TaxTMI 
TaxTMI 
2020 (6) TMI 409
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.... "1. That on facts and in law the Commissioner of 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 Co....
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.... 6.1 That on facts and in law the CIT(A) erred in upholding that the transmission and up-linking charges paid to M/s Intelsat Corporation are chargeable 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....
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....nd agent and as such the payments were liable for deduction of tax at source. 4. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 18,72,00,000/- on account of Corporate Guarantee 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 7/6/201....
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.... which was recalculated as the expenses incurred on account of ESOP . The assessee computed the claim as per the securities and Exchange Board of India guidelines which mandated that the difference between the market price and the price at which the option is exercised by the employee is to be debited to the profit and loss 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 gran....
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....covered in favour of the assessee by the decision of the honourable Delhi High Court in assessee's own case for assessment year 2006 - 07 and 2007 - 08. 12. We've carefully considered the rival contention and perused the orders of the lower authorities. We find that identical issue is covered in favour of the assessee by the decision 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 dat....
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....thus the expenditure incurred being on lines of the SEBI Guidelines, there could be no interference in the relief granted by the assessing authority for the expenditure arising on account of the employees' stock option plan. This expenditure incurred as per the SEBI Guidelines and granted by the Officer could not be considered as erroneous one calling for the exercise of 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 emp....
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....1) provides that for the purposes of this Chapter, 'fringe benefits' means any consideration for employment as provided under clauses (a) to (d). Clause (d), which is relevant for our purpose, states that: 'any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at concessional rate to his employees (including former employee or employees)' 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 considerati....
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.... deduction, in the second case, deduction has to be allowed for a sum determined on some rational basis representing the amount of liability incurred." 5. Having regard to the above discussion, especially that the previous order dated July 12, 2016 in ITA No. 366 of 2016 had considered the same items of expenditure, under section 34, we are of the opinion that no question of law arises. The appeal is accordingly dismissed." 13. In view of this, we 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 wrong....
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....e therefore submitted that the issue is squarely covered in favour of the assessee. 19. We have carefully considered the rival contention and perused the orders of the lower authorities. Identical issue arose in case of the assessee for assessment year 2009 - 10 [2017] 83 taxmann.com 282 (Delhi - Trib.)/[2017] 189 TTJ 1 (Delhi - Trib.) wherein the coordinate bench decided the issue as under:- "61. Ground No. 3 of the appeal of the Revenue is against direction of the ld DRP to delete the disallowance of Rs. 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 Ass....
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....DRP. 63. We have carefully considered the rival contentions. The assessee has been allowed the identical claim in earlier years by the ld CIT(A) and based on that decision the ld DRP was also of the view that the above expenditure incurred by the assessee is revenue in nature. The ld DR could not controvert that why the order of the ld DRP is erroneous. In view of this we do not find any infirmity in the direction issued by the ld DRP. In the result we confirm the direction of the DRP. In view of this ground No. 3 of the appeal of the revenue is dismissed." 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 ....
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....sion paid u/s 40(a)(ia) amounting to Rs. 41,54,41,111/- The AO has disallowed the sum on the ground that the assessee should have deducted tax on the gross amount received by the advertisement agency. On the other hand, the assessee had stated that its case is squarely covered by the decision of the jurisdictional High Court in the case of CIT v. Living Media India Ltd. and in the case of JagranPrakashan Ltd. v. DCIT [345 ITR 288 (2012)] of the Allahabad High Court. The AO has tried to differentiate the decision in the case of Living Media India Ltd. by stating that the assessee is in electronic 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....
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....e and he also could not show us any other judicial precedent so as to persuade us to disagree with the views of the ld DRP. Further merely because the revenue has filed an SLP before the hon'ble Supreme Court against the decision of Delhi High Court cannot be a reason for sustaining the disallowance. In view of this we do not find any infirmity in the direction of the ld DRP in directing the ld Assessing Officer to delete the disallowance commission paid amounting to Rs. 415441111/-. In the result the ground No. 1 of the appeal of the Revenue is dismissed." 24. Therefore in view of the decision of the coordinate bench in assessee'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 represe....
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....twork Services (India) (P.) Ltd. v. Dy. CIT [2017] 86 taxmann.com 158 (Delhi - Trib.) dated 18.09.2017 wherein the issue of the limitation was decided. This order of the coordinate bench was challenged before the honourable Delhi High Court. Honourable Delhi High Court in [2018] 97 taxmann.com 462 (Delhi)/[2018] 258 Taxman 197 (Delhi) approved the order of the coordinate bench. In view of this ground number [1] of the appeal of the assessee is dismissed. 32. Ground number [2] of the appeal is against the order of the learned CIT - A in upholding the disallowance of Rs. 2216476/- incurred by the appellant for obtaining license for use of accounting 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 rev....
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....ly, why the adjustment of the arm's length price of the guarantee should not be made. 35. Assessee explained on 28 May 2012 that no corporate guarantee was issued by the assessee for the above impugned transaction. Assessee also informed that the audited accounts of the assessee company states that the appellant company has merely given an undertaking to provide a corporate guarantee for and behalf of the NDTV Network PLC United Kingdom company as and when required. However, no such corporate guarantee was ever issued by the appellant. Therefore, question of any benefit in the hands of the assessee does not arise. It was also stated that it is not an international 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 guar....
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....t assessee company has provided the guarantee to its associated enterprise for raising a step-up coupon bonds. The transaction has resulted in to a direct benefit to its associated enterprise and therefore there is an active promotion of the multinational groups attributes which positively enhances the profit-making potential of particular members of the group. Thereafter, he referred to the various judicial pronouncements on the issue and rejected claim of the assessee that it has only gave an undertaking and no corporate guarantee has been given and the bonds have been enashed prior to the three years after the closing date therefore the company has not entered into 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....
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.... circumstances mentioned in clause (a) to (d) of the subsection exist. In such cases, the AO is not bound to refer the case of the assessee to the TPO. On the other hand, the AO may refer the case of the assessee to the TPO if he considers it necessary or expedient to do so. (iii) The expression necessary or expedient is quite distinct from an independent of the circumstances mentioned in section 92C (3). Considering the facts of the case, I hold that the AO can himself determine the ALP of corporate guarantee under section 92C (3) without making reference to the TPO. Thus the action of the AO is upheld." 42. Further with respect to the determination of the arm's length price, he referred to 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 learn....
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....n accordance with the condition number 9.6. It is further mentioned that however, until such time as the parent company gives a notice of extension of the guarantee to the trustee in accordance with condition 19, in the even to of default by the company in payment of the outstanding amount to bondholders due and payable under condition number 9.6, holders of bonds then outstanding shall only be entitled to direct recourse under the guarantee against the parent company in respect of 40% of the specified sum. He submitted that therefore the ld CIT (A) restricted the addition to the extent of 40 % of the addition made by the ld AO. He therefore submitted that such that it never came to happen as bonds were redeemed by the 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 da....
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.... officer should make a reference to the transfer pricing officer which is also governed by the CBDT circular. The honourable High Court also held that once the circular goes unchallenged and binds the revenue, then in the absence of all these, the tribunal held that the assessing officer order cannot be sustained and he could not have proceeded to make the transfer pricing adjustment. He therefore submitted that the adjustment made by the learned assessing officer who is not empowered to do so cannot make any adjustment on account of arm's length price of the corporate guarantee. 46. He further referred to the fact that the special bench was constituted wherein it was submitted by the assessee that the assessee only gave 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 g....
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....even otherwise. None exists. 48. He further stated that as per agreement dated 24/5/2007 the Jefferies international was an underwriter of hundred percent of the subscription. He submitted that when the subscription of the hundred million US dollar issued by the subsidiary is fully underwritten, there is no reason to give any guarantee by the appellant to its subsidiary company. 49. He further referred to the annual account of New Delhi television Ltd wherein in Note No [5] in schedule B ‗Notes to Accounts' it is mentioned that on 30 May 2007, NNPLC has raised funds by issuing hundred million dollar coupon convertible bonds due in 2012 (redeemable at a premium of 7.5%). In connection with this, the company has given an 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.....
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....he revenue therein. He therefore submitted that on this count also the addition made by the learned assessing officer cannot sustain. 53. In view of the above submission he submitted that that the addition made by the learned assessing officer is not sustainable on law as well as on the facts of the case. 54. The learned CIT DR supported the orders of the lower authorities. He submitted that there is no error in the order of the learned assessing officer in determining the arm's length price of an international transaction. He referred to assessment order para number 7.1 and 7.2 of the assessing officer wherein the learned assessing officer specifically referred the matter to the learned transfer pricing Officer. He submitted that when the 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 provi....
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....hat company in absence of the guarantee or undertaking by the appellant could not have garnered $ 100 million on its own. 59. He further referred to the subscription agreement and submitted that if the assessee is not to be involved in the whole financial transaction of the subscription of the convertible bonds of $ 100 Million, there was no reason that the name of the appellant could have been taken as one of the parties to the subscription agreement. He submitted that inclusion of the name of the appellant as one of the parties in the subscription agreement itself shows that assessee is issuing an undertaking to guarantee the recovery of the sum of the investors. He therefore submitted that this is also an international transaction. 60. Referring 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....
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....Assessing Officer and dismissed the appeal. The matter was carried further by filing ITA No.2399/Mum/2009 before the Tribunal. (C) The Tribunal by its order dated 22.04.2015 set aside the findings rendered by the first two authorities and held that transfer pricing adjustment made by the Assessing Officer was contrary to the mandatory instructions issued by CBDT2 in its Instruction No.3/2003 dated 20.05.2003. While allowing the appeal, the Tribunal observed as under:- "16.1 After considering the entire judicial discussion discussed hereinabove, in our considered opinion, the mandatory instructions issued by the Central Board of Direct Taxes cannot be brushed aside lightly. By not making reference to the Transfer Pricing Officer, the AO has breached the mandatory instructions issued by 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 goo....
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.... Officer is required to compute the income having regard to the price so determined by the TPO. The notification regarding jurisdiction of TPOs and their controlling officers have been issued by the Central Board of Direct Taxes and the copies thereof are enclosed for ready reference as Annexure II. In order to maintain uniformity of procedure and to ensure that work in this important area proceeds smoothly and effectively, the following guidelines are hereby issued: (i) Reference to Transfer Pricing Officer (TPO):- The Power to determine arm's length price in an international transaction is contained in sub-section (3) of section 92C. However, section 92CA provides that where the Assessing Officer considers it necessary or expedient so to do, he may refer the computation of arm's length price in relation to an international transaction to the TPO. Sub-section (3) of section 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, ....
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....ng reference to the TPO, the Assessing Officer has to seek approval of the Commissioner/Director as contemplated under the Act. Under the provisions of section 92CA reference is in relation to the international transaction. Hence all transactions have to be explicitly mentioned in the letter of reference. Since the case will be selected for scrutiny before making reference to the TPO, the Assessing Officer may proceed to examine other aspects of the case during pendency of assessment proceedings but await the report of the TPO on the value of international transaction before making final assessment. The threshold limit of Rs. 5 crores will be reviewed depending upon the workload of the TPOs. The work relating to selection of cases for scrutiny and reference to TPO on the above basis in respect of pending returns filed for the assessment year 2002-03 should be completed by June 30, 2003. (ii) Role of Transfer 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 h....
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....e made having regard to the arm's length price so determined by the TPO, it is imperative that a formal opportunity is given to the taxpayer before making adjustments to the total income. The opportunity with regard to the determination of arm's length price has already been given by the TPO and, therefore, opportunity by the Assessing Officer, for final determination of income under sub-section (4) of section 92C, read with sub-section (4) of section 92CA is to be given by the Assessing Officer. (iv) Maintenance of database: It is to be ensured by the DIT (Transfer Pricing) that the reference received from the Assessing Officer is dealt with expeditiously so as to leave the Assessing Officer with sufficient time to offer an opportunity of being heard of the taxpayer before computing the income and completing the assessment. In order to ensure that all the references are attended to timely and effectively, a record of all such developments 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 pric....
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....sis of these details whether a reference is considered necessary. No detailed enquiries are needed at this stage and the Assessing Officer should not embark upon scrutinizing the correctness or otherwise of the price of the international transaction at this stage... ... If there are more than one transaction with an associated enterprise or there are transactions with more than one associated enterprise the aggregate value of which exceeds Rs. 5 crores, the transactions should be referred to the TPO. ... ... Since the case will be selected for scrutiny before making reference to the TPO, the Assessing Officer may proceed to examine other aspects of the case during pendency of assessment proceedings but await the report of the TPO on the value of international transaction before making final assessment. ** ** ** (vi) Role of the Assessing Officer after receipt of "arm's length p....
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....the assessee by the decision of the honourable Delhi High Court in case of Cheminvest ltd. This fact has not been disputed by the learned departmental representative. Honourable Delhi High Court in Cheminvest Ltd versus CIT 378 ITR 33 and held that:- "23. In the context of the facts enumerated hereinbefore the court answers the question framed by holding that the expression "does not form part of the total income" in section 14A of the Act envisages that there should be an actual receipt of 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. In other words, section 14A will not apply if no exempt income is received or receivable during the relevant previous year." 66. Thus as there is no exempt income is received or receivable during the relevant previous year in the case of the assessee for this year, the disallowance under section 14 A cannot be made. Accordingly we allow ground number [5] of the appeal of the assessee and direct the learned assessing officer to delete the disallowance of Rs. 8 96000/-. 67. Ground number [6] of the appeal of th....
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....een show-caused as to why disallowance be not be made in respect of transmission and uplinking charges for the non-deduction of TDS u/s 40(1)(ia) paid to Intelsat? Please note that we have already given the details of transmission and uplinking charges to your honour vide our submission dated 11th March 2013. We reiterate that the provisions of TDS/withholding taxes were fully complied with. The payments were made after obtaining the requisite certificates from the Chartered Accountant as defined in the explanation to section 288B of the Income Tax Act'1961. Copies of Form 15CA/CB issued by an independent chartered accountant were also placed before you. We respectfully submit that there should not be any disallowance on account of non-deduction of TDS/withholding taxes from the payments made to Intelsat Corporation, we are giving below a brief note on the same: During the year under consideration, the assessee Company booked the expense of Rs. 7,81,23,855/- on account of transponder services received from M/s Intelsat Corporation (Intelsat) in terms of its agreement for the use of satellite (transponder capacity). Before we proceed to our sp....
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....A and in the absence of Permanent Establishment ('PE'), same could not be liable to tax in India. Intelsat Corporation is a non-resident company incorporated under the laws of USA and is a tax resident of USA and, therefore, the provisions of DTAA entered between India and USA are applicable on Intelsat which are more beneficial to Intelsat. For the year in question, the revenue of transmission and up-linking facilities in the hands of Intelsat Corporation were already held not taxable by the Honble Delhi High Court vide order dated 28/9/2012. The issue whether the recipient of such charges is liable to tax in India is also settled by the Jurisdictional High Court in the case of Asia Satellite Telecommunications Co. Ltd. v. DIT, (332 ITR 340) in favour of the taxpayer. Similarly, such charges were also held not liable to tax in India in view of Article 12(3) of DTAA entered between India and USA in the case of DCIT v. PanAmSat International System Inc (103 TTJ 861 (Delhi). In view of the facts and the legal position stated above, it is clear that the assessee Company had no liability to deduct tax on such payments under section 195 of the....
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.... T. Act. The provisions of the section 9 which defines the term royalty are reproduced as under: Section 9 Income deemed to accrue or arise in India. (1) The following incomes shall be deemed to accrue or arise in India.... (vi) income by way of royalty payable by- (a) The Government; or (b) A person who is a resident, except where the royalty is payable in respect of any right,property or information used or services utilised for the purposes of a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or.... (c) Provided that nothing contained in this clause shall apply in relation to so much of the income by way of royalty as consists of lump sum consideration for the transfer outside India of, or the imparting of information outside India in respect of , any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process s or trade mark or similar property, if such income is payable in pursuance of an agreement made before the 1st day of April, 1976, and the agreement is approved....
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....ned u/s 9(1)(Vi). The above definition clearly indicates that transmission and uplinking charges are covered under the definition or royalty (process) and it has been categorically introduce by the finance 2012 that process includes and shall be deemed to have always included transmission by satellite (including up-linking , amplification, conversion for down-linkiong of any signal). Since the transmission and uplinking charges are covered under the definition of royalty as define under the provision of section 9 therefore any payment made in respect of royalty to a person who is not resident in India , will also be a income deemed or accrue or arising in India. As the expense of transmission and uplinking charges of Rs. 7,81,23,855/- to M/s Intelsat corporation is a deemed income which has arisen in India therefore, the assesse was liable to deduct TDS on this payment, under the provision of section 195 therefore, this payment of transmission and uplinking charges to M/s Intelsat Corporation is not allowable under the provisions of section 4 (a)(i). I am satisfied that the assesse has furnished inaccurate particulars of its income and has concealed its correct income on t....
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....allowance transmission and up linking charges paid to Intelsat Corporation USA of Rs. 78123855/- In the result the ground No. 2 of the appeal of the Revenue is dismissed." Therefore respectfully following the decision of the coordinate bench in assessee's own case for assessment year 2009 - 10, we direct learned assessing officer to delete the disallowance of Rs. 73843516/- on account of non-deduction of tax at source on Transmission and uplinking charges. Accordingly ground number [6], [7] and [8] of the appeal are allowed. 71. [9]th ground of appeal is with respect to the order of the learned CIT - A in upholding the action of the assessing officer in re characterizing the income declared by the appellant as capital gain pursuant to sale of 212500 shares of M/s Astrao Awani Networks Limited as income from other sources and making an addition of Rs. 1 05789125/-. 72. During the year under consideration the assessee has shown income from capital gain amounting to Rs. 105789125/- on sale of shares of Astro awani Networks Limited. The learned assessing officer noted from the para number [3] of the ‗Notes to accounts' of the assessee that assessee has sold its investmen....
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....res whether to be considered as a capital gain or business income. He submitted that the genuineness of the transaction in unlisted sale are not questioned. He further submitted that there is no issue of pertaining to lifting of the corporate veil and therefore the action of the learned assessing officer in taxing it as income from other sources is not in consonance with the provisions of the income tax act. 76. The learned CIT DR vehemently supported the orders of the lower authorities. He submitted that when the assessee has purchased the shares before 13 months at miniscule price of a consistent loss-making company and subsequently sold to the subsidiary at a phenomenal price itself shows that it is not a transfer of a capital asset but it is a device to show the higher profit in the books of the company. He therefore supported the reasoning is of the lower authorities. 77. We have carefully considered the rival contentions and perused the orders of the lower authorities. On examination of the facts it is apparent that assessee has sold shares which were purchased by it before 13 months of a company and subsequently sold at substantially higher price to the associate conce....
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.... pronouncement of the above order beyond the 90 days. Of the date of hearing, relying upon the decision of the coordinate bench in case of Ashapura Minichem Ltd. v. Deputy Commissioner of Income Tax [2020] 116 taxmann.com 860 (Mumbai - Trib.) Wherein it has been held as under:- 11. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 19th February 2020, this order thereon is being pronounced today on the day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners:- (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order w....
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....ribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6-5-2020 read with order dated 23-3-2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that "In case the limitation has expired after 15.03.2020 then the period from 15-3-2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides exte....