ACIT CIRCLE-16 (1), MUMBAI V. M/S ZEE ENTERTAINMENT ENTERPRISES LTD., MUMBAI

ITA 6278/MUM/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0095 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 02-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Transfer pricing; Revised return
• Section: 271(1)(c); 143(3); 14A; 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “G”, MUMBAI BEFORE SHRI G. S. PANNU, HON’BLE PRESIDENT AND SHRI SAKTIJIT DEY, HON’BLE JUDICIAL MEMBER ITA No. 6278/MUM/2019 Assessment Year: 2008-09 ACIT, Circle-16(1), Room No. 439, 4 th Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 Vs. M/s Zee Entertainment Enterprises Ltd., 18 th Floor, Marathon Futurex, N.M. Joshi Marg, Mumbai - 400013 PAN: AAACZ0243R (Appellant) (Respondent) CO No. 119/MUM/2021 Arising out of ITA No. 6278/Mum/2019) Assessment Year: 2008-09 M/s Zee Entertainment Enterprises Ltd., 18 th Floor, Marathon Futurex, N.M. Joshi Marg, Mumbai - 400013 PAN: AAACZ0243R Vs. ACIT, Circle-16(1), Room No. 439, 4 th Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 Revenue by : Shri Salil Mishra, (DR) Assessee by : Jay Bhansali, (AR) Date of Hearing : 16/11/2021 Date of order: 17/01/2022 O R D E R PER BENCH: Captioned appeals and Cross Objection arise out of order dated 18.07.2019 learned Commissioner of Income Tax (Appeals)-4, Mumbai deleting the penalty imposed Under section 271(1)(c) of the Act for the assessment year 2008-09. 2 ITA No. 6278/MUM/2019 & CO No. 119/Mum/2021 Assessment Year: 2008-09 2. Briefly the facts are, the assessee is a resident company engaged in the business of broadcasting TV Channels. For the assessment year under dispute, assessee had filed its return of income on 26.09.2008 declaring total income of Rs. 459,60,84,672/- under the normal provision of the Act. Subsequently, the assessee filed a revised return of income on 31.03.2010 declaring total income of Rs. 471,34,52,865/-. During the year under consideration, since, the assesssee had entered into international transactions with its Associate Enterprises (AE), a reference was made to the Transfer Pricing Officer (TPO) for determining the Arm’s Length Price (ALP) of such transaction. Based on the order passed by the TPO, addition of Rs. 7,32,63,970/- was made to the income of the assessee. Besides, the aforesaid addition, the Assessing Officer made further additions towards disallowance under section 14A, writing off of advances given to BCCI and forex loss. Accordingly, the AO completed the assessment under section 143(3) r.w.s. 144C of the Act. Against the assessment order so passed, assessee filed objections before learned Dispute Resolution Panel (DRP) and thereafter before the Tribunal. Be that as it may based on the additions made in the assessment order, the AO initiated penalty proceedings under section 271(1)(c) of the Act alleging concealment of income or furnishing inaccurate particulars of income. During the penalty proceeding, the AO noticed that the TPO had revoked the TP adjustment by reducing it to Rs. 26,54,75,570/- as against the original adjustment of Rs. 73,26,03,970/-. Thus, ultimately rejecting the explanation of the assessee, the AO imposed penalty of Rs. 29,32,21,591/-, being 100% of the tax on the income allegedly sought to be evaded. Against the penalty order so passed, assessee filed an 3 ITA No. 6278/MUM/2019 & CO No. 119/Mum/2021 Assessment Year: 2008-09 appeal before learned Commissioner (Appeals). Noticing that substantial part of the addition was deleted by the Tribunal and the remaining additions did not make out any offence under section 271(1)(c) of the Act, learned Commissioner (Appeals) deleted the penalty imposed under section 271(1)(c) of the Act. 3. We have considered rival submissions and perused the materials on record. The undisputed factual position before us is, the only surviving additions after the decision of the Tribunal in quantum proceedings are, an amount of Rs. 27,19,342/-, being adjustment made towards provisions of corporate guarantee and Rs. 25,50,925/-, being disallowance made under section 14A r.w.r. 8D. Thus, as could be seen, substantial part of the addition on which penalty under section 271(1)(c) of the Act was imposed, in the meanwhile, has been deleted by the Tribunal. As far as the addition on account of corporate guarantee is concerned, undisputedly, at the relevant point of time it was a highly debatable issue as to whether such transaction falls within the definition of international transaction. In any case of the matter, the ALP of corporate guarantee has ultimately been fixed at 0.5% based on certain judicial precedents as against 3% determined by TPO. Thus, more or less, it is a case of estimation. Thus, in our view such addition cannot lead to the conclusion that the assessee has either concealed its income or furnished inaccurate particulars of income. 4. As far as disallowance under section 14A r.w.r. 8D is concerned, it is a fact that substantial relief has been granted to the assessee by the Tribunal. Even, otherwise also, disallowance under section 14A r.w.r. 8D, to some extent, is a notional disallowance based on certain formula. Thus, in our view, it 4 ITA No. 6278/MUM/2019 & CO No. 119/Mum/2021 Assessment Year: 2008-09 cannot lead to concealment of income or furnishing of inaccurate particulars of income. In view of the aforesaid, we agree with the decision of learned Commissioner (Appals) in deleting the penalty imposed under section 271(1)(c) of the Act. Grounds are dismissed. 5. In the result, appeal is dismissed. 6. In view of our decision above, the Cross Objection filed by the assessee having become infructuous, is dismissed. 7. To sum up, revenue’s appeal and assessee’s cross objection are dismissed. Sd/- Sd/- (G.S. PANNU) PRESIDENT (SAKTIJIT DEY) JUDICIAL MEMBER म ुंबई Mumbai; दिन ुंक Dated: 17/01/2022 Alindra, PS आदेश प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त(अपील) / The CIT(A)- 4. आयकर आय क्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, सत्य दपि प्रदि //True Copy// उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण, म ुंबई / ITAT, Mumbai