate guarantee for the bonds issued by its associated enterprises. The assessee supported this fact by referring to certain clauses of the agreement. The special bench as per its order dated 23/8/2017 has held that after hearing extensively to both the parties, in their opinion, assessee only incurred an obligation by giving an undertaking which is short of guarantee. As such the question before the special bench as to whether the giving of corporate guarantee is an international transaction does not arise in the instant appeal. Therefore the special bench returned the finding to be placed before the President of the ITAT. He therefore submitted that when the special bench says that the assessee only incurred an obligation by giving an undertaking which is short of guarantee but not a guarantee, the learned assessing officer should have accepted it and could not have proceeded to make the adjustment. He further referred to the order of the President ITAT dated 24/8/2017 wherein after taking the order of the special bench into account it was stated that the undertaking given by the assessee was not the corporate guarantee and when there is no corporate....
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.... undertaking to provide a corporate guarantee for and behalf of NNPLC, as and when required. These bonds carry a coupon rate (net of withholding taxes) of 4% for the first year, 6% for the second year and 9% for the balance after maturity. He therefore submitted that the notes on accounts of the appellant also disclosed that it has given an undertaking to provide a corporate guarantee but it has not provided a guarantee at that particular point of time. 50. He further referred to the annual accounts of NDTV networks plc wherein the issue of above convertible bonds are mentioned. He further referred to schedule of borrowing at serial number 12 where the stepup convertible bonds issued are shown as borrowings. He referred to the note attached to that account and stated that in that account also there was a disclosure of an undertaking by the ultimate holding company to provide a corporate guarantee as and when required. Therfore he submitted that even subsidiary accounts also confirm that there is no guarantee given by the appellant. 51. He further referred to the minutes dated 22 May 2007 of the subsidiary company where the agreements are approved. There are also the discussion on....
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....he learned transfer pricing officer did not examine the arm's length price of an international transaction and passes an order under section 92 CA (3), then the learned assessing officer is duty-bound to examine the transaction and its arm's length price. The learned assessing officer is precluded from determining the arm's length price only when the TPO determines the arm's length price. He therefore submitted that therefore there is no provision in the law in order to restrict the powers of the assessing officer to determine the ALP, if the transactions are not despite reference were not attended to by the by learned TPO . He referred to para number 7.1 of the order of the learned CIT appeal was dealt with this issue. He further stated that when the transfer pricing officer has specifically communicated in writing that he has not determined the ALP of the guarantee commission then the learned assessing officer has enough powers and is duty-bound to determine the arm's length price of international transaction which was not considered by the transfer pricing Officer. 55. With respect to the information of the UK tax authorities he submitted that it is merely an opinion of the Pri....
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....to the order of the learned dispute resolution panel in case of the assessee for assessment year 2009 - 10 is submitted that the DRP itself has stated that it is an implicit guarantee and it is nowhere stated that it is not an international transaction. 61. In view of this he supported the order of the learned assessing officer and the learned CIT - A in determining the arm's length price of the international transaction entered into by the assessee in the form of corporate guarantee. 62. We have carefully considered the rival contention and perused the orders of the lower authorities. The first argument of the learned authorised representative is that the learned assessing officer is precluded from making any adjustment on account of the arm's length price of the international transaction when specific powers are assigned by CBDT circular to the transfer pricing Officer. The learned authorised representative has relied upon the decision of the honourable Bombay High Court which reached at the doorstep of honourable Supreme Court in principle Commissioner of income tax versus SG Asia Holdings private limited [2019] 108 taxmann.com 213 (SC)/[2019] 266 Taxman 451 (SC) where in the ....
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....y the CBDT thereby making the assessment order on this issue in violation of the provisions of the law. We, therefore, set aside the findings of the Ld. CIT(A) on this issue and hold that the Transfer Pricing Adjustments made by the AO in contradiction to the mandatory instructions of the CBDT is bad in law. Here, we would like to make it clear that the assessment order is good but the Transfer Pricing Adjustments made therein are bad in law. Ground No.11 is therefore partly allowed. 16.2 Before parting with this issue, the Ld. DR has emphasized that if the AO has not followed the mandatory directions, the case may be set aside to the file of the AO so that he may refer the matter to the TPO. We do not subscribe to this argument of the Ld. DR for the simple reason that the Tribunal is an Appellate Authority and therefore cannot interfere in the administrative matters which are mandatory as per the provisions of the Act. Reference to the TPO is an administrative matter which was supposed to be followed by the AO which he has failed to do so. The Tribunal cannot make any good to such lapse made by the AO. 17. As we have held that T.P. Adjustments are bad in law, we do not fin....
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....ection 92CA provides that the TPO after taking into account the material available with him shall, by an order in writing, determine the arm's length price in accordance with sub-section (3) of section 92C. Sub-Section (4) of section 92CA provides that on receipt of the order of the TPO, the Assessing Officer shall proceed to compute the total income of the assessee having regard to the arm's length price, determined by the TPO. Thus, whereas the determination of the arm's length price, wherever reference is made to him, is required to be done by the TPO under sub-section (3) of section 92CA, read with sub-section (3) of section 92C, the computation of total income having regard to the arm's length price so determined by the TPO is required to be done by the Assessing Officer under sub-section (4) of section 92C, read with sub-section (4) of section 92CA. In order to make a reference to the TPO, the Assessing Officer has to satisfy himself that the taxpayer has entered into an international transaction with an associated enterprise. One of the sources from which the factual information regarding international transaction can be gathered is Form No.2CEB filed wit....
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....ransfer Pricing Officer:- The role of the TPO begins after a reference is received from the Assessing Officer. In terms of section 92CA this role is limited to the determination of arm's length price in relation to the international transaction(s) referred to him by the Assessing Officer. If during the course of proceedings before him it is found that there are certain other transactions; which have not been referred to him by the Assessing Officer, he will have to take up the matter with the Assessing Officer so that a fresh reference is received with regard to such transactions. It may be noted that the reference to the TPO is transaction and enterprise specific. The transfer price has to be determined by the TPO in terms of section 92C. The price has to be determined by any one of the methods stipulated in sub-section (1) of section 92C and by applying the most appropriate method referred to in sub-section (2) thereof. There may be occasions where application of the most appropriate method provides results which are different but equally reliable. In all such cases, further scrutiny may be necessary to evaluate the appropriateness of the method, the correctness of the da....
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....opments should be maintained in the format enclosed as Annexure I to these guidelines. This format will also serve as an important data base for future action and also help ensure uniformity in the determination of "arm's length price" in identical or substantially identical cases. These instructions are under Section 119 of the Income-tax Act. ANNEXURE I Register of record to be maintained by Transfer Pricing Officer 1 2 3 4 5 6 7 8 9 10 11 12 13 Sl.No. Date of receipt of reference from A.O. Name of the A.O. making reference Name and address of the tax payer and nature of business Nature and quantum of international transaction as per section 92B and assessment year Name and address of the associated enterprise and the country in which it is resident Nature of association as per section 92A Date of issue of notice to taxpayer Transfer price as taken by the taxpayer Arms length price as determined by the Transfer Pricing Officer under section 92CA (3) Method applied Reference to any database adopted by TPO Date of despatch of the order of the A.O. ANNEXURE II Order under section 120, read with section 92CA of the Income-tax Act, 1961, dated April,....
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.... ** (vi) Role of the Assessing Officer after receipt of "arm's length price": Under sub-section (4) of section 92C, the Assessing Officer has to compute total income of the assessee having regard to the arm's length price so determined by the TPO." 7. In view of the guidelines issued by the CBDT in Instruction No.3/2003 the Tribunal was right in observing that by not making reference to the TPO, the Assessing Officer had breached the mandatory instructions issued by the CBDT. We do not find the conclusion so arrived at by the Tribunal to be incorrect. 8. However, the Tribunal ought to have accepted the submission made by the Departmental Representative as quoted in para 16.2 of its order and the matter ought to have been restored to the file of the Assessing Officer so that appropriate reference could be made to the TPO. It would therefore be upto the authorities and the Commissioner concerned to consider the matter in terms of Sub-Section (1) of Section 92CA of the Act. 9. We, therefore, allow this Appeal to the aforesaid extent and direct that it would now be upto the Assessing Officer to take appropriate....
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....ing officer to delete the disallowance of Rs. 8 96000/-. 67. Ground number [6] of the appeal of the assessee is against the order of the learned CIT - A wherein he has upheld the disallowance made by the learned assessing officer of Rs. 7 3843516 being the transmission and uplinking charges paid to M/s Intel l set Corporation by invoking the provisions of section 40 (a (ia) of the income tax act. 68. The learned authorised representative submitted that identical issue is decided in case of the assessee for assessment year 2009 - 10 wherein such disallowance was deleted. 69. The learned departmental representative supported the order of the learned lower authorities. 70. Identical issue has been considered by the coordinate bench in case of the assessee for assessment year 2009 - 10 is under:- "57. The second ground of appeal is against the deletion of disallowance of Rs. 78123855/-on account of transmission and up linking charges paid by the assessee to Intelsat Corporation USA without deduction of tax at source. During the course of assessment proceedings it was found by the ld AO that assessee has made payment of transmission and up linking charges of Rs. 145251704/- and ou....
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....re we proceed to our specific submission and a fact of the case, we here-in-below submits the nature of transaction entered between the assessee Company and Intelsat Corporation to understand its taxability and application of provisions of section 195 of the Act. The assessee Company is engaged in the business of broadcasting, operating a TV channel. The assessee Company video-graphs events that takes place as and when they happen in the form of programs and by using transmission and up-linking facilities, it sends signals to a satellite that is hovering in space. The signals sent to the satellite are decoded and downlinked over the area covered by the satellite. A transponder is a part of the satellite which receives such signals from the earth stations and re-transmits the same back to the earth with or without amplifying them. The assessee Company entered into an arrangement with Intelsat Corporation, a Company incorporated in and resident of USA for using such transponder capacity, to make the signals available to the cable operators, who in turn beam the signals to the viewers in their homes. The above services are like standard facility used for transmission of programs....
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....duct tax if the payments made to non-resident are chargeable to tax. When it has already been held be the jurisdictional High Court/Tribunal that such sum is not taxable in India in the recipient, no liability could be fastened on the payer to deduct on such sum. Thus, the disallowance of above sum by invoking the provisions of section 40(a)(i) of the Act will be arbitrary and unwarranted. The legal view prevailing at the time of previous year 2008-09 was that such payments were not chargeable to tax in India under section 9(1)(vi) read with section 195 of the Act. Therefore the assessee Company was correct in law in not deducting tax at source on such payments at that point of time. The case of the assessee Company is also supported from the fact that Intelsat Corporation was held not liable to tax in India by the Jurisdictional High Court. Without prejudice to above submissions on merit and in alternate, the assessee Company most respectfully submits that on the facts of the case the disallowance under section 40(a)(i) of the Act is unwarranted as the above provisions are applicable only in a situation where the expenses remain unpaid/payable as on 31st March of the previou....
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...." includes and shall be deemed to have always included transmission by satellite (including up-linking, amplification, conversion for downlinking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret... (87a. Inserted by the Finance Act, 2012, w.r.e.f. 1-6-1976. The provisions of section 9(1)(vi) regarding income by way of royalty were very clear and specific. The word "process" included the Transmission and uplinking charges however, looking to the disputes in the various courts and contrary judgments in this regard, a clarification / amendment has been inserted by the Finance Act, 2012 (with retrospective effect from 01.06.1976) which clearly says that the "process" includes and shall be deemed to have always included transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal). In view of the present status of the legislation the Transmission and uplinking charges paid by the assessee without deducting any TDS would invite the consequences of provisions of section 40(a)(i). The assessee argument that no technical knowledge has been made available to it therefore it is not c....
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....jection before the ld DRP who vide para No. 7 of its direction directed the AO to delete the above disallowance as under:- "6. Disallowance of transmission and up-linking charges u/s 40(a)(i) amounting to Rs. 7,81,23,855/- Assessee had paid the above amount to Intelsat Corporation, a company incorporated in USA for using transponder capacity, to make the signals available for the cable operators. The AO has disallowed this sum because no TDS was made. Assessee has contended that in the case of Intelsat Corporation, the Hon'ble High Court of Delhi vide order dated 28.09.2012 has held that no tax was payable by the company on account of the revenue of transmission and up-linking facilities. In view of this, there is no question of TDS on the amounts payable to Intelsat Corporation. DRP has considered the argument of the assessee. In view of the binding decision coming from jurisdiction Delhi High Court, the contention of the assessee is accepted. The AO is directed to drop the proposed disallowance." 59. Before us the ld DR relied upon the draft assessment order whereas the ld AR vehemently submitted that the issue is squarely covered by the decision of Hon'ble Delhi Hi....
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....8 at Rs. 544.38 per share . Claim of the assessee is that the transaction of the sale of shares was in good faith and in no manner motivated to show that higher profits in the hands of the appellant. The transaction has been done in compliance with FEMA regulations and on the basis of valuation of shares done by an independent valuer. 73. However the learned assessing officer noted that the shares of increasingly loss-making company were sold at Rs. 544.38 per share which had been purchased just 13 months before the date of sale for the value of Rs. 46.55 per share. Therefore according to him it is only a corporate business restructuring whereby the appellant has sold the shares which otherwise had no value to its subsidiary at highly inflated rate. Thus AO held that the receipts shown over and above the purchase price of the above shares should be taxed as income from other sources instead of capital gain shown by the appellant in the return of income. Therefore Rs. 105789125/- was added as other income of the assessee. 74. On appeal before the learned CIT - A he agreed with the finding of the learned assessing officer that the valuation report of shares of the company is not re....
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....2006 speaks about the characterisation of income from transaction in listed securities as well as unlisted securities. As per para number two of that circular it is provided that for determining the tax treatment of income arising from transfer of unlisted shares for which no formal market exists for a trading, need has been felt to have a consistent view in assessments pertaining to such income. Therefore it was decided that the income arising from transfer of unlisted shares would be considered under the head capital gain irrespective of period of holding with a view to avoid dispute/litigation and to maintain a uniform approach. The para number three clarified that the above would not be necessarily applied in the situation where the genuineness of the transaction in unlisted shares itself is questionable, the transfer of unlisted shares is related to an issue pertaining to lifting of corporate veil and the transfer of unlisted share is made along with the control and management of the underlying business. In the present case before us the learned assessing officer could not prove that any of the three conditions mentioned in that circular applies. In fact the sale price of the ....
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....narily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. 12. Quite clearly, "ordinarily" the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression "ordinarily" has been used in the said rule itself. This rule was inserted as a result of directions of Hon'ble jurisdictional High Court in the case of Shivsagar Veg Restaurant v. ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that "We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all ....
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....nd also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure...". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary" period. 14. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact....