TaxTMI 
TaxTMI 
2019 (5) TMI 1974
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....f Income -Tax Act, the income of the assessee is not subject to income tax in India. The assessee stated that they have no fixed place of business in India, nor any project office. The return of income was selected for scrutiny. In the return of income the assessee reported international transaction with its associated enterprises (AE) i.e. Taj Television and Zee Entertainment Ltd. for advertising sales agency services, share of distribution services, recovery of expenses on sale of broadcasting rights, reimbursement of expenses and recovery of expenses. The assessee applied CUP as most appropriate method to conclude the transaction at arm's length. The assessee compared ist transaction of distribution services of Taj India with similar comparable uncontrolled transaction entered into with third parties in Pakistan. Therefore, the assessing officer made reference under section 92CA(1) for computation of Arms Length Price (ALP). The learned transfer pricing officer (TPO) after granting opportunity to the assessee suggested adjustment of Rs.2,57,61,838/-. The assessing officer after receipt of the report/ order of TPO passed a draft assessment order under section 143(3) rws 144C(1) o....
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....nder section 40(a)(i) for deduction for failure to deduct tax under section 195 is incorrect and directed the Assessing Officer to delete the addition. Therefore, being aggrieved both the parties have filed their respective appeal raising the grounds of appeal. In ITA No. 1313/Mum/2018, the assessee has raised the following grounds of appeal. Ground No. 1 On the facts and in circumstances of the case and in law, the Commissioner (Appeals) erred in concluding that Appellant has a Permanent Establishment in India and in respect of advertisement revenue. 4. The revenue in its cross appeal has raised the following grounds of appeal: 1. On e facts and circumstance of the case and in law, the Ld CIT(A) erred in holding that Taj India does not constitute an agency PE of the assessee within the meaning of Article 5(4) of the India-Mauritius DTAA with regard to the distribution income received by it " 2. "On the facts and circumstance of the case and in law, the Ld CIT(A) erred in holding that if the arm's length price of international transaction between the assessee and Taj India has been accepted by the TPO, nothing further out of the revenue is attributable to the assessee&....
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....otal income of the assessee arising in India" 7. "On the facts and circumstance of the case and in law, the Ld CIT(A) erred in treating the grounds raised on the issue of transfer pricing adjustments of Rs 2,57,61,838/- as infructuous without deciding it on merits" 8. "The appellant prays that the order of the CIT(A) may be set aside on the above ground and that of the assessing officer restored." 5. We have heard the submission of ld. AR of the assessee and ld. DR for the revenue and perused the material available on record. First, we are taking up the assessee's appeal. The sole ground of appeal raised by assessee related to PE in respect of advertisement revenue. The ld. AR of the assessee submits that the grounds of appeal raised by assessee is squarely covered by the decision o f Tribunal in A.Y. 2009-10 & 2010-11 in ITA No. 6367 & 6366/Mum/2016 dated 20.07.2018 wherein decision in assessee's own case for A.Y. 2006-07 in ITA No. 9097/Mum/2010 was followed. The ld. AR further submits that the co-ordinate bench in assessee's own case for A.Y. 2006-07, 2009-10 & 2010- 11 on similar set of fact held that Taj India does not constitute agency PE in term of India-Mauritius DTAA.....
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....e channel companies and ultimately enjoyed by the viewers. The business carried on by the channel companies is an indivisible and wholesome chain of activities, which cannot be segregated and packed as independent modules. All the players involved in the business take part simultaneously in carrying on of the telecasting business which runs instantly. In support the assessee has referred and relied upon the decision of ITAT, Mumbai Bench in the case of Satellite Television Asian Region Ltd. in ITA No.5066/Mum/2004 dated 18.01.2006. Thus, it was submitted by the assessee that, subscription/distribution revenue earned does not fall in the nature of "royalty" as defined in section 9(l)(vi). The Ld. CIT(A) after examining the definition of "royalty" as given in nation 2 to section 9(l)(vi) held that, the distribution income even up to 12th July, 2002 cannot to be taxed as a 'royalty' under section 9(l)(vi) of the Act, as copyright over the programs belong to the Assessee Company, whereas the Distributors or cable operators only transmit the signals received from the Assessee Company. They do not modify, alter, or replace the content of the telecast but broadcast the content as ....
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.... 10. On the other hand, the ld. Departmental Representative (DR) for the revenue after going through the order of lower authorities and the decision of Tribunal for earlier years agreed that all the grounds of appeal raised by revenue are covered in favour of assessee. 11. We have considered the submission of both the parties and have gone through the order of authorities below. We have also deliberated on the decision of Tribunal in assessee's own case for A.Y. 2006-07, 2009-10 & 2010-11. Ground No.1 relates to agency PE. We have noted that the common ground of appeal was raised by assessee in assessee's appeal, which we have already decided in favour of assessee. Therefore, our order in assessee's appeal shall apply mutatis mutandis on this ground of appeal. 12. In the result, ground no.1 of this appeal is dismissed. 13. Ground No. 2 to 6 relates to distribution of revenue. We have noted that on almost identical grounds of appeal, the co-ordinate bench of Tribunal in assessee's own case for A.Y. 2009-10 & 2010-11 by following the decision of Tribunal in assessee's own case for A.Y. 2006-07 passed the following order: "11. Having heard both the sides and considered the materi....
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.... board and sport associations, which has been disallowed under section 40(a)(i) of the Act, the Id. CIT(A) held that Programming cost paid to acquire live telecast rights of events was not in the1 nature of 'Royalty1 as there is no copyright involved in live telecast of events. He further held that in any case, programming cost are neither in connection with the PE nor is it borne by the PE in India, therefore, even if the payments are characterized as 'Royalty' it will not be taxable as per Article 12(7) of DTAA. Hence, there was no obligation to deduct tax at source on programming cost paid to acquire live telecast rights. Thus, after detailed discussion, Id. CIT(A) held that none of the payments would be taxable in India even if it is deemed to be 'royalty', because the payment to the parties do not have their PE in India, therefore, virtue of article 12(7) the same cannot be taxed in India. \Regarding programming fee also, he has relied upon the of CIT(A) in the order passed under section dated 17.03.2004." 12. In this view of the matter and consistent with the view taken by the co-ordinate bench in assessee's own case for earlier years, we direct the AO t....