TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 1047
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....ioner of Income-tax12(3)(2) Mumbai ['Learned A.O'], under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 ('Act') ('Assessment order'), in pursuance of the directions issued by Dispute Resolution Panel-3 (Hon'ble DRP'), Mumbai, on the following grounds: On the facts and circumstances of the case and in law, the Learned A.O, based on the directions of the Hon'ble DRP has: General Ground 1. erred in assessing the total income of the Appellant at Rs. 4,00,08,51,830 against Rs. 49,58,34,942 as computed by the Appellant in its return of income; 2. erred in making a transfer pricing adjustment of Rs. 3,50,50,16,888 to the total income of the Appellant on the premise that the international transactions entered into by the Appellant with its associated enterprises ('AEs') were not at arm's length; Order passed is without jurisdiction and bad in law: 3. order passed under Section 92CA(3) of the Act is passed by Additional Commissioner of Income-Tax, Transfer Pricing-3(2), Mumbai (Addl. CIT) is without jurisdiction and bad in law in as much as the 'Transfer Pricing Officer' means a Joint Commissioner or a Deputy Commissioner or Assistant Commissioner authorized by Boar....
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....nts are functionally different and are entered into in different geographies (i.e. other than India) hence the economic and commercial circumstances under which they are entered would be different from the distribution agreement entered into by the Appellant; Internal comparability 12. Without prejudice to the other grounds, should software distributors not be appropriate comparables, internal comparables are suitable over the royalty agreements selected by the Hon'ble DRP/ learned TPO to benchmark the Appellant's international transactions; Selection of Local Cable Operators ('LCOs')/ Multi System Operators ('MSOs')/ Direct to Home ('DTH') as comparables 13. Without prejudice to the other grounds, should software distributors be rejected as comparables then Local Cable Operators ('LCOs')/ Multi System Operators ('MSOs')/ Direct to Home ('DTH') companies can be considered as appropriate comparables; Impugned order passed in the name of non-existent entity (i.e. MSM Discovery Private Limited) 14. on the facts and circumstances of the case and in law, the impugned order dated 23.10.2018 passed under section 143(3) r.....
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....iture viz. distribution commission without any mark-up. 3.1. The ld. Counsel for the assessee further submitted that the assessee has raised additional ground of appeal in respect of deduction of education and secondary and higher education cess paid on the income-tax liability under the head "profits and gains from business or profession". The ld. Counsel of the assessee pointed that the additional ground raised by the assessee is a legal issue for which all the facts are already on record of the lower authorities. No new facts or additional evidences are required to be adduced in support of the same. The Tribunal in assessee's appeal in ITA No.6676/Mum/2017 for assessment year 2013-14 has admitted identical additional grounds and has adjudicated the same vide order dated 29/06/2020. The ld. Counsel of the assessee submitted that if the additional ground raised is admitted then grounds of appeal No. 3, 4 and 12 to 15 would become academic. The ld. Counsel for the assessee submitted that the facts in the assessment year under appeal are identical to the facts in the immediately preceding assessment year i.e. assessment year 2013-14. The ld. Counsel for the assessee placed reliance....
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....nded the impugned order. The ld. Departmental Representative opposed the admission of additional ground of appeal filed by the assessee. The ld. Departmental Representative contended that as per section 143(2) of the Act as mended by Finance Act, 1987, only upward revision of income is permissible. The additional ground raised by the assessee, if admitted and allowed would result in an assessment of income less than the returned income. This is impermissible. To support his contention, the ld. Departmental Representative placed reliance on the decision rendered in the case of Goetze (India) Ltd. vs. CIT, 284 ITR 323(SC). The ld.Departmental Representative further placed reliance on CBDT Circular explaining the Finance Act, 1987. As regards the fact that the ground raised by the assessee in the present appeal have been considered by the Tribunal in assessee's own case in assessment year 2013-14, the ld.Departmental Representative fairly admitted that all the issues raised by the assessee in present appeal have been considered by the Tribunal in assessee's own case in the immediately preceding assessment year. The ld. Departmental Representative asserted that the impact of amendment ....
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....& 207/2017. The learned AR furnished the copy of decision of Tribunal and copy of decision of Hon'ble Bombay High Court. 14. On the other hand the ld. DR for the revenue supported the order of the lower authorities. 15. We have considered the submissions of both the parties and gone through the order of the lower authorities. We have seen that on similar set of facts the coordinate bench of the Tribunal in assessee's own case for AY 201-12 on the issue held that the distribution fee paid by the assessee to its AE is not 'Royalty'. The coordinate bench (authored by JM) passed the following order; "30. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. The first issue for our consideration is whether the 'distribution fee' is in the nature of 'Royalty' or not. Before us the ld. AR for the assessee vehemently submitted that the TPO wrongly characterized the channel distribution fee as Royalty. It was further explained that the assessee acts as a intermediary between the broadcaster and the ultimate customers who uses the channels. Thus, distribution fee paid by the assessee cannot be termed as Royalty. This fact i....
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....arties and have gone through the orders of lower authorities. We have also considered the written submissions filed by ld. Briefing Counsel Sh. Hiten Chande, Advocate on 26.06.2020. We have also deliberated on the case laws relied by learned Sr Counsel of the assessee. We have seen that in assessee's own case for AY 2011-12, (ITA No. 971/Mum/2016) the coordinate bench while examining and accepting the validity of comparability of Avance and Sonata passed the following order; "25. We have considered the submission of both the parties and perused the record. The TPO during the TP Adjustment proceeding rejected Avance on the ground that this companies is engaged in software trading, sales of hardware and other services and no segmental information is available. DRP upheld the action of on the basis of order for A.Y. 2010-11.Before Tribunal, the assessee has placed on record the financial statement of Avance. Perusal of financial statement reveals that this company has earned Rs. 140 Crore from sale of software out of total sales of Rs. 176 Crore. This company has approximately 80% of its income from software product. Thus, segmental information as placed before us is available a....
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....India Private Limited (supra) for AY 2010-11 (2019 101 taxmann.com 446 Del Tri) and in AY 2006-07 (ITA No.1204/Del/2014, with Channel Distributor. 21. Considering the facts that the Avance and Sonata were accepted as valid comparable in assessee's own case in AY 2011-12 in ITA No. 971/Mum/2016 and Trijel and Integra was held as valid comparable with channel distribution, therefore, we in principal agree and accept the submission of ld. AR of the assessee to accept these four comparable as comparable with assessee. However, we have seen that the TPO rejected the comparability of these comparable summarily, without examining their segmental data, hence we direct the AO/TPO to verify the segmental data of these four comparable for the relevant financial years as per Rule 10B(4) and recompute the TP adjustment afresh and allow appropriate relief to the assessee. The assessee is also directed to provide all necessary information and evidence to the TPO/AO. Needless to order that before passing the order, the TPO/Assessing Officer shall grant opportunity to the assessee. In the result, the grounds related to comparability of comparable are allowed in accordance with the aforesaid dir....
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.... assessee in assessment year 2013-14. The Co-ordinate Bench of Tribunal after considering the decision of Hon'ble Bombay High Court in the case of Sesa Goa Ltd. (supra.) admitted additional ground and has restored the same to the file of Assessing Officer. The ld. DR has strongly opposed admission of additional ground and has even expressed reservations that if additional ground is allowed, the assessed income of the assessee would go below the returned income, and the same is impermissible in the light of CBDT Circular. We find that the in the case of Sesa Goa Ltd. (supra.) similar was the situation where the assessee had claimed deduction of "Education Cess" by raising additional ground before the CIT(A) and the Tribunal. The ld. Counsel for the assessee in the said case raised similar objections before the Hon'ble High Court against the admissibility of assessee's claim. The Hon'ble High Court after considering various decisions rejected the contentions raised on behalf of the Department and held: "37. Ms. Linhares, learned Standing Counsel for the Revenue however submitted that the Appellant - Assessee, in its original return, had never claimed deduction towards the amoun....
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.... is to ascertain the correct tax liability of the Assessee in accordance with law. 40. The decision in Goetze (supra) upon which reliance is placed by the ITAT also makes it clear that the issue involved in the said case was limited to the power of the assessing authority and does not impinge on the powers of the ITAT under section 254 of the said Act. This means that in Goetze (supra), the Hon'ble Apex Court was not dealing with the extent of the powers of the appellate authorities but the observations were in relation to the powers of the assessing authority. This is the distinction drawn by the division Bench in Pruthvi Brokers (supra) as well and this is the distinction which the ITAT failed to note in the impugned order. 41. Besides, we note that in the present case, though the claim for deduction was not raised in the original return or by filing revised return, the Appellant - Assessee had indeed addressed a letter claiming such deduction before the assessment could be completed. However, even if we proceed on the basis that there was no obligation on the Assessing Officer to consider the claim for deduction in such letter, the Commissioner (Appeals) or the ITAT, bef....