NGC NETWORK (INDIA) P. LTD, MUMBAI V. ASST CIT RG 11(1), MUMBAI

ITA 2103/MUM/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4510 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2009-2010
• Appeal Filed On: 27-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A MOHAN
• Assessee Lawyers: PORUS KAKADIVESH CHAWLA
• Keywords: Related party transaction; Transfer pricing; International transaction; Initiation of penalty proceedings; Non-deduction of tax; TDS
• Section: 271(1)(c); 143(3); 234B; 40(a)(ia); 194J; 73; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER [ ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) NGC NETWORK (INDIA) PRIVATE LIMITED STAR HOUSE, URMI ESTATE, 95, GANPATRAO KADAM MARG, LOWER PAREL (W), MUMBAI 400 013. PAN:AABCN1401A ...... APPELLANT VS. THE ACIT RANGE 11(1)/16(1), AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 ..... RESPON DENT ITA NO.1245/MUM/2016(A.Y.2011-12) THE ACIT RANGE 16(1), AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 ..... APPELLANT VS. NGC NETWORK (INDIA) PRIVATE LIMITED STAR HOUSE, URMI ESTATE, 95, GANPATRAO KADAM MARG, LOWER PAREL (W), MUMBAI 400 013. PAN:AABCN1401A .... RESPOND ENT C.O.NO.265/MUM/2017 (ARISING OUT OF ITA NO. 1245/MUM/2016(A.Y.2011-12) NGC NETWORK (INDIA) PRIVATE LIMITED MUMBAI 400 013. PAN:AABCN1401A .... CROSS OBJECTOR VS. ACIT, RANGE 16(1) MUMBAI. .... APPELLANT IN APPEAL 2 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 ASSESSEE BY : S/SHRI PORUS KAKA& DIVESH C HAWLA RESPONDENT BY : SHRI A. MOHAN DATE OF HEARING : 11/02/2020 DATE OF PRONOUNCEMENT : 26/02/2020 ORDER PER VIKAS AWASTHY, JM: THESE APPEALS BY THE ASSESSEE ARE FOR ASSESSMENT Y EARS 2009-10, 2010- 11 AND 2011-12 AND THE APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 2011-12 ARE TAKEN UP TOGETHER AS THE ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON AND ARE ARISING FROM SAME SET OF FACTS. FOR THE SAKE OF CONVENIENCE FACTS ARE EXTRACTED FROM APPEAL OF THE ASSESSEE IN ASSESSMENT YEAR 2009-10. ITA NO.2103/MUM/2014,A.Y. 2009-10 . 2. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ASSESSMENT ORDER DATED 20/01/2014 PASSED UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. BRIEF FACTS OF THE CASE AS EMANATING FROM THE RE CORDS ARE: THE ASSESSEE COMPANY IS ENGAGED IN DISTRIBUTION OF SATELLITE TEL EVISION CHANNELS NAMELY, NATIONAL GEOGRAPHIC CHANNEL AND HISTORY CHANNEL( NO W KNOWN AS FOX TRAVELLER CHANNEL) IN INDIA. THE ASSESSEE DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL ENTERED INTO INTERNATIONAL TRANS ACTION WITH TWO OF ITS ASSOCIATED ENTERPRISES (AES) NAMELY;(I) M/S. NGC NE TWORK ASIA LLC ,USA & (II) M/S. FOX INTERNATIONAL CHANNELS (US) INC. USA. THE ASSESSEE PROVIDED BUSINESS 3 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 SUPPORT SERVICES IN THE FORM OF (A) PROMO PRODUCTIO N SERVICES; (B) LONG FORM PRODUCTION SERVICES; AND (C) QUALITY CONTROL SERVIC ES IN RELATION TO CONTENT VERSIONING. TO BENCHMARK TRANSACTIONS WITH ITS AE S, THE , ASSESSEE SELECTED EIGHT COMPANIES AS COMPARABLES. THE ASSESSEE ADOPT ED TRANSACTION NET MARGIN METHOD( IN SHORT TNMM) AS THE MOST APPROPR IATE METHOD. THE OP/OC WAS THE FILTER FOR DETERMINING PLI. THE TR ANSFER PRICING OFFICER (TPO) REJECTED FIVE OUT OF EIGHT COMPARABLES SELECTED BY THE ASSESSEE AND INTRODUCED TWO FRESH COMPARABLES. THUS THE FINAL SET OF COMPAR ABLES ADOPTED BY THE TPO FOR DETERMINING ARMS LENGTH PRICE (ALP) OF THE ASSE SSEES INTERNATIONAL TRANSACTION AND THEIR AVERAGE ARITHMETIC MEAN IS AS UNDER:- S.NO. NAME OF THE COMPARABLE COMPANY PLI (% ) 1 APITCO LTD. 36.58 2 DLF SERVICES LTD. 5.21 3 HINDUSTAN HOUSING COMPANY LTD. 9.09 4 IDC (INDIA) LIMITED 9.99 5. TSR DARSHAW LIMITED 27.98 ARITHMETIC MEAN 17.77 ASSESSEE 9.00 4. THE TPO MADE ADJUSTMENT OF RS.29,69,557/- TO DETERMINE ALP OF THE INTERNATIONAL TRANSACTIONS WITH AES. ON THE BASIS O F ORDER OF THE TPO DATED 17/01/2013, THE ASSESSING OFFICER PASSED DRAFT ASSE SSMENT ORDER ON 25/03/2013. FURTHER, THE ASSESSING OFFICER IN THE DRAFT ASSESSMENT ORDER MADE DISALLOWANCE OF PAYMENT OF AGENCY COMMISSION RS.4, 70,26,793/- UNDER SECTION 40(A)(IA) OF THE ACT. AGGRIEVED AGAINST TH E DRAFT ASSESSMENT ORDER THE ASSESSEE FILED OBJECTION BEFORE THE DISPUTE RESOLUT ION PANEL (DRP), INTER-ALIA ASSAILING INCLUSION OF APITCO LTD. (IN SHORT APIT CO) AND TSR DARSHAW LIMITED (IN 4 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 SHORT TSRDL) IN THE LIST OF COMPARABLES BY THE TP O . THE DRP VIDE DIRECTION DATED 31/12/2013 REJECTED THE ASSESSEES OBJECTIONS IN TOTO. THE ASSESSING OFFICER PASSED THE IMPUGNED ASSESSMENT ORDER IN LIN E WITH THE DIRECTIONS OF THE DRP. NOW, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ASSAILING THE ADDITIONS MADE BY THE ASSESSING OFFICER. 5 SHRI PORUS KAKA, APPEARING ON BEHALF OF THE ASSE SSEE SUBMITTED THAT IN APPEAL THE ASSESSEE HAS RAISED 17 GROUNDS. THE G ROUNDS NO.1 TO 13 ARE IN RESPECT OF TRANSFER PRICING ISSUES. THE GROUND NO. 14 OF THE APPEAL IS IN RESPECT OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE UNDER SECTION 194H OF THE ACT ON PAYMENT OF AGENCY COMMISSION. THE OTHER THREE GROUNDS I.E. GROUND NO.15,16 & 17 A RE ON THE ISSUE OF CHARGING OF INTEREST UNDER SECTION 234B & 234C OF T HE ACT AND LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . THE LD. AUTHO RIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IF GROUND NO.10 & 11 RELAT ING TO INCLUSION/EXCLUSION OF THE COMPARABLES IS DECIDED IN FAVOUR OF THE ASSE SSEE, THE ALP OF THE ASSESSEE WOULD BE WITHIN PLUS MINUS 5% RANGE AND H ENCE, THE OTHER GROUNDS ON TP ISSUE I.E. GROUND NOS. 1 TO 9 AND 12 TO 13 OF THE APPEAL TP ISSUE WOULD BECOME ACADEMIC. 6. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE SUBMITTED THAT TPO HAS SELECTED APITCO AS ONE OF THE COMPARABLES. TH E SAID COMPANY IS A 100% GOVERNMENT UNDERTAKING AND IS FUNCTIONALLY DIFFEREN T FROM THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUB MITTED THAT A PERUSAL OF DIRECTORS REPORT OF APITCO AT PAGE 336 OF THE PAPER BOOK WOULD SHOW THAT THE COMPANY IS ENGAGED IN HIGH END TECHNICAL CONSULTANC Y SERVICES, SUCH AS SKILL 5 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 DEVELOPMENT, TOURISM AND RESEARCH STUDIES, MICRO EN TERPRISES DEVELOPMENTS, CLUSTER DEVELOPMENT, ASSET RECONSTRUCTION AND MANAG EMENT SERVICES, ENERGY RELATED SERVICES, ENVIRONMENT MANAGEMENT, INFRASTRU CTURE PLANNING AND DEVELOPMENT, ETC. THE ACTIVITIES CARRIED OUT BY A PITCO ARE ABSOLUTELY AT VARIANCE WITH THE ACTIVITIES OF THE ASSESSEE, WHICH IS PRIMARILY ENGAGED IN PROVIDING LOW END BUSINESS SUPPORT SERVICES. THE L D. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2223/MUM/2017 FOR ASSESSMENT YEAR 2 012-13 DECIDED ON 30/04/2019HAS REJECTED APITCO AS COMPARABLE ON BO TH GROUND I.E. THE SAID COMPANY BEING GOVERNMENT COMPANY AND BEING FUNCTION ALLY DIFFERENT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT IN THE CASE OF ASSESSEES GROUP CONCERN, STAR INDIA LTD VS. ACT IN ITA NO.1902/MUM/2016 FOR ASSESSMENT YEAR 2011-12 DECIDED ON 01/08/2019, THE TRIBUNAL HELD APITCO IS NOT FUNCTIONALLY COMPARABLE 6.1 THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSE SSEE IN ORDER TO BUTTRESS HIS CONTENTION THAT A GOVERNMENT COMPANY CANNOT BE CONSIDERED AS COMPARABLE REFERRED TO THE DECISION OF TRIBUNAL IN THE CASE OF M/S.THYSEEN KRUPP VS. ADDL. CIT, 154 TTJ 689(MUM-TRIB). THE LD .AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE TRIBUNAL EXCLUD ED ENGINEERS INDIA LTD. FROM THE LIST OF COMPARABLES ON THE GROUND THAT IT IS A GOVERNMENT UNDERTAKING. THE DEPARTMENT CARRIED THE ISSUE IN APPEAL BEFORE T HE HONBLE HIGH COURT. THE HONBLE HIGH COURT UPHELD THE FINDINGS OF TRIBU NAL [ CIT VS. THYSEEN KRUPP REPORTED AS 385 ITR 612(BOM).] 6 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 6.2 IN RESPECT OF TSRDL, THE LD. AUTHORIZED REPR ESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE SAID COMPANY IS ENGAGED IN BPO/ KPO ACTIVITIES AND HENCE, CANNOT BE COMPARED TO ASSESSEE, A BUSINESS SUPPORT PROVIDER. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED THAT TRIBUNAL IN THE CASE OF ASSESSEES GROUP CONCERN STAR INDIA PRIVATE LIMITED VS. ACIT IN ITA NO.1901/MUM/2016, ASSESSMENT YEAR 2011-12 DECIDED ON 1 ST AUG.2019 HELD THAT TSRDL IS ENGAGED IN PROVISION OF PAY ROLL SERVICES AND PROVIDENT FUND MANAGEMENT SERVICES. THE SAID COMPANY IS ALSO REGI STRAR AND SHARE TRANSFER AGENT, THEREFORE, IT CANNOT BE COMPARED TO SUPPORT SERVICE PROVIDER. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CONTENDE D TSRDL HAS BEEN REJECTED AS COMPARABLE BY THE TRIBUNAL IN SERIES OF DECISIONS. SOME OF THE TRIBUNAL ORDERS ARE AS UNDER:- (1) APL LOGISTICS (INDIA) (P) LTD. VS. ACIT, ITA N O.2162/MUM/2015, A.Y. 2010-11 DATED 29 TH MAY, 2019. (2) VESTERGAARD ASIA PVT. LTD. VS. DCIT, CIR.26(2), ITA NO.6670/DEL/2015 A.Y. 2011-12 DATED 30 TH NOVEMBER, 2017. (3) HONEYWELL TURBO TECHNOLOGIES (INDIA) PVT. LTD. V. DCIT, ITA NO. 2584/PUN/2012, A.Y. 2008-09 DATED 10 TH FEBRUARY, 2017. (4) TREND MICRO INDIA PVT. LTD VS. DCIT, CIR.25(2) , ITA NO.1585/DEL/2015, A.Y. 2010-11 DATED 20 TH NOVEMBER, 2015. 6.3 IN RESPECT OF GROUND NO.14, RELATING TO CORPORA TE ISSUE OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT, THE LD. AUTHORI ZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE OFFERED TRADE DISCOUNT TO ITS CUSTOMERS. THE TRADE DISCOUNT IS REFLECTED IN THE INVOICE. TH E ASSESSING OFFICER WRONGLY 7 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 PRESUMED THAT TRADE DISCOUNTS ARE IN THE NATURE OF AGENCY COMMISSION PAID BY THE ASSESSEE TO E INTERMEDIARIES FOR PROCURING B USINESS TO THE ASSESSEE. THE ASSESSING OFFICER FURTHER ERRED IN COMING TO THE C ONCLUSION THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE UNDER SECTION 194H O F THE ACT, ON ALL SUCH PAYMENTS ON AGENCY COMMISSION. THEREFORE, THE ASSES SING OFFICER MADE DISALLOWANCE OF THE SAID PURPORTED PAYMENTS UNDER S ECTION 40(A)(IA) OF THE ACT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASS ESSEE SUBMITTED THAT TRADE DISCOUNTS OFFERED BY THE ASSESSEE TO ITS CUSTOMERS ARE NEITHER PAYMENTS MADE BY THE ASSESSEE TO ITS AGENTS NOR IT IS CLAIMED IN THE BOOKS OF ACCOUNT. THE ASSESSEE HAS BEEN FOLLOWING THIS PRACTICE OF OFFERI NG TRADE DISCOUNTS TO ITS CUSTOMERS RIGHT THROUGH AND THE SAME ARE REFLECTED IN THE INVOICE ISSUED BY THE ASSESSEE. IN THE EARLIER ASSESSMENT YEARS, THE DEPARTMENT HAS NEVER RAISED ANY DISPUTE ON THIS COUNT. THE ASSESSMENT Y EAR UNDER APPEAL IS THE FIRST YEAR WHEN THE DEPARTMENT RAISED ANY QUERY ON TRADE DISCOUNTS OFFERED BY THE ASSESSEE AND HAS WRONGLY ASSUMED THE SAME AS A GENCY COMMISSION. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBM ITTED THAT SIMILAR DISALLOWANCE WAS MADE BY THE REVENUE IN ASSESSEES GROUP CONCERN STAR ENTERTAINMENT MEDIA PVT. LTD. IN ASSESSMENT YEAR 20 10-11. THE DRP DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THEREAFTER, T HE REVENUE CARRIED THE ISSUE IN APPEAL BEFORE THE TRIBUNAL IN ITA NO.1686/MUM/20 15. THE TRIBUNAL VIDE ORDER DATED 09/03/2016 UPHELD THE FINDINGS OF DRP A ND DISMISSED THE GROUND RAISED BY THE DEPARTMENT. THEREAFTER, THE DEPARTM ENT FILED APPEAL AGAINST THE ORDER OF TRIBUNAL BEFORE THE HON'BLE BOMBAY HIG H COURT IN INCOME TAX APPEAL NO.950 OF 2017. HOWEVER, THE DEPARTMENT DID NOT CHALLENGE THE 8 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 FINDING OF THE TRIBUNAL ON THIS ISSUE. THUS, THE D EPARTMENT ACCEPTED THE FINDINGS OF TRIBUNAL ON THIS ISSUE. 7. ON THE OTHER HAND, SHRI A. MOHAN, REPRESENTING T HE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. THE LD.DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT MERELY FOR THE REASON THAT COMPARABLE SELECTED BY THE TPO IS A GOVERNMENT UNDERTAKING WOULD NOT MAKE THE COMPARABLE BAD. THE GOVERNMENT COMPANIES WORK UNDER CORPORATE ENVIRONMENT AND ARE COMPETITIVE IN EVERY RESPECT. THE LD.DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE INCLUSION OF APITCO AND TSRDL IN THE LIST OF COMPARABLES. 8. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IN A PPEAL HAS RAISED 17 GROUNDS. THE GROUNDS NO.1 TO 13 OF THE APPEAL ARE IN RESPECT OF TRANSFER PRICING. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AT TH IS STAGE HAS CONFINED HIS SUBMISSIONS ONLY IN RESPECT OF EXCLUSION OF TWO CO MPARABLES I.E. APITCO AND TSRDL. OUR FINDINGS ON THE ISSUE ARE AS UNDER:- APITCO LIMITED 8.1 THE ASSESSEE IN GROUND NO.10 OF THE APPEAL IS SEEKING EXCLUSION OF APITCO FROM THE LIST OF COMPARABLES ON TWO COUNTS (I)THE COMPANY IS A GOVERNMENT UNDERTAKING; AND (II) THE COMPANY IS F UNCTIONALLY DIFFERENT. WE FIND THAT IN ASSESSEES OWN CASE IN ITA NO.2223/MUM /2017 (SUPRA), THE TRIBUNAL EXCLUDED APITCO FROM THE LIST OF COMPARABL ES FOR THE REASONS THAT THE 9 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 COMPANY IS GOVERNMENT COMPANY AND ALSO BEING FUNCTI ONALLY NON-COMPARABLE. THE RELEVANT FINDINGS OF THE TRIBUNAL ON THIS ISSUE READ AS UNDER:- 12. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUS ED MATERIAL ON RECORD. THE FIRST ISSUE WHICH REQUIRES CONSIDERATION IS, WHETHER A GO VERNMENT COMPANY CAN BE TREATED AS A COMPARABLE. IN OUR VIEW, THE DISPUTE O N THIS ISSUE IS NOW FAIRLY WELL SETTLED BY VIRTUE OF VARIOUS JUDICIAL PRECEDENTS. T HE TRIBUNAL, MUMBAI BENCH, IN THYSSEN KRUPP INDUSTRIES INDIA PVT. LTD. (SUPRA), H AS HELD THAT GOVERNMENT COMPANY CANNOT BE TREATED AS COMPARABLE AS THEY ARE NOT DRI VEN BY PROFIT MOTIVE AND HAVE BEEN CREATED IN FURTHERANCE OF SOCIAL OBLIGATION OF THE GOVERNMENT. HAVING HELD SO, WE ARE TO EXAMINE WHETHER APITCO LTD., FALLS IN THE CATEGORY OF A GOVERNMENT COMPANY / PSU. ON A PERUSAL OF THE MATERIAL ON RECO RD INCLUDING THE ANNUAL REPORT OF THE COMPANY, WE ARE OF THE CONSIDERED OPINION THAT APITCO LTD. HAS TO BE TREATED AS A GOVERNMENT COMPANY / PSU. IN FACT, IN THE CASE OF I NTERNATIONAL SOS SERVICES INDIA PVT. LTD. V/S DCIT, [2016] 67 TAXMANN.COM 73 (DEL.) , THE TRIBUNAL, DELHI BENCH, HAS EXCLUDED APITCO LTD., BY TREATING IT AS A GOVERNMEN T COMPANY. THE AFORESAID DECISION OF THE TRIBUNAL WAS UPHELD BY THE HON'BLE DELHI HIG H COURT WHILE DECIDING REVENUES APPEAL IN ITA NO. 454 OF 2016, DATED 30TH MAY 2017. IT IS RELEVANT TO OBSERVE, THOUGH THE DEPARTMENT CHALLENGED THE AFORESAID DECISION OF THE HON'BLE DELHI HIGH COURT BEFORE THE HON'BLE SUPREME COURT, HOWEVER, THE SLP WAS DISMISSED BY THE HON'BLE SUPREME COURT FINDING NO MERIT THEREIN. THUS, IN VI EW OF THE JUDICIAL PRECEDENTS REFERRED TO ABOVE, APITCO LTD., CANNOT BE CONSIDERE D TO BE A COMPARABLE. EVEN OTHERWISE ALSO, IN VARIOUS OTHER DECISIONS, APITCO LTD., HAS BEEN REJECTED AS A COMPARABLE DUE TO FUNCTIONAL DISSIMILARITY AND LACK OF SEGMENTAL BREAKUP. IN VIEW OF THE AFORESAID, WE DIRECT THE ASSESSING OFFICER TO E XCLUDE APITCO LTD., FROM THE LIST OF COMPARABLES AND COMPUTE THE ARM'S LENGTH PRICE OF B USINESS SUPPORT SERVICE SEGMENT. THIS GROUND IS ALLOWED. 8.2 WE FURTHER FIND IN THE CASE OF STAR INDIA PVT. LTD. VS. ACIT(SUPRA), THE CO- ORDINATE BENCH OF TRIBUNAL AFTER CONSIDERING THE FACTS CAME TO THE CONCLUSION THAT APITCO IS NOT A GOOD COMPARABLE BEING GOVERNME NT COMPANY. THE TRIBUNAL FURTHER HELD THAT THE SAID COMPANY IS NOT FUNCTIONALLY COMPARABLE WITH A COMPANY ENGAGED IN PROVIDING SUPPORT SERVICE S. THE RELEVANT EXTRACT OF THE FINDINGS OF THE TRIBUNAL ON THIS ISSUE ARE A S UNDER:- 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE GONE THROUGH THE ARGUMENTS OF THE BOTH THE SIDES AND NOTED THAT AS PER WEB SITE OF APTICO IS O WNED BY A PUBLIC SECTOR UNDERTAKINGS. AS PER DIRECTORS REPORT FOR AY 2011- 12, THE REVENUE OF APTICO IS 10 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 INFLUENCED BY GOVT. PROCEDURES AND BUDGET ALLOCATIO N. WE ALSO NOTICE THAT THE SHARE HOLDING IS BY PUBLIC SECTOR UNDERTAKINGS AND THE SU PPORT RECEIVED BY THE GOVERNMENT AND ITS PUBLIC SECTOR SHARE HOLDERS IN THE FUNCTION ING OF APTICO. FOR PRACTICAL PURPOSES IT IS A GOVERNMENT COMPANY. EVEN, THE COMP ANY IS NOT FUNCTIONALLY COMPARABLE AS PER THE DIRECTORS OF THE COMPANY AND SCHEDULES TO THE PROFIT AND LOSS ACCOUNT. IT CAN BE SEEN THAT THE COMPANY GENERATES REVENUE FROM SERVICES SUCH AS CLUSTER DEVELOPMENT, PROJECT DEVELOPMENT SERVICES, ENTREPRENEURSHIP DEVELOPMENT AND TRAINING, ASSET RECONSTRUCTION AND MANAGEMENT S ERVICES, MICRO ENTERPRISES DEVELOPMENT, TOURISM AND RESEARCH STUDIES, SKILL DE VELOPMENT, ENERGY AND ENVIRONMENT MANAGEMENT RELATED SERVICES. APTICO ALS O OFFERS WIDE RANGE OF CONSULTING SERVICES IN THE NATURE OF PROJECT IDENTI FICATION, PROJECT COUNSELLING, PRE FEASIBILITY REPORTS, DETAILED PROJECT FEASIBILITY R EPORTS, INFRASTRUCTURE PLANNING, MARKET ASSESSMENT, EXPANSION, DIVERSIFICATION AND TURN ARO UND STRATEGIES, SKILL DEVELOPMENT, PROJECT APPRAISALS, ASSET VALUATION, HRD INTERVENTI ON, CAPACITY BUILDING, ETC. THESE SERVICES PROVIDED BY THE APTICO ARE IN THE NATURE O F HIGH END CONSULTANCY / PROJECT RELATED SERVICES AND HENCE APTICO CANNOT BE COMPARE AS COMPARABLE TO SUPPORT TO SERVICE PROVIDERS. EVEN, COMPANY HAS NOT PROVIDED F OR ANY SEGMENTAL BREAK UP FOR THE INCOME EARNED FROM VARIOUS REVENUE STREAMS AS I T IS NOT CLEAR FROM ITS AUDITED ACCOUNTS. FURTHER, APTICO RECEIVES SUBSIDY FROM CEN TRAL AND STATE FINANCIAL INSTITUTIONS FOR CERTAIN ASSIGNMENTS. IN VIEW OF TH E ABOVE REASONS, WE ARE OF THE CONSIDERED VIEW THAT APTICO CANNOT BE CONSIDERED AS COMPARABLE TO THE ASSESSEE AND WE DIRECT THE AO TO EXCLUDE THIS COMPANY FROM T HE LIST OF COMPARABLES. 8.3 THE LD.DEPARTMENTAL REPRESENTATIVE HAS NOT PLAC ED ON RECORD ANY MATERIAL TO CONTROVERT THE FINDING OF THE TRIBUNAL REJECTING APITCO AS COMPARABLE BEING A GOVERNMENT COMPANY AND FUNCTIONA LLY DIFFERENT FROM THAT OF A SUPPORT SERVICE PROVIDER. THUS, IN VIEW OF SIMILARITY IN FACTS OF THE CASE AND THE DECISION OF TRIBUNAL IN ASSESSEES OWN CA SE IN ASSESSMENT YEAR 2012- 13, WE HOLD THAT APITCO IS NOT A GOOD COMPARABLE AN D, HENCE, IS TO BE EXCLUDED FROM THE LIST OF COMPARABLES. 8.4 THE ASSESSEE IN THE GROUND NO.10 OF THE APPEAL IS ALSO SEEKING INCLUSION OF OVERSEAS DEVELOPMENT & EMPLOYMENT PROM OTION CONSULTANTS LTD. AND OVERSEAS MANPOWER CORPORATION LTD. HOWEVER, N O SUBMISSIONS WERE MADE BY THE LD.AUTHORIZED REPRESENTATIVE OF THE ASS ESSEE IN RESPECT OF THE 11 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 SAID COMPANIES. CONSEQUENTLY, THE GROUND NO.10 OF THE APPEAL IS PARTLY ALLOWED. TSR DARSHAW LIMITED 8.5 THE ASSESSEE IN GROUND NO.11 OF THE APPEAL IS SEEKING EXCLUSION OF TSRDL FROM THE LIST OF COMPARABLES ON THE GROUND OF FUNCTIONAL DIFFERENCES. THE CONTENTION OF THE ASSESSEE IS THAT TSRDL IS EN GAGED IN PROVIDING SHARE REGISTRAR AND TRANSFER SERVICES, DEPOSITORY SERVI CES, PAY ROLL AND PROVIDENT FUND MANAGEMENT SERVICES, ETC. THE ACTIVITIES CARR IED OUT BY THE SAID COMPANY ARE IN THE NATURE OF BPO/KPO. WE FIND THAT THE TRI BUNAL IN THE CASE OF STAR INDIA PVT. LTD. (SUPRA), A GROUP COMPANY OF THE ASS ESSEE, HAVING ACTIVITIES SIMILAR TO THAT OF ASSESSEE HAS HELD, TSRDL IS NOT COMPARABLE TO SUPPORT SERVICE PROVIDER. THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL READ AS UNDER:- 13. AS REGARDS TO TSR DARASHAW LIMITED, WE NOTED T HAT THIS COMPANY IS A REGISTRAR AND TRANSFER AGENT AND ALSO ENGAGED IN PROVISION OF PAY ROLL SERVICES. WE HAVE GONE THROUGH THE ANNUAL REPORT SCHEDULE J AND AS PER N OTE 7 REVENUE RECOGNITION OF THIS COMPANY PROVIDES SHARE REGISTRY AND TRANSFER SERVIC ES, DEPOSITORY SERVICES, RECORD MANAGEMENT, PAY ROLL AND PROVIDENT FUND MANAGEMENT AND CORPORATE FIXED DEPOSIT MANAGEMENT SERVICES. WE ALSO NOTED FROM THE DIRECTO RS REPORT THAT THIS COMPANY HAS COMPLETED IMPLEMENTATION OF A NEW GLOBAL PAY ROLL E RP APPLICATION CALLED RAMCO PAY ROLL BUSINESS WHICH WILL ENABLE IT TO WITHSTAND COMPETITION AND SERVICE CLIENTS IN THE OVERSEAS MARKET. ACCORDINGLY, WE ARE OF THE VIE W THAT TSR DARASHAW IS A REGISTRAR AND SHARE TRANSFER AGENT, WHO HAS ALSO FO RAYED INTO PAY ROLL BUSINESS AS IN HOUSE SOFTWARE DEVELOPMENT AND CANNOT BE COMPARED A S A SUB AGENT AS THE FUNCTIONS ARE WHOLLY DIFFERENT. ACCORDINGLY, WE DIR ECT THE AO TO EXCLUDE THIS FROM COMPARABLE TO SUPPORT SERVICE PROVIDER LIKE SIPL. W E DIRECT THE AO ACCORDINGLY. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 8.6 NO MATERIAL IS BROUGHT BEFORE US BY THE DEPAR TMENT TO CONTROVERT THE FINDINGS OF TRIBUNAL IN REJECTING TSRDL AS COMPA RABLE TO SUPPORT SERVICE PROVIDER. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE 12 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 TRIBUNAL, WE HOLD THAT TSRDL IS NOT COMPARABLE TO A COMPANY ENGAGED IN PROVIDING BUSINESS SUPPORT SERVICES. CONSEQUENTLY, WE DIRECT THE TPO/ASSESSING OFFICER TO EXCLUDE TSRDL FROM THE LIS T OF COMPARABLES. CONSEQUENTLY, GROUND NO.11 OF THE APPEAL IS ALLOWED . 9. IN GROUND NO.14 OF THE APPEAL, THE ASSESSEE HA S ASSAILED DISALLOWANCE MADE UNDER SECTION 40(A)(IA) RS.4,70,26,793/- THE ASSESSING OFFICER HAS MADE DISALLOWANCE ON ACCOUNT OF AGENCY COMMISSION UNDER SECTION 40(A)(IA) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NOT DEDUCTE D TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194H OF THE ACT IN RESPECT OF SAID AGENCY COMMISSION PAID TO THE AGENTS FOR PROCURING BUSINESS FOR THE A SSESSEE. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS EXPLAINED THAT T HE ASSESSEE IS OFFERING TRADE DISCOUNT TO ITS CUSTOMERS AND THE SAID TRADE DISCOUNT IS REFLECTED IN THE INVOICE ISSUED BY THE ASSESSEE. THE TRADE DISCOUNT S LABELLED AS AGENCY COMMISSION BY ASSESSING OFFICER, ARE NEITHER PAID TO THE AGENTS NOR CLAIMED IN THE BOOKS. THEREFORE, THERE IS NO QUESTION OF DEDU CTING TAX AT SOURCE ON SUCH ALLEGED PAYMENT OF AGENCY COMMISSION. THE LD.AUTHO RIZED REPRESENTATIVE OF THE ASSESSEE HAS FURTHER POINTED THAT IN THE PAST A SSESSEE WAS FOLLOWING SIMILAR PRACTICE OF OFFERING TRADE DISCOUNTS TO ITS CUSTOMERS, THE DISCOUNTS WERE REFLECTED IN THE INVOICE, NO DISPUTE WAS EVER RA ISED BY THE DEPARTMENT. THIS FACT HAS NOT BEEN DISPUTED BY THE LD. D.R. THERE H AS BEEN NO CHANGE IN FACTS IN THE ASSESSMENT YEAR UNDER APPEAL. RULE OF CONSISTE NCY DEMANDS THAT IF THE TRANSACTION HAS BEEN ACCEPTED BY THE REVENUE IN THE PAST, WITHOUT THERE BEING ANY CHANGE OF FACTS OR THE PROVISIONS OF LAW, THE TRANSACTION SHOULD NOT BE DISTURBED. 13 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 10. WE FIND THAT SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF ASSESSEES GROUP CONCERN STAR ENTERTAINMENT MEDI A PVT. LTD. THE TRIBUNAL IN AN APPEAL BY THE DEPARTMENT IN ITA NO.1686/MUM/2018 (SUPRA) AFTER EXAMINING THE FACTS ON THIS ISSUE CONCLUDED AS UN DER:- 3.5. IN OUR OPINION, COMBINED READING OF FACTS OF THIS CASE, ORDER OF THE DRP, JUDGMENTS RELIED UPON BY THE LEARNED COUNSEL AS WEL L AS AFORESAID CIRCULAR OF THE BOARD CLEARLY SUGGESTS THAT NECESSARY INGREDIENTS F OR INVOKING THE PROVISIONS OF SECTION 194H ARE MISSING IN THIS CASE. IT IS NOTED THAT IT IS IN THE NATURE OF TRADE DISCOUNT AND NOT THE COMMISSION. THERE EXISTS NO R ELATIONSHIP OF AGENCY. THE TRANSACTION HAS BEEN DONE ON PRINCIPLE TO PRINCIP AL BASIS. IT IS FURTHER NOTED BY US THAT, NO CREDIT ENTRIES APPEAR IN THE ACCOUNTS OF A DVERTISING AGENCIES FORMING PART OF THE BOOKS OF THE ASSESSEE IN SO FAR AS THE AGENCY COMMISSION OF 15% IS CONCERNED. IN OTHER WORDS, THIS IS A PECULIAR CASE, WHERE NO INCO ME IS INVOLVED IN REALITY. THE TERM 'COMMISSION' HAS BEEN USED SYMBOLICALLY IN THE INVOICE, THERE WAS NEITHER ANY CREDIT ENTRY IN THE BOOKS, NOR ANY ACTUAL PAYMENT M ADE BY THE ASSESSEE BY ANY MODE, ON ACCOUNT OF 'COMMISSION'. THUS, KEEPING IN VIEW T HE FACTS OF THIS CASE AND AFORESAID LEGAL POSITION, WE FIND THAT ORDER OF THE DRP IS I N ACCORDANCE WITH LAW AND FACTS AND NO INTERFERENCE IS CALLED FOR THEREIN AND TH EREFORE SAME IS UPHELD. GROUND RAISED BY THE REVENUE IS DISMISSED. THE TRIBUNAL UPHELD THE FINDING OF DRP IN DELET ING THE ADDITION MADE ON SIMILAR FACTS. THE REVENUE FILED APPEAL BEFORE T HE HONBLE HIGH COURT AGAINST THE SAID ORDER OF TRIBUNAL. HOWEVER, IN APPEAL, TH E REVENUE DID NOT ASSAIL THE FINDINGS OF TRIBUNAL ON THE ISSUE OF DELETING THE A DDITION MADE IN RESPECT OF AGENCY COMMISSION UNDER SECTION 40(A)(IA) OF THE AC T. THUS, THE REVENUE ACCEPTED THE FINDINGS OF TRIBUNAL ON THIS ISSUE. TAKING INTO CONSIDERATION, THE FACTS OF THE PRESENT APPEAL AND THE AFORESAID DECIS IONS, WE FIND MERIT IN THE CONTENTIONS OF THE LD.AUTHORIZED REPRESENTATIVE O F THE ASSESSEE. ACCORDINGLY, GROUND NO.14 RAISED IN THE APPEAL IS ALLOWED. 11. SINCE, WE HAVE ACCEPTED THE CONTENTIONS OF THE ASSESSEE IN EXCLUDING APITCO AND TSRDL FROM THE LIST OF COMPARABLES THE MARGIN OF THE ASSESSEE FALLS 14 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 WITHIN TOLERANCE RANGE OF +/- 5%. AS A RESULT, THE GROUNDS NO.1 TO 9 AND 12 TO 13 RELATING TO TRANSFER PRICING ADJUSTMENT HAVE BEC OME ACADEMIC, HENCE, ARE NOT DELIBERATED UPON. 12. THE GROUNDS NOS.15 & 16 OF THE APPEAL ARE RESPE CT TO CHARGING OF INTEREST UNDER SECTION 234B & 234C OF THE ACT. CHA RGING OF INTEREST IS MANDATORY AND CONSEQUENTIAL, HENCE, THESE GROUNDS A RE DISMISSED. 13. IN GROUND NO.17 OF THE APPEAL, ASSESSEE HAS ASS AILED INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. CHALLENGE TO PENALTY PROCEEDINGS AT THIS STAGE IS PREMATURE, THEREFORE, THIS GROUND IS DISMISSED AS PREMATURE. 14, IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED IN THE TERMS AFORESAID. ITA NO.1658/MUM/2015, A.Y.2010-11: 15. THE GROUNDS RAISED BY THE ASSESSEE IN ASSESSMEN T YEAR 2010-11 ARE SIMILAR TO THE GROUNDS RAISED IN ASSESSMENT YEAR 2 009-10. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN PRESENT APPEAL THE ASSESSEE IS SEEKING EXCLUSION OF APITCO AND TSRDL , AS WAS IN ASSESSMENT YEAR 2009-10. THE SUBMISSIONS MADE IN A.Y 2009-10 IN RES PECT OF AFORESAID COMPARABLES WOULD EQUALLY APPLY TO A.Y 2010-11. AP ART FROM ABOVE TWO COMPARABLES, THE ASSESSEE IN THE PRESENT ASSESSMENT YEAR HAS ALSO ASSAILED INCLUSION OF WAPCOS LIMITED (IN SHORT WAPCOS). 16. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE SUBMITTED THAT WAPCOS IS A GOVERNMENT COMPANY AND, HENCE, SHOULD BE EXCLUDED FROM THE 15 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 LIST OF COMPARABLES FOR THE PARITY OF REASONS APPLI ED FOR EXCLUDING APITCO. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER CONTENDED THAT THE TRIBUNAL IN THE VARIOUS DECISIONS HAS EXCLUDED WA PCOS FROM THE LIST OF COMPARABLES BEING GOVERNMENT COMPANY. TO SUPPORT HIS CONTENTIONS, THE LD.AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFER RED TO FOLLOWING DECISIONS: (1) JACOBS ENGINEERING INDIA P. LTD. VS. DCIT,ITA NO.1 964/MUM/2016 A.Y.2011-12 DATED 22/02/2019. (2) GENZYME INDIA PVT. LTD. VS. ACIT, ITA NO.892/DEL/2 014, A.Y.2009-10 DATED 20/04/2018. (3) VIRGINIA TRANSFORMER INDIA P. LTD., VS. ITO, ITA NO .1001/DEL/2014 ,A.Y 2009-10 DATED 10/07/2017. 17. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER CONTENDED THAT WAPCOS IS ALSO LIABLE TO BE EXCLUDED FROM THE LIST OF COMPARABLES ON ACCOUNT OF FUNCTIONAL DISPARITY. THE LD. AUTHORIZE D REPRESENTATIVE FOR THE ASSESSEE POINTED THAT WAPCOS IS ENGAGED IN PROVIDI NG HIGH END CONSULTANCY SERVICES AND UNDERTAKES TURNKEY CONTRACTS ON REGULA R BASIS. TO SUBSTANTIATE HIS CONTENTION THE LD. AUTHORIZED REPRESENTATIVE FOR TH E ASSESSEE REFERRED TO P&L ACCOUNT OF THE COMPANY AT PAGE 534 OF THE PAPER BOO K. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED THAT PERUSA L OF THE P&L ACCOUNT OF THE SAID COMPANY WOULD FURTHER SHOW THAT THERE ARE TWO SEGMENTS I.E. CONSULTANCY AND ENGINEERING PROJECT AND LUMPSUM TURNKEY PROJECT S. THUS, THE ACTIVITIES CARRIED OUT BY WAPCOS ARE NOT COMPARABLES WITH THA T OF THE ASSESSEE, ENGAGED IN PROVIDING BUSINESS SUPPORT SERVICES. 16 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 18. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE STATED AT THE BAR THAT THOUGH NAME OF SOME OTHER COMPANIES IS ALSO MENTION ED IN GROUNDS OF APPEAL BUT HE IS NOT PRESSING EXCLUSION OF OTHER COMPARAB LES VIZ. BEST MULYANKAN CONSULTANCY LTD., DLF SERVICES, GENINS INDIA TPS LT D., KILLICK AGENCIES AND MARKETING LTD., HINDUSTAN HOUSING CO. LTD. 19. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FURTHER POINTED THAT GROUND NO.14 TO 19 OF THE APPEAL ARE ON THE ISSUE O F TRADE DISCOUNTS TREATED AS AGENCY COMMISSION BY THE REVENUE. THE ISSUE IS S IMILAR TO THE ONE ADDRESSED IN ASSESSMENT YEAR 2009-10. 20. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE FINDING OF TPO/DRP IN INCLUDING WAPCOS LTD. IN THE LIST OF COMPARABLES. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT TH E GROUND RAISED IN THE PRESENT APPEAL ARE SIMILAR TO THE ONE RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2009-10. THE LD. DEPARTMENTAL REPRESENTATIVE FURTH ER CONTENDED THAT SUBMISSIONS MADE IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 WOULD EQUALLY APPLY TO ASSESSMENT YEAR 2010-11. 21. BOTH SIDES HEARD. THE GROUND NO.1 OF THE APPEA L IS GENERAL IN NATURE. IN SO FAR AS TRANSFER PRICING ISSUES RAISED IN GROUND NO.2 TO 13, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS RESTRICTED HIS SUBMISSIONS ONLY QUA EXCLUSION OF THREE COMPARABLES I.E. APITCO, TSRDL A ND WAPCOS. WHILE DECIDING THE APPEAL OF THE ASSESSEE IN ASSESSMENT Y EAR 2009-10 WE HAVE GIVEN DETAILED FINDING FOR EXCLUDING APITCO AND TSRDL FR OM THE LIST OF COMPARABLES. THE AFORESAID FINDINGS WOULD MUTATIS MUTANDIS APPLY TO ASSESSMENT YEAR 2010-11, AS WELL. 17 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 22. AS REGARDS EXCLUSION OF WAPCOS, THE PRIMARY CO NTENTION OF THE ASSESSEE IS THAT THE SAID COMPANY IS A GOVERNMENT COMPANY AND, HENCE, SHOULD BE EXCLUDED FROM LIST OF COMPARABLES. IN AD DITION, THE ASSESSEE HAS ALSO ASSAILED INCLUSION OF WAPCOS ON THE GROUND OF FUNC TIONAL DIFFERENCE. THE BALANCE SHEET OF THE COMPANY AS ON 31/03/2011 AND T HE P&L ACCOUNT FOR FINANCIAL YEAR 2009-10 AT PAGES 533 TO 564 OF THE P APER BOOK REVEAL THAT THE SAID COMPANY IS A GOVERNMENT OF INDIA UNDERTAKING. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JACOB ENGINEERING INDIA PVT. LTD.(SUPRA) HAS HELD THAT WAPCOS BEING A GOVERNMENT COMPANY CANNOT BE T REATED AS COMPARABLE. SIMILAR VIEW HAS BEEN TAKEN BY THE TRI BUNAL IN THE OF GENZYME INDIA PVT. LTD VS. ACIT(SUPRA) AND VIRGINIA TRANSFO RMER INDIA P LTD VS. ITO (SUPRA). THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO BROUGHT TO OUR NOTICE THE BUSINESS ACTIVITIES CARRIED OUT BY WAP COS. AS PER AUDITORS REPORT, THE COMPANY IS ENGAGED IN PROVIDING CONSULTANCY AND ENGINEERING PROJECT AND LUMPSUM TURNKEY PROJECT. THE ACTIVITIES CARRIED OU T BY WAPCOS ARE NOT COMPARABLE TO A COMPANY ENGAGED IN PROVIDING BUSINE SS SUPPORT SERVICES. HENCE, THE SAID COMPANY IS LIABLE TO BE REJECTED AS COMPARABLE ON ACCOUNT OF FUNCTIONAL DISPARITY AS WELL AS, BEING A GOVERNMENT COMPANY. IN VIEW OF OUR ABOVE OBSERVATION, WE DIRECT TPO /ASSESSING OFFICER TO EXCLUDE WAPCOS FROM THE LIST OF COMPARABLES. 23. THE ASSESSEE IN GROUND NO.9 OF THE APPEAL HAS A LSO ASSAILED INCLUSION OF BEST MULYANKAN CONSULTANTS LTD., DLF SERVICES, GEN INS INDIA TPA LTD. AND KILLICK AGENCIES AND MARKETING LTD. THE LD. AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE STATED AT THE BAR THAT THE ASSESSEE IS N OT PRESSING EXCLUSION OF 18 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 AFOREMENTIONED COMPANIES. CONSEQUENTLY, GROUND NO. 8 OF THE APPEAL IS ALLOWED AND GROUND NO.9 OF THE APPEAL IS PARTLY ALL OWED. 24. IN GROUND NO.10, THE ASSESSEE HAS ASSAILED I NCLUSION OF HINDUSTAN HOUSING COMPANY LTD. THE LD. AUTHORIZED REPRESENT ATIVE FOR THE ASSESSEE STATED AT BAR THAT HE IS NOT PRESSING GROUND NO.1 0 OF THE APPEAL, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 25. SINCE, WE HAVE ADJUDICATED ASSESSEES GROUNDS R ELATING TO EXCLUSION OF CERTAIN COMPARABLES, CONSEQUENTLY, THE PLI OF THE A SSESSEE FALLS WITHIN +/- 5% RANGE. THE OTHER GROUNDS RELATING TO TRANSFER PRIC ING ISSUE RAISED IN GROUND NO.2 TO 7 AND GROUND NO.11 TO 13 HAVE BECOME ACADEM IC AND THUS, ARE NOT DELIBERATED UPON. 26. IN GROUND NO.14 TO 19 OF THE APPEAL, ASSESSEE HAS ASSAILED THE ACTION OF ASSESSING OFFICER IN TREATING TRADE DISCOUNT AS AGENCY COMMISSION. THIS ISSUE WE HAVE ADJUDICATED IN THE APPEAL OF THE ASSE SSEE IN ASSESSMENT YEAR 2009-10. BOTH SIDES ARE UNANIMOUS IN STATING THA T THIS ISSUE IS IDENTICAL TO THE ONE RAISED IN APPEAL FOR ASSESSMENT YEAR 2009-10. THE FINDING GIVEN BY US WHILE ADJUDICATING THE ISSUE OF AGENCY COMMISSION IN ASSESSMENT YEAR 2009- 10 WOULD MUTATIS MUTANDIS APPLY TO GROUND NO.14 TO 19 OF THE PRESENT APPEAL. CONSEQUENTLY, THESE GROUNDS ARE ALLOWED IN SIMILAR TERMS. 27. IN GROUND NO.20 OF THE APPEAL, ASSESSEE HAS ASS AILED CHARGING OF INTEREST UNDER SECTION 234BOF THE ACT. THE CHARGING OF INTE REST UNDER SECTION 234B IS MANDATORY AND CONSEQUENTIAL, HENCE, THE GROUND RAIS ED IS DISMISSED. 19 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 28. IN GROUND NO.21, ASSESSEE HAS ASSAILED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THIS GROUND IS PREMA TURE AT THIS STAGE. ACCORDINGLY, THE SAME IS DISMISSED AS SUCH. 29. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS AFORESAID. ITA NO.1245/MUM/16, CO. 265/MUM/2017 & ITA 1527/MUM /2016. ITA NO.1527/MUM/2016: 30. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APP EAL ARE SIMILAR TO THE ONE RAISED IN ASSESSMENT YEAR 2009-10 AND 2010-11. TH E LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS CONFINED HIS SU BMISSIONS ONLY FOR EXCLUSION OF FOLLOWING COMPARABLES: (1) APITCO, (2) TSRDL, (3) WAPCOS (4) HINDUSTAN HOUSING CO. LTD. 31. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSE SSEE CONTENDED THAT THE ASSESSEE IS NOT PRESSING INCLUSION OF FOLLOWING CO MPANIES: (1) BEST MULYANKAN CONSULTANTS LTD., (2) DLF SERVICES, (3) GENINS INDIA TPA LTD. (4) KILLICK AGENCIES AND MARKETING LTD 20 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 32. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE SUBMITTED THAT IF AFOREMENTIONED FOUR COMPANIES ARE EXCLUDED FROM T HE LIST OF COMPARABLES, THE OTHER GROUND RELATING TO TRANSFER PRICING ISSUE S WOULD BECOME ACADEMIC. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT GROUND NO.14 TO 18 OF THE APPEAL ARE IN RESPECT OF TRADE D ISCOUNT TREATED AS AGENCY COMMISSION. THIS ISSUE IS SIMILAR TO THE ONE RAIS ED IN ASSESSMENT YEAR 2009- 10 AND 2010-11.THE LD. AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE FURTHER SUBMITTED THAT IN GROUND NO.19 OF THE APPEAL THE AS SESSEE HAS ASSAILED THE FINDINGS OF AUTHORITIES BELOW IN GRANTING SHORT CRE DIT OF TAX DEDUCTED AT SOURCES (TDS). THE ASSESSEE HAD CLAIMED TDS CREDIT OF RS. 3,43,33,893/-. THE ASSESSEE HAD FURNISHED NECESSARY DOCUMENTS IN SUPPORT OF ITS CLAIM. HOWEVER, THE ASSESSEE ALLOWED TDS CREDIT SHORT BY RS.32,911/-. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PRAYED THAT THE ISS UE CAN BE RESTORED TO ASSESSING OFFICER FOR VERIFICATION. 33. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY ADMI TTED THAT THE GROUNDS RAISED BY THE ASSESSEE ON TRANSFER PRICING ISSUE AN D CORPORATE ISSUES ARE SIMILAR TO THE ONE RAISED IN ASSESSMENT YEAR 2009- 10 AND 2010-11. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE VEHEMENT LY DEFENDED THE FINDING OF ASSESSING OFFICER /DRP. 35. BOTH SIDES HEARD. IN SO FAR AS ASSESSEES PRAY ER FOR EXCLUSION OF APITCO, TSRDL, WAPCOS IS CONCERNED, WE HAVE HELD THAT TH E SAID COMPANIES SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES ON ACCOUNT OF FUNCTIONAL DISPARITY APART FROM THE FACT THAT APITCO AND WAPCOS BEING G OVERNMENT COMPANIES ARE NOT GOOD COMPARABLES. THE DETAILED FINDINGS GI VEN BY US IN THE PRECEDING 21 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 ASSESSMENT YEARS WOULD MUTATIS MUTANDIS APPLY TO THE ASSESSMENT YEAR UNDER APPEAL. 35. AS REGARDS HINDUSTAN HOUSING CO. LTD., THE ASS ESSEE IS SEEKING EXCLUSION OF THE SAME AS THE SAID COMPANY FAILS TO QUALIFY RP T FILTER. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE SAID COMPANY IS HAVING RELATED PARTY TRANSACTIONS OF 25.75% OF TOTAL REVEN UE. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN THE CASE OF DCIT VS. ARUBA NETWORKS INDIA PVT. LTD. IN IT(TP) A NO.5 71/BANG/2015 FOR ASSESSMENT YEAR 2010-11 DECIDED ON 30/09/2016 HAS EXCLUDED HINDUSTAN HOUSING LIMITED FOR THE REASONS THAT IT HAS RELATE D PARTY TRANSACTIONS EXCEEDING 25% OF TURNOVER. SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN THE CASE OF ITO VS. ALCON LABORATORIES PVT. LTD. IN IT( TP)A NO.391/BANG/2015 IN ASSESSMENT YEAR 2010-11 DECIDED ON 21/11/2017. TH E LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THER E ARE CATENA OF JUDGMENTS WHERE THE COMPANY HAVING RELATED PARTY TRANSACTIONS EXCEEDING 25% OF TURNOVER HAVE BEEN REJECTED AS COMPARABLE. 36. WE HAVE CONSIDERED THE CONTENTIONS OF THE LD. A UTHORIZED REPRESENTATIVE FOR THE ASSESSEE . IT IS NO DENYING FACT THAT WHERE AN ENTITY IS HAVING RELATED PARTY TRANSACTION IN EXCESS OF 25% O F THE TOTAL TURNOVER, THE SAME IS HELD TO BE BAD COMPARABLES. IN VARIOUS JUD ICIAL PRONOUNCEMENTS TOLERANCE OF RPT FILTER HAS BEEN ACCEPTED AS 25% OF THE TOTAL TURNOVER. WE FIND THAT IN THE CASE OF DCIT VS. ARUBA NETWORK PVT. LTD ., BANGALORE BENCH OF THE TRIBUNAL HAS EXCLUDED HINDUSTAN HOUSING CO. LTD. FR OM THE LIST OF COMPARABLES AS IT HAS FAILED TO QUALIFY RPT FILTER OF 25%. TAK ING INTO CONSIDERATION, WELL 22 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 SETTLED PRINCIPLE OF REJECTING COMPARABLE BY APPLYI NG RPT FILTER, WE DEEM IT APPROPRIATE TO REFER THIS COMPARABLES TO THE TPO F OR RE-EXAMINATION. IN CASE THE RELATED PARTY TRANSACTIONS OF THE SAID COMPANY EXCEEDS 25% OF THE TOTAL TURNOVER, THE TPO IS DIRECTED TO EXCLUDE SAID CO MPANY FROM THE LIST OF COMPARABLES. 37. IN VIEW OF ABOVE FINDINGS, GROUND NO.9 OF THE A PPEAL IS PARTLY ALLOWED AND THE GROUND NO.10 OF THE APPEAL IS ALLOWED FOR S TATISTICAL PURPOSE. 38. SINCE, WE HAVE ACCEPTED ASSESSEES CONTENTION ON EXCLUSION OF SOME OF THE COMPARABLES, THE PLI OF THE ASSESSEE FALLS WITH IN +/-5% RANGE. CONSEQUENTLY, GROUND NO.2 TO 8 AND 11 TO 13 RELATIN G TO TRANSFER PRICING ISSUE HAVE BECOME ACADEMIC AND HENCE, NOT DELIBERATED UP ON. 39. IN GROUND NO.14 TO 19 OF THE APPEAL, THE ASSES SEE HAS ASSAILED THE ACTION OF ASSESSING OFFICER IN TREATING TRADE DISCO UNT AS AGENCY COMMISSION. THIS ISSUE WE HAVE ADJUDICATED IN THE APPEAL BY AS SESSEE IN ASSESSMENT YEAR 2009-10. BOTH SIDES ARE UNANIMOUS IN STATING THA T THIS ISSUE IS IDENTICAL TO THE ONE RAISED IN APPEAL FOR ASSESSMENT YEAR 2009-10. THE FINDING GIVEN BY US WHILE ADJUDICATING THIS ISSUE IN ASSESSMENT YEAR 2 009-10 WOULD MUTATIS MUTANDIS APPLY TO GROUND NO.14 TO 19 OF THE PRESENT APPEAL. CONSEQUENTLY, THESE GROUNDS ARE ALLOWED. 40. IN GROUND NO.19 OF THE APPEAL, ASSESSEE HAS ASS AILED THE ACTION OF TPO IN GRANTING SHORT CREDIT OF TDS. THIS ISSUE IS RESTOR ED TO THE ASSESSING OFFICER FOR RE-VERIFICATION OF THE SUPPORTING DOCUMENTS FILED B Y THE ASSESSEE FOR CLAIMING TDS CREDIT. THE ASSESSING OFFICER IS DIRECTED TO E XAMINE THE DOCUMENTS FILED 23 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 BY THE ASSESSEE IN SUPPORT OF THE CLAIM AND ALLOW TDS CREDIT, IN ACCORDANCE WITH LAW. THUS, GROUND NO.19 OF THE APPEAL IS ALLOW ED FOR STATISTICAL PURPOSE. 41. IN GROUND NO.20 OF THE APPEAL, ASSESSEE HAS AS SAILED CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT. THE CHARGING OF INT EREST UNDER SECTION 234B IS MANDATORY AND CONSEQUENTIAL, HENCE, THE GROUND RAIS ED IS DISMISSED. 42. IN GROUND NO.21, ASSESSEE HAS ASSAILED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THIS GROUND IS PREMA TURE AT THIS STAGE. ACCORDINGLY, THE SAME IS DISMISSED. ITA NO.1245/MUM/2016,A.Y.2011-12DEPARTMENTAL APPEAL : 43. THE REVENUE IN APPEAL HAS ASSAILED THE FINDING S OF ASSESSING OFFICER /DRP IN DELETING DISALLOWANCE UNDER SECTION 40(A) (IA) R.W.S. 194J OF THE ACT IN RESPECT OF CHANNEL PLACEMENT FEE. 44. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE HAS SUBMITTED THAT HONBLE HIGH COURT IN THE CASE OF UTB ENTERTAINMENT TELEVISION LTD., TIMES GLOBAL BROADCASTING CO. LTD. AND IN ASSESSEES OWN CASE HAS DELETED THE DISALLOWANCE ON ACCOUNT OF CHANNEL PLACEMENT FEE. 45. WE FIND THAT DRP HAS GRANTED RELIEF TO THE ASS ESSEE BY PLACING RELIANCE ON THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR . SINCE THIS ISSUE HAS AL READY BEEN LAID TO REST BY THE DECISION OF THE HONBLE HIGH COURT IN VARIOUS CASES INCLUDING IN ASSESSEES OWN CASE , WE FIND NO INFIRMITY IN THE DIRECTIONS OF DRP IN DELETING THE DISALLOWANCE ON ACCOUNT OF CHANNEL PLACEMENT FEE. CONSEQUENTLY, GROUND 24 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 NO.1 TO 6 RAISED IN THE APPEAL BY THE REVENUE ON TH E SINGLE ISSUE IS DISMISSED. CONSEQUENTLY, APPEAL OF THE REVENUE ARE DISMISSED. C.O.NO.265/MUM/2017: 46. THE ASSESSEE FILED CROSS OBJECTIONS SUPPORTING THE FINDINGS OF ASSESSING OFFICER/DRP. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE, THE CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BECOME INFRU CTUOUS, AND THE SAME ARE DISMISSED AS SUCH. 47. TO SUM UP, ITA NO. 2103/MUM/2014 (A.Y.2009-10), ITA NO.1658/MUM/2015, (A.Y.2010-11) AND ITA NO.1527/MU M/2016 (A.Y.2011- 12) BY THE ASSESSEE ARE PARTLY ALLOWED. ITA NO.124 5/MUM/2017(A.Y.2011-12) BY THE REVENUE AND C.O. NO.265/MUM/2017 BY THE ASSE SSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER THE HEARI NG ON WEDNESDAY, THE 26TH DAY OF FEBRUARY, 2020. SD/ SD/- (R.C.SHARMA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 26/02/2020 VM , SR. PS(O/S) 25 ITA NO.2103/MUM/2014(A.Y.2009-10) ITA NO.1658/MUM/2015(A.Y.2010-11) ITA NO.1527/MUM/2016(A.Y.2011-12) ITA NO.1245/MUM/2016(A.Y.2011-12) C.O.NO.265/MUM/2017 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI