TaxTMI 
TaxTMI 
2026 (8) TMI 955
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....o. 1 of appeal, assailing validity of assessment order dated 29.01.2025 on the ground of limitation. In light of the statement made by ld. Counsel for the assessee at Bar, the legal ground raised by way of ground no. 1 of appeal is dismissed as not pressed. 4. The assessee in appeal has raised as many as ten grounds involving five issues The gist of issues raised by the assessee in appeal is as under:- (i) (Ground no. 3 to 5) Enhancement of profits attributable to assessee's DAPE from 8.75% to 15%; (ii) (Ground No.6) Arm's Length payment to Associated Enterprises (AE), BGNIPL which is also assessee's DAPE, therefore, no further attribution of profits to assessee's DAPE in India; (iii) (Ground no. 7 & 8) Non grant of credit of tax paid by assessee's AE in India; (iv) (Ground no. 9) Levy of interest u/s.234B of the Act; & (v) (Ground no.10) Initiation of penalty proceedings u/s.270A of the Act. 5. The ld. Counsel for the assessee at the outset submits that admittedly BBC Global News India P. Ltd. (BGNIPL) is assessee's Dependent Agency Permanent Establishment (DAPE). The ld. Counsel stated that the limited issue for consideration in ....
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.... Department submits that a survey action was carried out in the case of assessee in February 2023. In June 2023, the assessee had offered additional income to tax to the tune of Rs.80,00,000/-. During survey statements of key officials of the assessee were recorded i.e. Shri Vishal Bhatnagar, Sales Director, South Asia Advertising and M/s.Rachna Agarwal. The statement of two persons are at pages 634 to 641 of the paper book. The ld. Special Counsel pointed that after examining the statements and in light of the fact that the assessee had itself offered additional income to tax post survey action shows that the activities carried out by the DAPE of assessee were beyond the scope of services mention in Transfer Pricing Study Report (TPSR) for the impugned assessment year. From the statements of Shri Vishal Bhatnagar new facts have emerged indicating that assessee's DAPE (BGNIPL) was carrying out activities which are beyond TPSR. In this backdrop, the AO increased, rate of attribution from 8.75 to 15%. The ld. Special Counsel, thus, prayed for upholding findings of the AO in attributing 15% to assessee's PE in India. 7. Both sides heard, orders of the lower authorities examined. Th....
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....ivities for the channel. XI. Ensuring regular supply of marketing materials to primary customers. XII. Carry out marketing and research activities on the reach of the BBC World News Channel, BBC websites, and BBC social media." 8. The assessee has not been able to controvert the activities/functions allegedly carried out by assessee's PE in India as pointed by the AO. Further, it is not controverted that these activities are over and above, the activities referred in the TPSR. The argument of ld. Counsel for the assessee to uphold 8.75% rate of attribution is the said rate was agreed in MAP resolution for AY 2004-05 to AY 2014-15, therefore, should be adopted in the impugned assessment year as well. It is a settled legal position that MAP resolution is not binding on assessment years not explicitly covered by MAP resolution. The benefit of MAP can only be extended to AYs not covered by MAP resolution, if there is no change in facts, scope of activities carried out by the assessee or its PE. In the instant case, post survey action, it transpires that the scope of activities carried out by assessee's PE is much wider than what is specifically stated in TPSR. Ther....
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....lutions in assessment years not covered under MAP where there is no change in facts. Once in principle it has been agreed that the benefit of taxes paid by the PE in relation to the advertisement income shall be allowed to the assessee, the same benefit can be extended to the assessee in subsequent assessment year i.e. the assessment year not covered by MAP as no material is available on record to show that credit of tax paid by DAPE of the assessee cannot be allowed to the assessee. This issue is restored back to the AO for verification and quantification of credit of tax paid by Indian PE in relation to advertisement income. Ground of appeal no. 6 is allowed for statistical purpose. 11. In so far as, interest u/s.234B of the Act is concerned, interest u/s.234B of the Act is consequential and mandatory, hence, ground no. 9 of appeal is dismissed. 12. The assessee in ground no. 10 of appeal has assailed initiation of penalty proceeding u/s.270A of the Act. Challenge to initiation of penalty proceedings at this stage is premature, hence, ground no. 10 of appeal is dismissed. 13. Before parting with the order, we record that the appeal has been decided on the basis of submis....