ABP NEWS NETWORK PVT. LTD., MUMBAI V. JT. CIT RANGE - 16(1), MUMBAI

ITA 5241/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6147 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 22-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE; ANADI VARMA DRS
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Transfer pricing; International transaction; Question of law; Difference of opinion
• Section: 40(a)(ia); 37(1); 201; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 5241/MUM/16 2012-13 M/S. ABP NEWS NETWORK PVT. LTD., 301, BOSTON HOUSE, SUREN ROAD, WESTERN EXPRESS HIGHWAY, ANDHERI (EAST), MUMBAI [PAN: AADCM 0507 A] THE JOINT COMMISSIONER OF INCOME TAX, RANGE-16(1), MUMBAI 5599/MUM/16 2012-13 ACIT-16(1), MUMBAI M/S. ABP NEWS NETWORK PVT. LTD., 301, BOSTON HOUSE, SUREN ROAD, WESTERN EXPRESS HIGHWAY, ANDHERI (EAST), MUMBAI [PAN: AADCM 0507 A] APPELLANT BY : SHRI S A NJAY R. PARIKH , AR RESPONDENT BY : SHRI SATISH CHANDRA RAJORE & SHRI ANADI VARMA, DRS DATE OF HEARING : 0 5 - 12 - 201 8 DATE OF PRONOUNCEMENT : - 15 - 0 1 - 201 9 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THESE ARE CROSS-APPEALS FILED BY BOTH ASSESSEE AND REVENUE AGAINST THE ORDERS OF THE COMMISSIONER OF I NCOME TAX(APPEALS)-4, MUMBAI, DATED 29-06-2016. SINCE TH ESE ARE ITA NOS. 5241 & 5599/MUM/16 : 2 : CROSS APPEALS , WE HAVE HEARD THEM TOGETHER AND DEC IDED BY THIS COMMON ORDER. ITA NO. 5241/MUM/2016 (ASSESSEES APPEAL) : 2. THE GROUNDS RAISED BY ASSESSEE ARE AS UNDER: A) DISALLOWANCE OUT OF ADVERTISEMENT AND PROMOTION EXPENSES RS. 2,92,48,874/- 1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-4, MUMBAI [CIT(A)] ERRED ON, FACTS AND IN LAW IN CONFIRMING T HE ORDER OF THE JT. COMMISSIONER OF INCOME-TAX, RANGE-16(1), MUMBAI (AO ) MAKING A DISALLOWANCE OF RS. 2,92,48,874/- OUT OF ADVERTISEM ENT AND PROMOTION EXPENSES BY HOLDING THAT THE APPELLANT BY INCURRING SUCH HUGE EXPENDITURE HAS DIRECTLY OR INDIRECTLY CA USED BENEFITS TO ITS ASSOCIATE ENTERPRISE. 2) THE APPELLANT PRAYS THAT THE DISALLOWANCE OF RS. 2, 92,48,874/- OUT OF ADVERTISEMENT AND PROMOTION EXPENSES AS MADE BY THE AO AND AS CONFIRMED BY THE CIT(A) MAY BE DELETED. 3. THE FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING VARIOUS SERVICES LIKE BROADCA STING , COLLECTING, GATHERING CURRENT AFFAIRS AND NEWS CON TENTS AND MARKETING THE SAME TO THE CUSTOMERS. DURING THE Y EAR UNDER CONSIDERATION, ASSESSEE INCURRED EXPENSES OF RS. 11 ,69,95,494/- ON MARKETING AND PROMOTING THE BRAND OF THE ASSESSE E, WHICH DOES NOT BELONG TO OR OWNED BY THE ASSESSEE. ASSESS EE PAID ADVERTISEMENT AND PROMOTIONAL CHARGES IN REGARD TO THE BRAND ITA NOS. 5241 & 5599/MUM/16 : 3 : THAT BELONGED TO THE ASSOCIATED ENTERPRISE (AE). T HE ASSESSEE ALSO PAID LICENSE FEE FOR THE SAID BRAND . ACCORDI NG TO THE ASSESSING OFFICER (AO), SINCE SUCH EXPENDITURE WAS INCURRED IN ORDER TO PROMOTE THE BRAND STAR WHICH BELONGED TO THE AE, THUS, THE SOME BENEFIT OF THE SAID EXPENSES WAS ALS O REALIZED BY THE AE AND THEREFORE THE EXPENSES INCURRED DID NOT PERTAIN TO THE BUSINESS OF THE ASSESSEE. ACCORDINGLY, SHOW CAUSE N OTICE WAS ISSUED BY THE AO , WHICH WAS REPLIED BY THE ASSESSE E BY SUBMITTING AS UNDER: .. IN THIS CONNECTION WE HAVE TO STATE THAT THE ADVERT ISING EXPENSES INCURRED BY THE ASSESSEE COMPANY UNDER THE VARIOUS HEADS AS STATED HEREUNDER AND THEN REPORTED UNDER THE HEAD SALES A ND DISTRIBUTION EXPENSES THE COMPANY HAS INCURRED ADVERTISING EXPENSES UNDER THE FOLLOWING HEADS: 1. MEDIA BUY OUTDOOR RS. 8,67,69,089 2. MERCHANDISE RS. 44,60,617 3. ON AIR PROMOTIONS & OTHERS RS. 94,91,106 4. TRADE MARKETING RS. 1,62,74,682 THE EXPENSES INCURRED UNDER THE HEAD MEDIA BUY OU TDOOR COMPRISES OF THE EXPENSES RELATING TO ADVERTISEMENT OF OUR PR OPERTIES (PROGRAMS) & EVENTS LIKE KAUN BANEGA PRADHAN MANTRY (KBPM), SANS ANI, 24 GHANTE, 24 REPORTERS, KAUN BANEGA MUKHYA MANTRY (KBMM), DEC IBEL EVENTS OF THE STATE ORGANIZED EXCLUSIVELY BY ABP ANANDA LIKE SERA BENGALI, SHARAD ANANDA, ANANDA ANCHOR HUNT, ANANDA 20-20, BI TARKE ANANDA, PANORAMA CONTEST, BALO THAKO SUCHITRA ETC., ITA NOS. 5241 & 5599/MUM/16 : 4 : IT IS EVIDENT FROM THE FACE OF THE ADVERTISEMENT TH AT SUCH ADVERTISEMENT WAS MADE FOR THE PROMOTION OF THE EVENTS AND PROGRA MME TO BE AIRD ON THE CHANNELS AND NO ELEMENT OF BRAND PROMOTION IS I NVOLVED. THE EXPENSES INCURRED UNDER THE HEAD ON AIR PROMOTI ONS & OTHERS COMPRISES OF THE EXPENSES RELATING TO GRAPHICS DESI GN, VOICE OVER CHARGES, DUBBING ETC., THE COPY OF SAMPLE BILL OF S UCH EXPENSES IS ATTACHED HEREWITH AS ANNEXURE-2. THE EXPENSES INCURRED UNDER THE HEAD TRADE MARKETIN G COMPRISES OF THE EXPENSES RELATING TO BRANDING OF REGIONAL NEWS CHANNELS OF HINDI, MARATHI, BENGOLI ETC., THE COPY OF SAMPLE BILL OF S UCH EXPENSES IS ATTACHED HEREWITH AS ANNEXURE-3. CONSIDERING THE ABOVE NATURE OF EXPENSES IT IS VERY MUCH CLEAR THAT THE EXPENSES HAVE BEEN INCURRED ARE FOR ASSESSEES REGU LAR BUSINESS TRANSACTIONS AND NOT FOR BRAND PROMOTION OF FOREIGN INVESTING COMPANY. . 4. ASSESSEE SUBMITTED THAT THESE EXPENSES WERE INCU RRED IN THE ORDINARY COURSE OF BUSINESS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND THEREFORE, IS ALLOWABLE EXPENDITUR E U/S. 37(1) OF THE INCOME TAX ACT (ACT) AS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AS THE ASS ESSEE PROMOTES ITS OWN PROGRAMMES THROUGH INCURRING SUCH EXPENSES . HOWEVER, THE AO CAME TO THE CONCLUSION THAT BY INCU RRING MARKETING AND ADVERTISING EXPENSES AND PROMOTING TH E BRAND STAR, THE ASSESSEE HAS PROVIDED SERVICES OR IMPROV ING THE MARKETING INTANGIBLES FOR AND ON BEHALF OF ITS AE A ND ACCORDINGLY, DISALLOWED A SUM OF RS. 2,92,48,874/- BEING 25% OF TOTAL EXPENDITURE OF RS. 11,69,95,494/- BY FRAMING ASSESSMENT. ITA NOS. 5241 & 5599/MUM/16 : 5 : 5. LD. AR AT THE OUTSET SUBMITTED THAT THE ISSUE IN VOLVED IN THE PRESENT CASE IS SQUARELY COVERED BY THE DECISIO N OF THE HON'BLE BOMBAY HIGH COURT UNDER SIMILAR FACTS IN TH E CASE OF CIT VS. NGC NETWORKS (INDIA) P. LTD., IN INCOME TAX APPEAL NO. 538 OF 2012, WHEREIN THE HON'BLE JURISDICTIONAL HIG H COURT HAS HELD THAT THE ADVERTISEMENT AND BUSINESS PROMOTIONA L EXPENSES INCURRED BY THE NGC IS FULLY ALLOWABLE. LD. AR PRAY ED THAT IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE JURISDIC TIONAL HIGH COURT IN THE SAID CASE, THE APPEAL OF ASSESSEE MAY BE ALLOWED. 6. LD. DR ON THE OTHER HAND RELIED ON THE ORDERS OF CIT(A) ON THIS ISSUE AND PRAYED FOR THE BENCH THAT THE EXPENS ES WHICH ARE INCURRED BY WAY OF ADVERTISING AND BUSINESS PROMOTI ON AND RESULTING ANY BENEFIT TO AE HAVE TO BE DISALLOWED A ND PRAYED FOR UPHOLDING THE ORDER OF CIT(A). 7. AFTER HEARING BOTH THE SIDES AND PERUSING THE MA TERIAL ON RECORD AND DECISION OF THE HON'BLE JURISDICTIONAL H IGH COURT CITED BY THE LD. AR IN THE CASE OF CIT VS. NGC NETW ORK (INDIA) P. LTD., ((SUPRA)), WE OBSERVE THAT THE ISSUE IS SQUAR ELY COVERED IN FAVOUR OF ASSESSEE. THE HON'BLE HIGH COURT IN THE SAID DECISION HAS MADE A DETAILED OBSERVATION AND GIVEN A CLEAR C UT FINDING IN ITA NOS. 5241 & 5599/MUM/16 : 6 : FAVOUR OF THE ASSESSEE. THE JUDGMENT EXTRACTED FROM THE SAID DECISION IS REPRODUCED HEREUNDER: 19. HAVING CONSIDERED RIVAL CONTENTIONS WE ARE IN AGREEMENT WITH MR.KAKA. THE MAIN GROUNDS ON WHICH THE REVENUE HAS QUESTIONED THE ORDER OF THE TRIBUNAL ARE (A) NON DISCLOSURE IN FOR M 3CEB OF THE FACT THAT THE PRINCIPAL IS ALSO A BENEFICIARY OF THE ADVERTIS ING EXPENSES; (B) THAT THE ADVERTISING AND PROMOTIONAL EXPENSES ARE NOT WH OLLY FOR THE BENEFIT OF THE ASSESSEE BUT IT ALSO BENEFITED THE PRINCIPAL WHO WAS AN ASSOCIATED ENTERPRISE; (C) THAT ADVERTISING AND PUB LICITY EXPENSES WERE FAR HIGHER THAN THE AMOUNT OF REVENUE EARNED AND LA STLY, THAT ALTHOUGH FOREIGN PRINCIPALS I.E. ASSOCIATED ENTERPRISE BENEF ITED FROM ADVERTISING AND PUBLICITY NO COMPENSATION WAS PAID BY THE FOREI GN PRINCIPALS TO THE ASSESSEE TO AVAIL OF SUCH BENEFITS. 20. IT IS NOT POSSIBLE TO ACCEPT THE REVENUE'S CONT ENTIONS FOR THE FOLLOWING REASONS : FIRSTLY, THE CONTENTION THAT TH ERE WAS NO PROPER DISCLOSURE OF THE BENEFIT BEFORE THE TRANSFER PRICI NG OFFICER CANNOT NOW BE A REASON TO ENTERTAIN THE QUESTIONS AND THE ORDE R OF TRANSFER PRICING OFFICER IS FINAL. IT WAS ADMITTED POSITION THAT THE ASSESSEE IS A AGENT OF FOREIGN PRINCIPAL AND WOULD NATURALLY BENEFIT FROM ADVERTISING CARRIED ON BY AGENT IN INDIA. HOWEVER, THESE BENEFITS WERE NOT ASCERTAINABLE. THE CONTENTION OF THE ASSESSEE THAT THE BENEFITS WERE N OT ASCERTAINABLE OR TAXABLE IN VIEW OF EXTRA TERRITORY APPEARS TO BE CO RRECT AND JUSTIFIED. IN THE INSTANT CASE WE FIND THAT THE ASSESSEE HAS NOT SUPPRESSED ANY INFORMATION. IT HAS OFFERED TO TAX ITS INCOME FROM BOTH BUSINESS, NAMELY, DISTRIBUTION BUSINESS AS WELL AS ADVERTISEMENT AND PROMOTION BUSINESS. IN THE ASSESSMENT YEAR IN QUESTION, THE ASSESSING O FFICER HAS PROCEEDED TO GRANT 33.33% OF THE TOTAL ADVERTISING EXPENSES AS ALLOWABLE DEDUCTION. WE DO NOT FIND ANY JUSTIFICATI ON FOR SUCH RESTRICTION OF THE SAME. FURTHERMORE, THE APPELLANT'S CASE DURI NG ARGUMENT THAT THE FACT OF THE FOREIGN PRINCIPAL BENEFITING HAD BEEN D ISCLOSED IN THE FORM 3CEB AND THE TRANSFER PRICING OFFICER COULD HAVE TAKEN A DIFFERENT VIEW. ADMITTEDLY THEREFORE THE TRANSFER PRICING OFF ICER HAD FOLLOWED A POSSIBLE VIEW WHICH CANNOT NOW BE FAULTED. 21. THE CONTENTION THAT THE EXPENDITURE SHOULD HAVE BEEN WHOLLY AND EXCLUSIVE FOR THE PURPOSE OF BUSINESS OF THE ASSESS EE UNDER SECTION 37(1) READ WITH PROVISIONS OF SECTION 40A(2) AS BEI NG EXCESSIVE AND UNREASONABLE DOES NOT APPEAL TO US. THERE CAN BE NO DOUBT IN THE INSTANT CASE, THAT IN VIEW OF DECISION OF THE SUPRE ME COURT IN SASSOON DAVID (SUPRA) IT CANNOT BE SAID THAT THE EXPENDITUR E WAS NOT WHOLLY OR EXCLUSIVELY FOR BENEFIT OF THE ASSESSEE. THE MERE F ACT THAT FOREIGN ITA NOS. 5241 & 5599/MUM/16 : 7 : PRINCIPALS ALSO BENEFITED DOES NOT ENTAIL RIGHT TO DENY DEDUCTION UNDER SECTION 37(1). FURTHERMORE, IT IS SEEN THAT ALL THE AMOUNTS EARNED BY THE ASSESSEE WERE BROUGHT TO TAX, ESPECIALLY IN VIEW OF THE FACT THAT THE PAYMENT OF EXPENSES WERE MADE TO INDIAN RESIDENTS A ND THERE PAYMENTS WERE NOT REQUIRED TO BE INCLUDED IN FORM 3 CEB SINCE SECTION 92 WHICH GOVERNS THE EFFECT OF FORM 3CEB COVERS ONL Y INTERNATIONAL TRANSACTIONS. FURTHERMORE, IT IS SEEN THAT THE RES PONDENTS INCOME FROM SUBSCRIPTION FEE IS VARIABLE AND THROUGH COMMISSION RECEIVED ON THE ADVERTISING SALES IS 15% OF THE VALUE OF AD-SALES. THE ASSESSING OFFICER'S CONTENTION THAT THE ASSESSEE RECEIVED FIX ED INCOME IS NOT JUSTIFIED AND THERE IS CERTAINLY, IN OUR VIEW, A DI RECT NEXUS BETWEEN THE AMOUNT SPENT ON ADVERTISING AND PUBLICITY, AND THE APPELLANT'S REVENUE. 22. ADVERTISERS WHO ADVERTISE ON THESE CH ANNELS ACT THROUGH MEDIA HOUSES AND ADVERTISING AGENCIES AND THEY WORK TO MEDIA PLANS DESIGNED IN THE MANNER SO AS TO MAXIMISE VALUE FOR THE ADVERTISER. THEY WILL EVALUATE EXPENDITURE PENETRATION IN THE M ARKET PLACE INASMUCH AS ONLY CHANNELS WITH HIGH VIEWERSHIP WOUL D JUSTIFY THE HIGHER ADVERTISING RATES WHICH IS NORMALLY SOLD IN SECONDS. MERELY HAVING HIGH QUALITY CONTENT WILL NOT ENSURE HIGH VI EWERSHIP. THIS CONTENT HAS TO BE PUBLICIZED. THE GREAT REACH OF THE PUB LICITY, THE HIGHER CHANCES OF LARGER VIEWERSHIP. THE LARGER THE VIEWE RSHIP, THE BETTER CHANCES OF OBTAINING HIGHER ADVERTISEMENT REVENUE. THE HIGHER ADVERTISEMENT REVENUE, THE HIGHER WILL BE COMMISSIO N EARNED BY THE RESPONDENT-ASSESSEE. ACCORDINGLY, WE HAVE NO DOUBT THAT THERE IS A DIRECT NEXUS BETWEEN ADVERTISING EXPENDITURE AND RE VENUE ALBIET THE FACT THAT THERE MAY BE A LEAN PERIOD BEFORE REVENUE PICKS UP NOTWITHSTANDING HIGH AMOUNT SPENT ON SUCH PUBLICITY . THIS JUSTIFIES THE HIGHER EXPENDITURE VIS-A-VIS REVENUE NOTICED BY THE DEPARTMENT. 23. IT IS ALSO NOT NECESSARY THAT THE FOREIGN ENTER PRISES MUST COMPENSATE THE INDIAN AGENT FOR THE BENEFIT IT RECE IVES OR IT MAY RECEIVE FROM THE ADVERTISEMENT AND PROMOTION OF ITS CHANNEL S BY AGENT IN INDIA. THE AGENT IN INDIA EARNS COMMISSION FROM AD-SALES A ND DISTRIBUTION REVENUE, BOTH OF WHICH HAVE SUFFICIENTLY COMPENSATE D THE ASSESSEE. WE WOULD NOT EXPECT THE REVENUE TO DETERMINE THE SUFFI CIENCY OF THE COMPENSATION RECEIVED BY THE AGENT AND AS SUCH WE D O NOT FIND ANY JUSTIFICATION IN THIS GROUND EITHER. IN THE CIRCUMS TANCES WE ANSWER QUESTIONS OF LAW (A), (B) AND (C) IN THE AFFIRMATIV E IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THE RESULT THE APPEAL IS DISMISSED. NO ORDER AS TO COSTS. ITA NOS. 5241 & 5599/MUM/16 : 8 : 7.1. SINCE THE FACTS OF THE ASSESSEES CASE ARE MAT ERIALLY SAME AS INVOLVED IN THE CASE OF CIT VS. NGC NETWORK (IND IA) P. LTD., ((SUPRA)), WE,THEREFORE, RESPECTFULLY FOLLOWING TH E RATIO LAID DOWN BY THE HONBLE HIGH COURT DIRECT THE AO TO ALLOW T HE DEDUCTION OF RS. 2,92,48,874/-. GROUND RAISED BY THE ASSESSE E IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ITA NO. 5599/MUM/2016 (REVENUES APPEAL) : 9. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS: 1. WHETHER ON THE FACTS, IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELET E THE DISALLOWANCE U/S. 40(A)(IA) RWS 194J OF CARRIAGE FEES/CHANNEL PLACEM ENT FEES AND FAILING TO APPRECIATE THAT THE PAYMENTS MADE FOR US E/RIGHT TO USE OF PROCESS ARE ROYALTY AS PER EXPLANATION 6 TO SEC TION 9(1)(VI) HENCE SUCH PAYMENTS ARE COVERED U/S. 194J OF THE INCOME-TAX AC T, 1961. 2. WHETHER ON THE FACTS, IN THE CIRCUMSTANCES OF TH E CASE AND AS PER LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELET E THE DISALLOWANCE U/S. 40(A)(IA) RWS 194J OF CARRIAGE FEES/CHANNEL PLACEM ENT FEES, WHEREAS THE JURISDICTIONAL ITAT, MUMBAI L BENCH, IN ITS O RDER DATED 28.03.2014 IN THE CASE OF ADIT-(IT)-2(2), MUMBAI VS VIACOM 18 MEDIA PVT. LTD HAS CONFIRMED THAT THE PAYMENTS MADE FOR USE/RIGHT TO U SE OF PROCESS ARE ROYALTY IN TERMS OF THE INCOME-TAX ACT, 1961. GROUND NOS. 3 & 4 ARE GENERAL IN NATURE. 10. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A), DIRECTING THE AO TO DELETE THE DISALLOWANCE U/S. 40(A)(IA) ITA NOS. 5241 & 5599/MUM/16 : 9 : OF THE ACT, R.W.S. 194J, IN RESPECT OF CARRIAGE FEE S/CHANNEL PLACEMENT FEES WITHOUT APPRECIATING THE FACT THAT T HE SAID PAYMENT WAS MADE FOR USE/RIGHT TO USE OF POSSESS AN D IN THE NATURE OF ROYALTY AS PER THE EXPLANATION-6 TO SECTI ON 9(1)(VI) AND HENCE, THE PAYMENTS ARE COVERED BY THE PROVISIONS O F SECTION 194J OF THE ACT AND WERE RIGHTLY DISALLOWED BY THE AO. 11. LD. AR AT THE OUTSET SUBMITTED THAT THE ISSUE I S SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DI SH TV INDIA LTD., VS. ACIT [169 DTR 253] (MUMBAI) (TRIB) AND TH E HON'BLE BOMBAY HIGH COURT IN THE CASE CIT VS. NGC NETWORK ( INDIA) P. LTD., ((SUPRA)). LD. AR THEREFORE PRAYED THAT IN V IEW OF THE RATIO LAID DOWN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL AND THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT, THE APPEAL OF THE REVENUE MAY BE DISMISSED. 12. LD. DR ON THE OTHER HAND, RELIED ON THE GROUNDS OF APPEAL. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IMPUGNED DECISIONS CITED BY THE LD. AR. WE FIND THAT THE ISSUE OF THIS APPEAL IS S QUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRI BUNAL IN THE ITA NOS. 5241 & 5599/MUM/16 : 10 : CASE OF DISH TV INDIA LTD., VS. ACIT [169 DTR 253] (MUMBAI) (TRIB), WHEREIN THE CO-ORDINATE BENCH HAS HELD AS U NDER: HELD : THE DISPUTE BETWEEN THE ASSESSEE AND THE DEPARTME NT IS CONFINED TO THE APPROPRIATE RATE AT WHICH TAX SHOUL D HAVE BEEN DEDUCTED AT SOURCE WHILE MAKING THE PAYMENT OF CHAN NEL SUBSCRIPTION CHARGES. THUS, IT IS NOT A CASE OF FAILURE TO DEDUC T TAX AT SOURCE BUT, IF AT ALL, IT IS A CASE OF DEDUCTION OF TAX AT SOURCE AT A LOWER RATE. ON A READING OF THE PROVISIONS CONTAINED UNDER S. 40(A)( IA) IT APPEARS THAT ANY PAYMENT TO A RESIDENT WHICH IS SUBJECT TO DEDUC TION OF TAX AT SOURCE, IF PAID, WITHOUT DEDUCTING TAX OR AFTER DED UCTION IT WAS NOT PAID TO THE GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF RE TURN OF INCOME UNDER S. 139(1), IT HAS TO BE DISALLOWED UNDER S. 40(A)(I A). THUS, THE AFORESAID PROVISION OPERATES UNDER TWO CONDITIONS; FIRSTLY, I F TAX IS NOT DEDUCTED AT SOURCE; AND SECONDLY, IF AFTER DEDUCTION IT IS NOT PAID TO THE GOVERNMENT ACCOUNT BEFORE THE PRESCRIBED DATE. IN THE PRESENT CASE, ADMITTEDLY, THE ASSESSES HAS DEDUCTED TAX AT SOURCE ON THE PAYMENT MADE, THO UGH, AT A LOWER RATE. THEREFORE, THE FIRST CONDITION OF S. 40 (A)(IA) DOES NOT APPLY. ALSO, THERE IS NO ALLEGATION THAT AFTER DEDUCTION O F TAX THE ASSESSEE HAS NOT REMITTED IT TO THE GOVERNMENT ACCOUNT BEFORE TH E PRESCRIBED DATE. THEREFORE, THE SECOND CONDITION OF S. 40(A)(IA) ALS O DOES NOT APPLY. ACCORDINGLY, THE DELETION OF DISALLOWANCE MADE BY T HE AO IS UPHELD. 13.1. IN THE CASE OF ASSESSEE, LD CIT(A) HAS GIVEN THE FINDINGS AND CONCLUDED THAT THERE IS NO DEFAULT ON ACCOUNT O F NON- DEDUCTION OF TAX IN THE CASE OF ASSESSEE AND THERE IS DIFFERENCE OF OPINION REGARDING THE RATE OF WITHHOLDING TAX, WHIC H HAS BEEN DEDUCTED UNDER THE PROVISIONS OF SECTION 194C, WHER EAS AS PER THE AO, THE CARRIAGE FEES/CHANNEL PLACEMENT FEES AR E IN THE NATURE OF ROYALTY AND THE DEDUCTION OF TAX HAS TO B E MADE U/S. 194J OF THE ACT. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ITA NOS. 5241 & 5599/MUM/16 : 11 : CIT VS. NGC NETWORKS (INDIA) (P) LTD., IN IT APPEAL NO. 397 OF 2015 [167 DTR (BOM) 245] HAS HELD AS UNDER: FURTHER, UNDER S. 40(A)(IA) UNDER WHICH THE EXPEND ITURE HAS BEEN DISALLOWED BY THE REVENUE, MEANING OF ROYALTY AS DE FINED THEREIN IS THAT AS PROVIDED IN EXPLN. 2 TO S. 9(1)(VI) AND NOT EXPLN. 6 TO S. 9(1)(VI). THUS, DISALLOWANCE OF EXPENDITURE UNDER S. 40(A)(IA ) CAN ONLY BE MADE IF THE PAYMENT IS 'ROYALTY' IN TERMS OF EXPLN. 2 TO S. 9(1)(VI). UNDISPUTEDLY, THE PAYMENT OF CHANNEL PLACEMENT FEE, IS NOT ROYALT Y IN TERMS OF EXPLN. 2 TO S. 9(1)(VI). THEREFORE, NO DISALLOWANCE OF EXPEN DITURE UNDER S. 40(A)(IA) CAN BE MADE IN THE PRESENT FACTS. IN THE ABOVE VIEW , THIS BEING A SELF- EVIDENT POSITION FROM THE READING S. 40(A)(IA), NO SUBSTANTIAL QUESTION OF LAW ARISES. 13.2. THE FACTS OF THE CASE BEFORE US ARE MATERIALL Y SAME AS HAS BEEN DECIDED HEREIN ABOVE BY THE CO-ORDINATE BENCH OF THE TRIBUNAL AND THE HONBLE HIGH COURT. WE,THEREFORE, RESPECTFULLY FOLLOWING THE SAME DISMISS THE GROUNDS RAISED BY R EVENUE. 14. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. 15. TO SUM-UP, THE APPEAL OF ASSESSEE IS ALLOWED AN D THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH DAY OF JANUARY, 2019 SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /MUMBAI; /DATED : 15 TH JANUARY, 2019 TNMM ITA NOS. 5241 & 5599/MUM/16 : 12 : / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT, MUMBAI 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI