ASST DIT (IT) 2(2), MUMBAI V. WARNER BRO DISTRIBUTING INC., MUMBAI

ITA 1405/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2556 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 27-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASBIR CHOUHAN
• Assessee Lawyers: W HASAN
• Keywords: Business income; Transfer pricing; Double taxation relief; Permanent establishment
• Section: 143(3); 5(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L , MUMBAI , , BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, A CCOUNTANT MEMBER ITA NO. : 1405 /MUM/20 14 (ASSESSMENT YEAR: 2010 - 11 ) ADIT (IT) - 2(2), SCINDIA HOUSE, 1 ST FLOOR, N M MARG, BALLARD ESTATE, MUMBAI - 400 001 VS WARNER BROTHER DISTRIBUTING INC. , C/O WARNER BRO S PICTURE ( INDIA) PVT LTD, 4 TH FLOOR, EROS BLDG, 42 M K ROAD, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) C.O. NO. : 102 /MUM/20 15 ARISING OUT OF ITA NO. : 1405/MUM/2014 , AY 2010 - 11 WARNER BROTHER DISTRIBUTI NG INC. , C/O WARNER BRO S PICTURE (INDIA) PVT LTD, 4 TH FLOOR, EROS BLDG, 42 M K ROAD, MUMBAI - 400 020 PAN: AAACU 6668 D VS ADIT (IT) - 2(2), SCINDIA HOUSE, 1 ST FLOOR, N M MARG, BALLARD ESTATE, MUMBAI - 400 001 ( CROSS OBJECTOR ) (RESPONDE NT) ASSESSEE - CROSS OBJECTOR BY : SHRI W HASAN REVENUE BY : SHRI JASBIR CHOUHAN /DATE OF HEARING : 27 - 10 - 2016 / DATE OF PRONOUNCEMENT : 27 - 10 - 2016 ORDER , : 2 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 PER AMIT SHUKLA, J .M. : THE AFORESAID APPEAL HA S BEEN FILED BY THE DEPARTMENT AND CROSS OBJECTION BY THE ASSESSEE AGAINST FINAL ASSESSMENT ORDER DATED 31.12.2013 , PASSED UNDER SECTION 144C(13) R.W. S. 143(3) FOR THE ASSESSMENT YEAR 2010 - 11 IN PURSUANCE OF DIRECTIONS GIVEN BY THE DRP VIDE ORDER DATED 30.12.2013. IN THE GROUNDS OF APPEAL, THE REVENUE HAS RAISED FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE HONBLE DRP WAS CORRECT IN HOLDING THAT ROYALTY RECEIVED BY THE ASSESSEE FROM WARNER BROS PICTURE INDIA LTD IN PURSUANCE TO THE AGREEMENT FOR DISTRIBUTION AND EXHIBITION OF THE FILMS IN INDIA BEING BUSINESS PROFIT ATTRIBUTABLE TO THE PE OF THE ASSESS EE IN INDIA IS NOT TAXABLE AS IT IS NOT HIT BY RIGORS OF EXPLANATION 2(V) TO SECTION 9(1)(VI) OF THE INCOME TAX ACT, 1961? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP WAS CORRECT IN HOLDING THAT ROYALTY RECEIV ED BY THE ASSESSEE FROM WBPIL IN PURSUANCE TO THE AGREEMENT FOR DISTRIBUTION IF THEATRICAL MOVIES IN INDIA, IS NOT TAXABLE IN INDIA AS IT IS NOT HIT BY THE RIGORS OF EXPLANATION 2(V) TO SECTION 9(1)(VI) WITHOUT APPRECIATING THAT THE SAME IS COVERED BY THE PROVISIONS OF SECTION 9(1)(I) AND THAT THESE TWO SECTIONS ARE INDEPENDENT AND EXCLUSIVE TO EACH OTHER AND HAVE INDEPENDENT APPLICATION? 