HATHWAY CABLE AND DATACOM LIMITED, MUMBAI V. ACIT - CIRCLE -12(2)(2), MUMBAI

ITA 6201/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9338 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2014-2015
• Appeal Filed On: 31-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NILLU JAGGI JT
• Keywords: Transfer pricing
• Section: 92C; 201; 144C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI VIKAS AWASTHY, JM ITA NO. 6201/MUM/2018 ( ASSESSMENT YEAR: 2014-15) HATHWAY CABLE AND DATACOM LTD., RAHEJAS, 4 TH FLOOR, CORNER OF MAIN AVENUE & V.P. ROAD, SANTACRUZ (WEST), MUMBAI. VS. DCIT-12(2)(2), 1 ST FLOOR, AAYAKAR BHAVAN, MUMBAI. PAN/GIR NO.AAACC 6814 B (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI VIJAY MEHTA (AR) REVENUE BY SHRI ANAND MOHAN (CIT-DR) & MS. NILLU JAGGI (JT.CIT) DATE OF HEARING 10/12/2019 DATE OF PRONOUNCEMENT 10/01/2020 / O R D E R PER: R.C. SHARMA, A.M. THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST T HE DIRECTION OF THE DISPUTE RESOLUTION PANEL-1(WZ) (DRP), MUMBAI DATED 27/08/2018 U/S 144C (5) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) FOR THE A.Y. 2014-15, WHICH WAS GIVEN EFFECT BY THE A.O. PASSING ORDER U/S 144C(13) OF THE ACT DATED 22/09/2018. IN THIS APPEAL, THE AS SESSEE HAS RAISED FOLLOWING GROUNDS: 1. PAYMENT OF PLACEMENT CHARGES: 1.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, HON'BLE DISPUTE RESOLUTION PANEL / TRANSFER PRICING OFFICER/ ASSESSING OFFICER ERRED IN RETAINING THE ADJUSTMENT TO THE EXTENT OF RS. 6,96,01,120; ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 2 1.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, HON'BLE DISPUTE RESOLUTION PANEL ERRED IN REJECTING THE SUPPLEMENTAL BENCHMARKING WITHOUT PROVIDING ANY COG ENT REASONS; 1.3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, HON'BLE DISPUTE RESOLUTION PANEL ERRED IN HOLDING T HAT THE ASSESSEE HAS RENDERED MARKETING SERVICES, INCURRED ADDITIONAL COST, AND PERFORMED ADDITIONAL FUNCTIONS IN NEGOTIA TING PLACEMENT CHARGES ON BEHALF OF ITS RELATED PARTIES; 1.4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, HON'BLE DISPUTE RESOLUTION PANEL ERRED IN DETERMINI NG THE ARM'S LENGTH PRICE AT 10% OF THE GROSS AMOUNT DISTR IBUTED TO ASSOCIATED ENTERPRISE WITHOUT FOLLOWING ANY OF THE PRESCRIBED METHODS/PROCESS; 1.5. WITHOUT PREJUDICE TO THE ABOVE GROUND, THE HO N'BLE DISPUTE RESOLUTION PANEL FAILED TO NOTE THAT THE APPELLANT HAS RETAINED ARM'S LENGTH CONSIDERATION AS DETERMINED IN GROUND NO. 1.4 AND NO FURTHER ADJUSTMENT IS WARRANTED; 1.6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, HAVING HELD THAT THE ALLOCATION OF CHANNEL PLACEMEN T IS FAIR AND PROPER, THE HON'BLE DISPUTE RESOLUTION PANEL ER RED IN HOLDING THAT THE APPELLANT HAS RENDERED SERVICES OF MARKETING OF THE CHANNEL PLACEMENT RIGHTS AND SHOULD HAVE CHA RGED 10% OF THE AMOUNT DISTRIBUTED AS ARM'S LENGTH CONSIDERATIO N AND THEREBY TRAVELLING BEYOND THE SCOPE OF SECTION 92BA (I) R.W.S. 40A(2)(B). 2. APPLICABILITY OF PROVISIONS OF SPECIFIED DOMESTI C TRANSACTION: 2.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DISPUTE RESOLUTION PANEL-I, MUMBAI ERRED IN NOT APPRECIATING THE FACT THAT THE PROVISIONS OF SE CTION 92BA(I) ARE OMITTED AND NOT REPEALED BY THE FINANCE ACT 201 7. 3. REFERENCE TO THE TRANSFER PRICING OFFICER (`TPO' ) UNDER SECTION 92CA OF THE ACT. 3.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. AO ERRED IN MAKING A REFERENCE TO THE ID. T RANSFER 2 ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 3 PRICING OFFICER BY MECHANICALLY FOLLOWING THE DIREC TIONS OF THE ID. PRINCIPLE COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT, WHICH IS NOT MANDATE OF SECTION 92CA OF THE ACT, TH EREBY MAKING THE REFERENCE AND THE TRANSFER PRICING ORDER BAD IN LAW. 3.2. WITHOUT PREJUDICE TO THE ABOVE GROUNDS AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE HON'BLE DISPUTE RESOLUTION PANEL ERRED IN CONFIRMIN G THE ACTION OF THE LEARNED AO IN NOT STATING REASONS TO SHOW TH AT ANY OF THE CONDITIONS MENTIONED IN CLAUSES (A) TO (D) OF SECTI ON 92C(3) OF THE ACT WERE SATISFIED BEFORE MAKING AN ADJUSTMENT TO THE TOTAL INCOME OF THE APPELLANT; 3.3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE HON'BLE DISPUTE RESOLUTION PANEL ERRED IN CONFIRMIN G THE ACTION OF THE LEARNED AO IN NOT DEMONSTRATING THE MOTIVE O F THE APPELLANT, TO CARRY OUT TRANSACTIONS TO REDUCE THE TAXABLE PROFITS BY MANIPULATING THE PRICES OF ITS SPECIFIED DOMESTI C TRANSACTIONS, EITHER AT THE STAGE OF INVOKING OR IN ITIATING THE ASSESSMENT OR AT THE STAGE OF FRAMING THE ASSESSMEN T. EACH OF THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PRE JUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, DELETE, R ECTIFY, SUBSTITUTE, MODIFY, OR OTHERWISE, ALL OR ANY OF THE AFORESAID GROUNDS OR ADD A NEW GROUND(S) AT ANY TIME BEFORE OR DURING THE HEARING OF THE ABOVE APPEAL. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. EVEN THOUGH, 11 GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE BUT THE CRUX OF THE ISSUE REVOLVES AROUND THE DECISION OF DRP FOR UPHOL DING 10% OF THE AD HOC ADDITION MADE ON ACCOUNT OF INCOME DISTRIBUTED FOR THE SERVICES RENDERED FOR MARKETING OF CHANNEL PLACEMENT RIGHTS. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY OPERATES AS MULTI SYSTEM OPERATOR (MSO) IN DISTRIBUTION OF TELEVISION CHANNELS THROUGH ANALOG AND DIGITAL CABLE ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 4 DISTRIBUTION NETWORK AND INTERNET SERVICES THROUGH CABLE. THE ASSESSEE COMPANY OPERATES AS LAST MILE CABLE OPERATOR FOR CE RTAIN TERRITORIES OF THE COUNTRY. OVER THE YEARS, IT ALSO ACQUIRED STAKE IN OTHER ENTITIES BY SUBSCRIBING TO MAJORITY SHARES THEREIN. THESE ENTIT IES FALL WITHIN THE MEANING OF RELATED PARTIES AS DEFINED IN SECTION 40 A(2)(B) OF THE ACT. THESE ENTITIES ARE HEREINAFTER REFERRED TO AS RELA TED PARTIES (RPS). THESE RPS OF THE COMPANY OPERATE AS LAST MILE CABLE OPERATOR IN THEIR RESPECTIVE TERRITORIES WHICH ARE NOT WITHIN THE OPE RATING AREA OF THE ASSESSEE COMPANY. AS SUCH THE ASSESSEE COMPANY AND RPS TOGETHER, AS A GROUP, OPERATE OVER A LARGE PART OF THE COUNTRY. THE ASSESSEE COMPANY HAS ADOPTED A POOLED MODEL UNDER WHICH IT NEGOTIA TES AND SETTLES WITH THE BROADCASTERS FOR THEIR CHANNELS OR BOUQUETS OF CHANNELS. IT ACTS AS A PRINCIPAL NEGOTIATOR (POOLING ENTITY) IN THE DISCUS SIONS AND NEGOTIATIONS WITH THE BROADCASTER/DISTRIBUTOR AND IN SETTLEMENT OF THE TERMS FOR THE GROUP AS A WHOLE. ONE OF THE REVENUE STREAMS EARNED BY THE ASSESSEE IS PLACEMENT CHARGES WHICH ARE THE AMOUNT PAID BY THE BROADCASTERS FOR PLACING THEIR CHANNELS AT PREFERRED POSITIONS. SUC H REVENUE IS SHARED BY THE ASSESSEE WITH THE RPS ON THE BASIS OF THEIR SUB SCRIBER BASE. IN NEGOTIATING SUCH PLACEMENT CHARGES ALSO, THE ASSESS EE COMPANY ACTS ON THE POOLED MODEL AND NEGOTIATES THE TERMS BASED ON THE TOTAL NUMBER OF SUBSCRIBERS OF THE ASSESSEE COMPANY AS WELL AS THE RPS. BY PROJECTING HIGHER NUMBER OF SUBSCRIBING HOUSEHOLDS OF THE GROU P AS A WHOLE, THE ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 5 ASSESSEE COMPANY IS IN A POSITION TO BARGAIN FOR A SIGNIFICANTLY HIGHER AMOUNT OF PLACEMENT CHARGES IN COMPARISON TO WHAT T HE COMPANY AND EACH RELATED PARTY WOULD HAVE GOT, HAD THEY NEGOTIA TED SEPARATELY ON THE BASIS OF THEIR OWN SUBSCRIBER BASE. THE PLACEME NT FEES AS DETERMINED BETWEEN THE COMPANY AND THE BROADCASTER ON THE BASIS OF THE TOTAL NUMBER OF SUBSCRIBERS IS RECEIVED BY THE ASSESSEE COMPANY AND THE AMOUNT RELATABLE TO RPS IS THEN PAID BY THE COM PANY TO THE RESPECTIVE RPS. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE GOT AGGREGATE PLACEMENT CHARGES FROM ALL THE BROADCASTE RS AMOUNTING TO RS. 314 CRORES AND AFTER RETAINING THE AMOUNT ATTRIBUTA BLE TO THE DIRECT SUBSCRIBER BASE OF THE COMPANY, DISTRIBUTED THE BAL ANCE AMOUNT OF RS. 69.60 CRORES AMONG THE RPS ACCORDING TO THEIR RESPE CTIVE ENTITLEMENTS AS WORKED OUT ON THE BASIS OF THEIR SUBSCRIBERS. DURIN G THE COURSE OF ASSESSMENT, THE TPO DID NOT ACCEPT THE SYSTEM OF PR OPORTIONAL ALLOCATION OF THE TOTAL PLACEMENT REVENUE FOR THE REASON THAT THE BENCHMARKING IS AD HOC IN NATURE AND DOES NOT JUSTIFY THE ALLOCATIO N OF TOTAL REVENUE PROPORTIONATELY. AS PER THE TPO WHEN 78% OF THE CUS TOMERS BASE WAS OF THE COMPANY ITSELF WHEREAS CUSTOMER BASE OF INDIVIDUAL RPS IS ONLY 5% TO 7% OF THE TOTAL BASE, THEN THE RPS CANNO T BE TREATED AT PAR WITH THE ASSESSEE COMPANY IN THE MATTER OF S HARING THE PLACEMENT REVENUE. AS PER THE TPO, THE ASSESSEE WHO CAN NEGOTIATE EFFECTIVELY ON ITS LARGE SUBSCRIBER BASE, THE RISK ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 6 INVOLVED IS ALSO THAT OF ASSESSEE AND THE CONTRACT WITH THE BROADCASTER IS EXECUTED WITH THE ASSESSEE ONLY. ON THESE OBSERVATIONS, HE HELD THAT THE ENTIRE REVENUE SHARE D WITH RPS ON BASIS OF THE SUBSCRIBER BASE AND THE BENCHMARKING D OES NOT RESULT IN ARMS LENGTH PRICING. THE TPO, THEREFORE, DETERMINED THE ALP OF PLACEMENT CHARGES AT 50% OF THE AMOUNT AND HELD THA T THE BALANCE 50% HAS TO BE RETAINED BY THE ASSESSEE FOR ITS OWN SERVICES RENDERED, RISKS UNDERTAKEN AND CAPITAL DEP LOYMENT. ACCORDINGLY, HE DIRECTED AN ADJUSTMENT OF RS. 34,80 ,05,601/- TO BE MADE IN RESPECT THEREOF IN DETERMINING THE TO TAL INCOME. 3. BY THE IMPUGNED ORDER, THE DRP HAS RESTRICTED AD HOC ADDITION TO THE EXTENT OF 10% AFTER OBSERVING AS UNDER: 4.7 HOWEVER, THE PANEL NOTES THAT THE ASSESSEE HAS INDEED PERFORMED MORE , FUNCTIONS WITH RESPECT TO THE TRANSACTION OF PLACEM ENT CHARGES. THIS INCLUDES MAKING EFFORTS TO CONSOLIDAT E THE RPS, PRESENTING THEIR POSITION AND NEGOTIATING FOR RPS F ROM BROADCASTERS. THE PANEL IS ALSO OF THE VIEW THAT EACH RP IS ALSO TAKING ITS OWN RISKS AND DEPLOYING ITS OWN CAPITAL AND IS ENTITLED TO IT S SHARE. THE PANEL IS NOT IN AGREEMENT WITH THE TPO THAT JUST BECAUSE EACH RP INDIVIDUALLY REPRESENTS MERE 5% TO 7%, OF THE SUBSC RIBER BASE AND HENCE IS NOT IN A POSITION TO NEGOTIATE WITH THE BROADCASTER INDIVIDUALLY , IT SHOULD BE ALLOWED JUST 50% OF THE AMOUNT ATTRIBUTABLE TO ITS SUBSCRIBER BASE. 4.8 IN OUR VIEW, THE TRANSACTION CAN BE VIEWED AS A TRANSACTION OF MARKETING OF PLACEMENT POSITION AVAILABLE WITH THE GROUP BY THE ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 7 ASSESSEE. THE ASSESSEE WAS GIVEN AN AUTHORITY BY IT S AES TO NEGOTIATE SUCH CHANNEL PLACEMENT. CLUBBING SUCH RIG HTS WITH ONE PERSON ENSURED BETTER CHARGES FOR THE ENTIRE GROUP. HENCE, THE ASSESSEE ITSELF BENEFITED FROM SUCH POOLING OF BROA DCAST AREA. OTHER THAN GIVING A RIGHT TO SUCH NEGOTIATIONS, THE RE WAS NO OTHER RISK TRANSFERRED TO THE ASSESSEE NOR THE ASSESSEE C ONTRIBUTED TO THE DEPLOYING OF CAPITAL ON BEHALF OF THE RPS. HENCE, T HE PANEL IS OF THE VIEW THAT THERE WAS NO SIGNIFICANT ASSUMPTION OF RI SK BY THE ASSESSEE ON BEHALF OF THE RPS. IF THE ASSESSEE WAS ENTITLED TO ANY COMPENSATION, IT WAS TOWARDS RENDERING THE SERVICES OF MARKETING OF THE CHANNEL PLACEMENT RIGHTS WITH THE BROADCASTE RS. IN THE PANELS VIEW, IT WOULD BE SUFFICIENT IF THE ASSESSE E IS COMPENSATED AT 10% OR THE GROSS AMOUNT OF RS. 69,60,11,202/- WI TH RESPECT TO ITS FUNCTIONS PERFORMED IN THE COURSE OR NEGOTIATIO N AND SUBSEQUENT ALLOCATION OR PLACEMENT CHARGES TO THE R PS. IN THE LIGHT OF THE ABOVE DISCUSSION, THE TPO IS DI RECTED TO RETAIN THE ADJUSTMENT TO THE EXTENT OR 10% OR THE ALLOCATE D AMOUNT. THE GROUND IS DECIDED ACCORDINGLY. 4. AGAINST THE DIRECTION OF THE DRP WHICH HAS BEEN GIVEN EFFECT BY THE TPO, THE ASSESSEE IS IN FURTHER APPEAL BEFORE T HE ITAT. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LOWER A UTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LD AR AND THE LD DR DURING THE COURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTU AL MATRIX OF THE CASE. FROM THE RECORD WE FOUND THAT THE ADDITION HAS BEEN MADE BY THE TPO ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 8 NOT IN RESPECT OF ANY EXPENDITURE HAVING BEEN INCUR RED BUT WITH RESPECT TO INCOME DERIVED BY THE ASSESSEE, PART OF WHICH WA S DISTRIBUTED AMONG THE RPS ACCORDING TO THEIR RESPECTIVE ENTITLEMENTS AS WORKED OUT ON THE BASIS OF THEIR SUBSCRIBERS. THE TPO HAS NOT ACCEPTE D THE DISTRIBUTION OF REVENUE ON THE BASIS OF ACTUAL ENTITLEMENT OF SUBSC RIBERS. THE TPO WAS OF THE VIEW THAT THE ASSESSEE CAN NEGOTIATE EFFECTI VELY ON ITS LARGE SUBSCRIBER BASE, THEREFORE, THE ASSESSEE IS ENTITLE D FOR MORE PART OF THE REVENUE. THUS, ON AD HOC BASIS, THE TPO ADDED 50% O F PLACEMENT CHARGES DISTRIBUTED TO ITS RPS AS ASSESSEES INCOME . BY THE IMPUGNED ORDER, THE DRP UPHELD AD HOC ADDITION TO THE EXTENT OF 10%. WE FOUND THAT WHILE UPHOLDING 10% OF ADDITION IN RESPECT OF THE AMOUNT DISTRIBUTED, THE DRP AT PARA 4.6 HAVE CLEARLY OBSER ED THAT THE TPO WAS NOT JUSTIFIED IN MAKING ADDITION TO THE EXTENT OF 5 0%. THE DRP HELD THAT CONSUMER NUMBERS REPRESENT A KEY PARAMETER FOR DECI DING THE AMOUNT OR PLACEMENT CHARGES AND IN THE FACTS AND CIRCUMSTA NCES OF THE CASE HELD THAT ALLOCATION MADE BY THE ASSESSEE WITH RESP ECT TO THE TOTAL PLACEMENT CHARGES RECEIVED IS FAIR AND PROPER. IN O UR CONSIDERED VIEW, AFTER THIS FINDING BEING RECORDED BY THE DRP, THERE IS NO JUSTIFICATION EVEN FOR UPHOLDING 10% OF THE ADDITION, IN SO FAR A S THE ASSESSEE HAS DISTRIBUTED INCOME ON THE BASIS OF ACTUAL SUBSCRIBE RS BEING COMMANDED BY THE RPS. ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 9 6. WE FURTHER OBSERVE THAT AT PARA 4.7 OF THE DIREC TION, THAT DRP HAS CATEGORICALLY OBSERVED THAT THE ASSESSEE HAS PERFOR MED MORE FUNCTIONS THAT INCLUDE MAKING EFFORTS TO CONSOLIDATE THE RPS PRESENTING THEIR POSITION AND NEGOTIATING WITH THE BROADCASTERS FOR RPS. THE DRP HAS FURTHER CATEGORICALLY REJECTED THE FINDINGS OF THE TPO THAT JUST BECAUSE EACH RP INDIVIDUALLY REPRESENTS MERE 5% TO 7% OF TH E SUBSCRIBER BASE WHICH IS NOT IN A POSITION TO NEGOTIATE INDIVIDUALL Y WITH THE BROADCASTERS. CONSEQUENTLY, THE FINDING OF THE TPO FOR THE RPS SH OULD BE ALLOWED JUST 50% OF THE AMOUNT ATTRIBUTABLE TO ITS SUBSCRIBER BA SE HAS BEEN REJECTED BY THE DRP. 7. WE FURTHER OBSERVE THAT THE DRP AT PARA 4.8 HAS HELD THAT BY WAY OF THIS TRANSACTION, THE ASSESSEE WAS GIVEN AN AUTH ORITY BY THE RPS TO NEGOTIATE WITH THE BROADCASTERS FOR THE PLACEMENT C HARGES FOR THE ENTIRE GROUP. THE DRP ACKNOWLEDGES THE FACT THAT CLUBBING OF SUCH RIGHTS WITH ONE PERSON ENSURED BETTER CHARGES FOR THE ENTIRE GR OUP. AND THAT THE ASSESSEE ITSELF HAS BEEN BENEFITTED FROM SUCH POOLI NG. FURTHERMORE, THE DRP HAS NOT CATEGORICALLY HELD THAT OTHER THAN GIVI NG SUCH RIGHTS OF NEGOTIATION TO THE ASSESSEE, NO OTHER RISKS ARE TRA NSFERRED TO THE ASSESSEE NOR THERE IS ANY DEPLOYMENT OF CAPITAL ON BEHALF OF THE RPS. MOREOVER, THE DRP AT PARA 4.8 HAS HELD THAT IT IS A TRANSACTION OF RENDERING OF SERVICES OF MARKETING OF THE CHANNEL P LACEMENT RIGHTS WITH THE BROADCASTERS AND ARMS LENGTH CONSIDERATION IS T O BE RECEIVED BY THE ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 10 ASSESSEE WITH RESPECT OF FUNCTIONS PERFORMED IN REN DERING THESE SERVICES,. AFTER GIVING ALL THESE FINDINGS BY THE D RP, THERE IS NO JUSTIFICATION FOR UPHOLDING ANY AD HOC ADDITION OF 10%. FROM THE RECORD WE FURTHER FOUND THAT THE ADJUSTMENT OF 10% SO UPHE LD BY THE DRP WAS WITHOUT FOLLOWING ANY OF THE PRESCRIBED METHODS U/S 92C(1) OF THE ACT NOR HAS ANY BENCHMARKING BEEN ADOPTED IN DETERMINAT ION OF THE ALP. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS LEVER INDIA EXPORTS LIMITED IN ITA NO. 1306/1307/1349 OF 2014 H AVE HELD THAT THE AD HOC DETERMINATION OF ALP DE-HORS SECTION 92C OF THE ACT CANNOT BE SUSTAINED, RENDERING THE ENTIRE TRANSFER PRICING AD JUSTMENT UNSUSTAINABLE IN LAW. 8. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE DRP FOR UPHOLDING AD HOC ADDITION OF 10% UNDER TRANSFER PRICING ADJUSTMENT. 9. OTHER GROUNDS RAISED BY THE ASSESSEE WERE NOT PR ESSED BY THE LD AR, SO THE SAME ARE DISMISSED AS NOT PRESSED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED, IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY, 2020. SD/- (VIKAS AWASTHY) SD/- (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 10/01/2020 *RANJAN ITA NO. 6201/MUM/2018 HATHWAY CABLE & DATACOM LTD. VS DCIT 11 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//