TaxTMI 
TaxTMI 
2023 (11) TMI 588
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....as disposed off by a common order dated 18.10.2019 along with several other cases of the same group. Subsequently, vide order dated 24.03.2023 in Misc. Application Nos.176 & 213/Del/2020, the aforesaid order was recalled for fresh adjudication. Pursuant to the above recall, we have heard both the parties and perused the records. 3. The grounds of appeal taken by the Revenue read as under :- "1.(a) The Ld. CIT (A) has erred on facts and in law in deleting addition of Rs. 1,09,56542/- made on account of transfer pricing adjustment as : (b) The Ld. CIT (A) has inter-alia erred in law in accepting the assessee's contention that it is only intermediary between third party and AE. (c) The Ld. CIT (A) inter-alia erred....
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.... programs and other related activities including publication and mercantile. The following international transaction was undertaken by the assessee :- S.No. Description of transaction Method Value (in Rs. ) 1. Providing market Support Service & Other Miscellaneous services TNMM 10,22,44,145 2. Providing distribution support services TNMM 1,03,33,354 3. Interest on ECB loan - 18,04,060 4. One Time Grant received - 1,75,31,533 8. Apropos the issue of action of the TPO charging mark-up on the third party costs incurred by the assessee : As mentioned in the note 10 of schedule 14 of the audited account of the company, during the financial year relevant to the assessment year 2004-05....
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....hird party vendor for marketing and research for the channel were reimbursed at cost, as these costs were incurred by the assessee on behalf of the channel and its principals. In the same way, all cost incurred under the division of finance, administration and direction were reimbursed at cost. These costs pertain to the expenditure incurred inter-alia on compliance by the assessee with various tax laws, on payment of rent etc. According to the assessee, no extra services were rendered by incurring these expenses. 10. On the other hand, TPO opined that the agreement between the assessee and its associated enterprises (AEs) covers all the activities on which the assessee is expected to provide the services to its AEs. Literally there are ....
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....erators and promotion of viewership of the channel. However, as submitted by the assessee, there are certain expenses like 1) advertisement and publicity, 2) business promotion and 3) participation in trade events which were undertaken by the assessee at the request of the overseas entity. The budget was also controlled by the AE. The risk and outcome of these expenses are borne or attributed to the AE. The expenses relating to advertisement are on buying of advertisement space in the newspapers. In such activities the cost involved is too high and the effort required to buy such space is not much. Therefore, they should be treated as pass through cost. Other than these three items all other items should be considered as part of the cost ba....
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....as no cogent basis. The reference to ITAT order for AYs 2002-03 & 2003-04 is also not germane as in those cases, ITAT found that the agreement was not before the authorities below. Accordingly, in the background of the aforesaid discussion, we uphold the order of the ld. CIT (A) in this regard. 13. Apropos foreign exchange loss being operational in nature : On this issue, the TPO opined that as the assessee company is a captive service provider all costs inclusive of any loss arising out of forex fluctuations and interest cost should have been marked up. He also opined that in service segment any loan taken for general office purposes cannot be anything else except operation expense. That the assessee is not carrying any significant inve....
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....ppellant and I am of the view that foreign exchange loss is non-operating in nature as it partakes the nature of interest cost. The TPO has considered interest expense as a non-operating expenditure. Therefore, J consider foreign exchange loss to be non-operating in nature and exclude it from the calculation of PLI." In view of the above, I hold that these two items, namely, forex fluctuation loss and interest expenses should be excluded while computing the PLI of the assessee." 16. Against the above order, Revenue is in appeal before us. 17. We have heard both the parties and perused the records. Upon careful consideration, we find ourselves in agreement with the reasoning adopted by the ld. CIT (A). Furthermore, ld. Counsel....