3. WITHOUT PREJUDICE, WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP WAS CORREC T IN HOLDING THAT ROYALTY RECEIVED BY THE ASSESSEE IS NOT TAXABLE IN INDIA AS IT IS NOT HIT BY THE RIGORS OF EXPLANATION 2(V) TO SECTION 9(1)(VI) WITHOUT APPRECIATING THAT THE SAME IS DULY COVERED BY THE SUBSTANTIVE PROVISIONS OF 3 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 SECTION 5(2) AND THAT A SU BSTANTIVE PROVISION ((SECTION 5(2)) WOULD HAVE PRECEDENCE OVER A DEEMING PROVISION (SECTION 9)? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP MUMBAI WAS CORRECT IN COMING TO THE CONCLUSION THAT THE RESPONDENT DOE S NOT HAVE PE IN INDIA BECAUSE THE INDIAN COMPANY THAT HAS OBTAINED THE RIGHT IS ACTING INDEPENDENTLY? 5. WITHOUT PREJUDICE, WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP WAS CORRECT IN HOLDING THAT ROYALTY RECEIVED BY THE ASSESSEE IS NOT TAXABLE AS BUSINESS PROFIT WHEN THE INDIAN ENTITY EMERGES AS DAPE OF THE ASSESSEE IN VIEW OF VARIOUS ACTIVITIES IN TERMS OF THE AGREEMENT AND SUPERVISION AND CONTROL OF THE ASSESSEE OVER INDIAN ENTITY? 6. THE APPELLANT PRAYS THAT T HE ORDER OF THE DRP BE SET ASIDE ON THE ABOVE GROUNDS AND THE DRAFT ORDER OF THE ASSESSING OFFICER BE RESTORED. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE , SHRI W HASAN, SUBMITTED THAT THE ISSUE S RAISED IN THE REVENUES APPEAL ARE SQUARELY COVERE D BY THE DECISION S OF THIS TRIBUNAL IN ASSESSEES OWN CASE RIGHT FROM THE ASSESSMENT YEARS 2006 - 07 TO 2009 - 10. EXPLAINING THE BRIEF BACKGROUND , HE SUBMITTED THAT, ASSESSEE IS A NON - RESIDENT COMPANY INCORPORATED IN USA AND ONE OF ITS ACTIVIT IES INCLUDES EXP ORT OF FILMS FR O M USA WHICH ARE EITHER PRODUCED BY ITS GROUP STUDIOS OR PRODUCED BY OTHER THIRD PARTIES. THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH WARNER BROS PICTURE ( INDIA ) PVT . LTD , AN INDIAN ENTITY, GRANTING DISTRIBUTION RIGHT S FOR CINEMATOGRAP HIC FILMS ON PAYMENT OF SPECIFIED ROYALTY . THE 4 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 ASSESSEES CONTENTION WAS THAT THOUGH IT IS RECEIVING ROYALTY FROM THE INDIAN COMPANY BUT SAME IS ON ACCOUNT OF DISTRIBUTION OF CINEMATOGRAPHIC FILMS. SINCE CLAUSE (V) OF EXPLANATION 2 TO SECTION 9(1)(VI) EX CLUDES CONSIDERATION FOR THE SALE, DISTRIBUTION OR EXHIBITION OF CINEMATOGRAPHIC FILMS FROM THE PURVIEW OF ROYALTY, THEREFORE, SUCH AN INCOME IS NOT TAXABLE UNDER THE INCOME - TAX ACT ALSO. T HE ASSESSING OFFICERS CASE ON THE OTHER HAND WAS THAT, INCOME OF T HE ASSESSEE IS DIRECTLY ACCRUING OR ARISING IN INDIA FROM THE DISTRIBUTION OF THE FILMS IN THE CINEMA HALLS / TV CHANNE L S ETC. IN INDIA , THEREFORE , BY VIRTUE OF SECTION 5 THE SAME IS TAXABLE IN INDIA IN THE HANDS OF THE ASSESSEE COMPANY. O THERWISE ALSO, TH E ASSESSEE HAS BUSINESS CONNECTION IN INDIA WITHIN THE SCOPE OF SECTION 9(1)(I). THUS, AS PER THE DEPARTMENT INCOME FROM THE SALE OF DISTRIBUTION OF CINEMA FILMS IS TO BE TREATED AS BUSINESS PROFITS WHICH SHOULD BE TAXED IN THE HANDS OF THE ASSESSEE COMP ANY. THE ASSESSING OFFICER AFTER GOING THROUGH THE VARIOUS CLAUSES OF THE AGREEMENT ALSO CAME TO THE CONCLUSION THAT, ASSESSEE EVEN HAS A DEPENDENT AGENCY PE IN INDIA IN THE FORM OF WARNER BROS PICTURE INDIA PVT . LTD , ACCORDINGLY, HE DETERMINED THE TAX ABLE INCOME OF THE ASSESSEE @ 65% OF THE INCOME RECEIVED BY THE ASSESSEE FROM INDIA. HE HAD ALSO REJECTED THE ASSESSEES CONTENTION THAT THE ROYALTY RECEIVED BY THE ASSESSEE CANNOT BE SUBJECTED TO TAX AS THE SAME HAS BEEN REMUNERATED AT ARMS LENGTH PRICE (ALP). THE LD. DRP AFTER REFERRING AND FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE RIGHT FROM THE ASSESSMENT YEAR S 2006 - 07 TO 2008 - 09 HAS ALLOWED THE ASSESSEES APPEAL , HOLDING THAT ITS INCOME IS NOT TAXABLE IN INDIA . ACCORDINGLY, THE APP EAL OF THE REVENUE SHOULD BE DISMISSED FOLLOWING 5 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 EARLIER YEARS PRECEDENT, WHEREIN, IT HAS BEEN HELD THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE INDIAN COMPANY IS NOT TAXABLE EITHER UNDER THE DOMESTIC LAW OR UNDER THE DTAA. 3. THE LD. DR ADMITTED TH AT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN EARLIER YEARS. HOWEVER, HE STRONGLY RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON THE PERUSAL OF THE IMPUGNED ORDER OF THE DRP, WE FIND THAT THE ASSESSEES CLAIM TH AT THE ROYALTY RECEIVED BY IT FROM THE INDIAN ENTITY, WARNER BROS PICTURE INDIA PVT . LTD WAS NEITHER TAXABLE IN INDIA UNDER THE INCOME - TAX ACT AS THE CONSIDERATION FOR THE SALE, DISTRIBUTION OR EXHIBITION OF CINEMATOG RAPHIC FILMS HAVE BEEN CATEGORICALLY EXCLUDED FROM THE PURVIEW OF ROYALTY UNDER SECTION 9(1)(VI) R EAD W ITH CLAUSE (V) , NOR UNDER THE TERMS OF ARTICLE 12 OF INDO - US DTAA. THIS CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED BY THE LD. CIT ( A) IN THE AY 2006 - 07 AN D IN THE SECOND APPEAL FILED BY THE REVENUE BEFORE THE TRIBUNAL , THE ORDER OF THE LD. CIT ( A) HAS BEEN CONFIRMED. THE NON - TAXABILITY OF ROYALTY INCOME IN INDIA HAS BEEN ACCEPTED IN THE SUCCEEDING ASSESSMENT YEAR S 2007 - 08, 2008 - 09 AND 2009 - 10 AND ALLOWED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL. ASSESSEES DETAILED SUBMISSIONS ON MERITS AS WELL AS BASED ON EARLIER YEARS PRECEDENCE HA S BEEN INCORPORATED AND DEALT IN DRPS ORDER IN PARA 3.2 FROM PAGES 4 TO 7. THE LD. DRP AFTER CONSIDERING THE ENTIRE SUBMISSI ONS AND ENTIRE GAMUT OF FACTS HAVE DECIDED THIS ISSUE IN FA V O UR OF THE ASSESSEE AFTER OBSERVING AND HOLDING AS UNDER: - 6 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 3.3.1 WE HAVE GONE THROUGH THE ORDER OF THE AO AND SUBMISSIONS OF THE ASSESSEE. IT IS SEEN THAT THE SIMILAR ISSUE WAS BEFORE THE PREDEC ESSOR DRP FOR THE AY 2007 - 08 AND 2008 - 09 AND DRP HAS REJECTED THE CLAIM OF THE ASSESSEE. 3.3.2 WE HAVE ALSO SEEN THAT IN THE AY 2006 - 07, THE ASSESSEE HAD CLAIMED THAT THE ROYALTY RECEIVED BY IT FROM WBPIPL WAS NOT TAXABLE IN INDIA EITHER UNDER THE INCOM E TAX ACT OR UNDER INDIA - USA DTAA. DURING THE ASSESSMENT PROCEEDINGS, THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND ASSESSED THE ROYALTY @ 15% UNDER INDIA - USA DTAA. AGAINST THE SAID ORDER OF THE AO, THE ASSESSEE FILED APPEAL TO CIT ( A). THE CIT ( A) H AS HELD THAT THE ROYALTY RECEIVED BY THE ASSESSEE FROM WBPIPL IS NOT TAXABLE EITHER UNDER THE I NCOME TAX ACT OR THE DTAA. AGAINST THE SAID ORDER OF THE CIT ( A), THE DEPARTMENT HAD FILED APPEAL TO THE ITAT. THE HONBLE ITAT, L BENCH, MUMBAI VIDE ITS ORDER DATED 30 TH DECEMBER, 2011 IN ITA NO.3160/MUM/2010 HAS CONFIRMED THE ORDER OF THE CIT(A) HOLDING THAT THE ROYALTY RECEIVED BY THE ASSESSEE (WBPI) FROM WBPIPL IS NOT TAXABLE IN INDIA EITHER UNDER THE INCOME TAX ACT OR INDIA - USA DTAA. 3.3.3 IN AY 2007 - 0 8 AND 2008 - 09 THE AO HAD ASSESSED THE SAID ROYALTY AS BUSINESS INCOME U/S 143(3) R.W.S 144C(13). AGAINST THE SAID ORDER OF THE AO THE ASSESSEE HAD FILED APPEAL TO HONBLE ITAT, MUMBAI. THE HONBLE ITAT L BENCH, MUMBAI HAS ALLOWED THE APPEAL OF THE 7 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 ASSESS EE FOR BOTH THE YEARS HOLDING THAT THE ROYALTY RECEIVED BY THE ASSESSEE FROM WBPIPL IS NOT TAXABLE IN INDIA. 3.3.4 AS PER THE PROVISIONS OF THE DTAA, THE BUSINESS INCOME OF THE ASSESSEE CANNOT BE TAXED IN INDIA IN THE ABSENCE OF PE. THE AO, AFTER GOING TH ROUGH THE VARIOUS CLAUSES OF AGREEMENT, HAS HELD THAT THE ASSESSEE HAS A DEPE N DENT AGENT PE RMANENT ESTABLISHMENT (DAPE) IN INDIA IN THE FORM OF WBPIPL. THE QUESTION WHETHER THE INDIAN COMPANY, NAMELY, WBPIPL IS THE PE OF THE ASSESSEE COMPANY OR NOT CAME UP FOR CONSIDERATION DIRECTLY IN AY 2006 - 07 IN ITA NO. 60/MUM/2010. AFTER CONSIDERING THE DETAILED ARGUMENTS OF THE LEARNED CIT (DR) THE HONBLE L BENCH HELD THAT WBPIPL IS NOT THE PE OF THE ASSESSEE COMPANY IN INDIA. THE FINDINGS OF THE HONBLE BENCH ARE QUOTED HEREUNDER: 10) THE ISSUE CAN BE EXAMINED IN ANOTHER DIMENSION WHETHER THE AMOUNT IS TAXABLE UNDER THE INDIAN INCOME TAX ACT IN INDIA IF NOT AS ROYALTY, BUT AS BUSINESS INCOME. THE CIT ( A) FINDING IS THAT ASSESSEE HAS A BUSINESS CONNECTION IN INDIA. HOWEVER, HE CONSIDERED THAT THERE IS NO PE TO THE ASSESSEE, THE FACT OF WHICH WAS ALSO ACCEPTED BY THE ASSESSING OFFICER AS PER PE PROVISO. IT WAS THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE HAVING BUSINESS CONNECTION, THE FINDINGS OF WHICH WAS GIVEN BY THE CIT(A), THE AMOUNT CANNOT BE EXECUTED WITHOUT EXAMINING PE PROVISO PROVISIONS OF DTAA. IN THIS REGARD THE LEARNED COUNSELS SUBMISSION THAT UNDER THE INCOME TAX ACT AS WELL AS UNDER THE PROVISIONS OF DTAA THE TRANSACTIO N BETWEEN THE ASSESSEE AND INDIAN COMPANY TO WHOM LICENSE WAS GRANTED BY THE VIRTUE OF THE AGREEMENT CANNOT BE CONSIDERED AS AGENCY PE AS THE INDIAN ASSESSEE IS NOT EXCLUSIVELY DEALING WITH THE ASSESSEE AND 8 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 REFERRED TO THE RECEIPTS FROM ANOTHER COMPANY 10 T H CENTURY FOX TO SUBMIT THAT THE ASSESSEE IS ALSO DEALING WITH THE OTHER NON RESIDENT COMPANIES, SO ASSESSEE CANNOT BE CONSIDERED AGENCY PE WITHIN THE DEFINITION OF PERMANENT ESTABLISHMENT. 11) WE HAVE EXAMINED THIS ASPECT ALSO. AS RIGHTLY HELD BY THE CIT (A) EVEN IF INCOME ACCRUING OR ARISING OUT OF SUCH BUSINESS CONNECTION CAN ONLY BE TAXED TO THE EXTENT OF THE ACTIVITIES ATTRIBUTED TO PERMANENT ESTABLISHMENT. IN THIS CASE, THE ASSESSEE DOES NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA. SINCE THE INDIAN COMPANY WHO OBTAINED THE RIGHTS IS ACTING INDEPENDENTLY . AGENCY PE PROVISIONS ARE NOT APPLICABLE TO THE ASSESSEE COMPANY. THE ASSESSEE RELIED ON THE DECISION OF ISHIKAWAJAMA HARIMA HEAVY INDUSTRIES LTD VS . DIRECTOR OF INCOME TAX 2007 (158) TAXMAN 0259 - SC THAT INCOMES ARISING TO A NON - RESIDENT CANNOT BE TAXED AS BUSINESS INCOME IN INDIA, WITHOUT A PE. AS THE ASSESSEE DOES NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA, THE INCOMES ARISING OUTSIDE INDIAN TERRITORIES CANNOT BE BROUGHT TO TAX. THEREFORE, THERE IS NO NEED TO DIFFER FROM THE FINDINGS OF THE CIT ( A) AND ACCORDINGLY THE REVENUE APPEAL IS DISMISSED. THE FINDING OF THE HONBLE L BENCH HAS BEEN FOLLOWED IN THE SUBSEQUENT TWO APPEALS VIZ. ITA NO.8734/MUM/2010 FOR AY 2007 - 08 AND ITA NO.8627/M UM/2011 FOR AY 2008 - 09. 3.3.5 THUS, IT IS CLEAR THAT THE VERY ISSUE OF EXISTENCE OF PE IN INDIA HAS BEEN CONSIDERED BY THE HONBLE ITAT. THE INCOME OF THE ASSESSEE COMPANY DOES NOT QUALIFY FOR THE DEFINITION OF ROYALTY IN TERM OF INCOME TAX ACT 1961. THE AO HIMSELF HAS ACCEPTED IN THE ASSESSMENT ORDER THAT THE INCOME OF THE ASSESSEE CANNOT BE TAXED AS ROYALTY. ONCE THE INCOME OF THE ASSESSEE COMPANY DOES NOT 9 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 QUALIFY UNDER THE DEFINITION OF ROYALTY, THE INCOME HAS TO BE HELD AS BUSINESS INCOME. THE BUSINESS INCOME CANNOT BE TAXED IN THE ABSENCE OF PE IN INDIA. WE HAVE SEEN THAT THE HONBLE ITAT HAS CATEGORICALLY HELD THAT THE WBPIPL IS NOT THE PE OF THE ASSESSEE COMPANY. 3.3.6 THUS, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT IN THE ASSESSEES O WN CASE, WE ARE OF THE VIEW THAT THE INCOME OF THE ASSESSEE IS NOT TAXABLE IN INDIA AND WE DIRECT THE AO TO DELETE THE ADDITION PROPOSED ON THIS ACCOUNT. SINCE , THE AFORESAID DECISION OF THE LD. DRP IS BASED ON FINDING ARRIVED AT BY THE TRIBUNAL IN EARLIER YEARS, THEREFORE, CONSISTENT WITH THE JUDICIAL PRECEDENCE AND VIEW TAKEN IN EARLIER YEARS WHICH IS APPLICABLE ON THE FACTS OF THE PRESENT YEAR ALSO , T HEREFORE, WITHOUT TAKING ANY DEVIATION WE AFFIRM THE ORDER OF THE LD. DRP . ACCORDINGLY, GROUND RA ISED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. CROSS OBJECTION NO.10 2 OF 2015 : 6. IN THE CROSS OBJECTIONS ASSESSEE HAS RAISED FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE DRP ERRED IN NOT DEALING WITH THE ASSESSEES SUBMISSIONS THAT RELIEF ALSO BE GRANTED TO THE ASSESSEE IN VIEW OF THE DECISION OF THE HONBLE L BENCH OF ITAT MUMBAI IN THE CASE OF DELMAS, FRANCE V. ADIT (MUM.) IN ITA NO.9001/MUM/2010 WHICH APPLIES TO THE CASE OF THE ASSESSEE ON ALL FOURS. 10 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE DRP ERRED IN NOT DEALING WITH THE ASSESSEES OBJECTION THAT THE ASSESSING OFFICER ERRED IN HOLDING THAT THE ROYALTY RECEIVED BY THE ASSESSEE IS LIABLE TO TAX EVEN WHEN THE SAME IS DETERMINED AT ARMS LENGTH. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE DRP ERRED IN NOT DEALING WITH THE ASSESSEES OBJECTION THAT THE ASSESSING OFFICER ERRED IN DETERMIN ING THE TAXABLE INCOME OF THE ASSESSEE @ 65% OF THE ROYALTY RECEIVED BY THE ASSESSEE. 7 . IT HAS BEEN ADMITTED BY BOTH THE PARTIES THAT, IF REVENUE S APPEAL IS BEING DISMISSED, THEN GROUNDS RAISED IN THE CROSS OBJECTION WILL BECOME PURELY ACADEMIC. SINCE WE HAVE ALREADY DISMISSED THE REVENUES APPEAL, THEREFORE, THE ISSUE S RAISED IN THE CROSS OBJECTIONS ARE KEPT OPEN AND SAME IS NOT ADJUDICATED AS IT WOULD PURELY ACADEMIC EXERCISE . A CCORDINGLY, CROSS OBJECTION RAISED BY THE ASSESSEE IS DISMISSED AS INFRUCT UOUS. TO SUM - UP: - REVENUES APPEAL AND ASSESSEES CROSS OBJECTION STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2016. SD/ - SD/ - ( ) ( ) ( ASHWANI TANEJA ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 27 TH OCTOBER, 2016 . / COPY T O: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3 ) THE DRP - II/CIT ( APPEAL S ) CONCERNED , MUMBAI. 4 ) THE CIT / DRP/DIT CONCERNED____ , MUMBAI 5 ) , , / 11 WARNER BROTHER DISTRIBUTING INC. ITA NO. : 1405 /MUM/201 4 C O NO. : 102/MUM/2015 THE D.R. L BENCH, MUMBAI. 6 ) \ COPY TO GUAR D FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS