TaxTMI 
TaxTMI 
2016 (11) TMI 1679
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.... Ignoring Transfer Pricing orders of the TPO on advertisement revenue and distribution revenues. 2. We heard the parties and perused the record. The Tribunal has disposed of the appeals numbered as ITA No.7994/Mum/2011 and ITA No.7631/Mum/2012 relating to assessment years 2007-08 and 2008-09 respectively by a common order dated 16.12.2015. The issues that were considered were (a) Whether the assessee is having a Permanent Establishment (PE) in India in terms of India-USA DTAA and whether the revenue generated through advertisements is taxable in India. (b) Whether the income generated through distribution of channels falls within the meaning of "Royalty" under Article 12 of India-USA DTAA and also u/s 9(1)(vi) of the Act and hence the same is also taxable in India. The Tribunal decided the first issue against the assessee and the second issue was set aside to the file of AO for fresh consideration. 3. The first mistake pointed out by the assessee is that certain facts relating to the case has been incorrectly recorded. It is submitted that the Tribunal has observed as under in paragraph 4 of its order (Page 2):- "4. The assessee is the owner of t....
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....05-2006, wherein the assessee sold advertisement and sponsorship air time to NGC India. The tax authorities, after examining the agreements and related facts, came to the conclusion the relationship between the assessee and NGC India continues to be that of "Principal and agent". The above said decision was upheld by the Tribunal by making a modification, viz., the Tribunal held that the provisions of Article 5(4)(a) of India-US DTAA shall be applicable. Thus we notice that the Tribunal has taken a conscious view in the matter. In view of the above, there was no necessity to deal with other submissions made by the assessee. 4.2 In view of the above, we do not find any merit in the contentions of the assessee that there was incorrect appreciation of facts.. 5. Next point submitted by the assessee is that the Tribunal, while dealing with issue as to whether "advertisement airtime" is "Goods" or not, has failed to distinguish following decisions:- (a) Tata Consultancy Services vs. State of Andhrapradesh (271 ITR 401) (b) CST Vs. Madhya Pradesh Electricity Board (1969)(1 SCC 200) (c) Ambient Space Sellers Ltd Vs. Asia Industrial Technology P Ltd (1998 P....
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....GC India as well as the revenue generated by the assessee was agreed to be shared in a fixed proportions, whereas under the new agreement, it has been determined at the consolidated figure." It was further submitted that the fact the TPO has accepted the transaction has been ignored by the Tribunal. Further the TPO has accepted that NGC India has obtained higher margin in line with higher risks assumed by it. Since NGC India has been remunerated at arm's length basis by the assessee, no further profit can be attributed in the hands of assessee. It was submitted that the assessee has placed reliance on various case laws to support the above said proposition, but the Tribunal did not consider the same. It was further submitted that the Tribunal has made following observations, even though neither of parties has argued this matter:- "We wish to clarify here that the ratio laid down on the above said case has application while examining the existence of PE under Article 5(5) of the Act. Once the foreign company is held to have PE in India, then the taxability of business income is required to be determined in terms of Article 7 of the India-US treaty." 7.1 In paragraph 2....
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....essee. It was further held that the relationship between the assessee and NGC India cannot be considered to be on Principal to Principal basis. It was further held that NGC India constitutes a dependent agent in terms of Article 5(4)(a) of the India-US DTAA. The assessee had received money from NGC India on sale of advertisement airtime. Even though the payment made to the assessee by NGC India was held to be at arms length, yet the Tribunal has taken the view that the taxability of receipt of money by the assessee by way of lump sum consideration is required to be examined in the hands of the assessee, since NGC India was held to be a dependent agent and constitutes PE. 8.2 Thus, we notice that the Tribunal has taken a conscious decision by considering the peculiar facts available in the instant case. Accordingly we are of the view that the same cannot be interfered with by the Tribunal u/s 254(2) of the Act. 9. With regard to the decision rendered by the Tribunal in respect of taxability of "Distribution revenue", we notice that the Tribunal has restored the matter to the file of the AO with the observation that the AO has not critically examined the provisions of India-US ....