SONY PICTURES NETWORKS INDIA P.LTD(SUCCESSOR OF MSM DISCOVERY PRIVATE LIMITED), MUMBAI V. ACIT-12(3)(2), MUMBAI

ITA 6630/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6243 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Appeal Filed On: 22-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A MOHAN CIT DR
• Assessee Lawyers: JAHANGIR MISTRY
• Keywords: Business income; Depreciation; Transfer pricing; International transaction; Additional evidence; Initiation of penalty proceedings; Revised return; TDS
• Section: 271(1)(c); 92C; 143(3); 92D; 234B; 205; 144C; 143(2); 207; 13; 22; 154; 92

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI , # ,$ % BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI N.K.PRADHAN, ACCOUNTANT MEMBER . 6630 / /2018(. . 2014-15 ) ITA NO. 6630/MUM/2018 (A.Y.2014-15) SONY PICTURES NETWORKS INDIA PRIVATE LIMITED (SUCCESSOR OF MSM DISCOVERY PRIVATE LIMITED) INTERFACE BUILDING NO.7, 5 TH FLOOR, MALAD LINK ROAD, MALAD (WEST), MUMBAI 400 064 PAN:AABCS1728D ...... . / APPELLANT VS. THE ASSISTANT COMMISSIONER OF INCOME TAX-12(3)(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021 ..... #/ / RESPONDENT .0/ APPELLANT BY : SHRI JAHANGIR MISTRY, SR. ADV OCATE #/ 0/ RESPONDENT BY : SHRI A. MOHAN, CIT -DR 1/ / DATE OF HEARING : 24/08/2020 234 1/ / DATE OF PRONOUNCEMENT : 21/09/2020 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ASSESSMENT ORDER DATED 23/10/2018 PASSED UNDER SECTION 143(3) R.W.S. 144C (13) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO.6630/MUM/2018(A.Y.2014-15) 2. THE ASSESSEE IN APPEAL HAS RAISED AS MANY AS 22 GROUNDS ASSAILING THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL (DRP) AN D THE ASSESSMENT ORDER PASSED IN CONSEQUENT THERETO. THE ASSESSEE HAS ALSO RAISED A DDITIONAL GROUND OF APPEAL. THE GROUNDS OF APPEAL AND THE ADDITIONAL GROUND OF APPE AL READ AS UNDER:- GROUNDS OF APPEAL: BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE APPELLANT RESPECTFULLY CRAVES LEAVE TO PREFER AN APPEAL AGAIN ST THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME-TAX12(3)(2) MUMBAI [LEARNED A.O], UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME TAX ACT, 1961 (ACT) (ASSESSMENT ORDER), IN PURSUANCE OF THE DIRECTIONS ISSUED BY DISPUTE RESOL UTION PANEL-3 (HONBLE DRP), MUMBAI, ON THE FOLLOWING GROUNDS: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED A.O, BASED ON THE DIRECTIONS OF THE HONBLE DRP HAS: GENERAL GROUND 1. ERRED IN ASSESSING THE TOTAL INCOME OF THE APPEL LANT AT RS.4,00,08,51,830 AGAINST RS.49,58,34,942 AS COMPUTED BY THE APPELLAN T IN ITS RETURN OF INCOME; 2. ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS.3,50,50,16,888 TO THE TOTAL INCOME OF THE APPELLANT ON THE PREMISE THAT T HE INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE APPELLANT WITH ITS ASSOCIATED ENTERPRISES (AES) WERE NOT AT ARMS LENGTH; ORDER PASSED IS WITHOUT JURISDICTION AND BAD IN LAW : 3. ORDER PASSED UNDER SECTION 92CA(3) OF THE ACT IS PASSED BY ADDITIONAL COMMISSIONER OF INCOME-TAX, TRANSFER PRICING-3(2), MUMBAI (ADDL. CIT) IS WITHOUT JURISDICTION AND BAD IN LAW IN AS MUCH AS T HE TRANSFER PRICING OFFICER MEANS A JOINT COMMISSIONER OR A DEPUTY COMMISSIONER OR ASSISTANT COMMISSIONER AUTHORIZED BY BOARD TO PERFORM ALL OR ANY OF THE FUNCTIONS OF AN ASSESSING OFFICER SPECIFIED IN SECTION 92C AND 92D IN RESPECT OF ANY PERSON OR CLASS OF PERSONS, AS PER EXPLANATION TO SECTION 92C A OF THE ACT; REFERENCE MADE TO THE TRANSFER PRICING OFFICER (TP O) 4. ERRED IN REFERRING THE APPELLANTS CASE TO THE L EARNED TPO UNDER SECTION 92 CA(1) OF THE ACT, WITHOUT SATISFYING THE CONDITION S SPECIFIED THEREIN; TPO ERRED IN CHARACTERIZING THE DISTRIBUTION FEE PA ID BY MSMD TO ITS AE AS ROYALTY 5. ERRED IN CHARACTERIZING THE DISTRIBUTION FEE PAI D /PAYABLE BY THE APPELLANT TO ITS AES TO BE IN THE NATURE OF ROYALTY; REJECTIONS OF ECONOMIC ANALYSIS BY THE APPELLANT IN ITS TRANSFER PRICING STUDY REPORT. 3 ITA NO.6630/MUM/2018(A.Y.2014-15) 6. ERRED IN NOT FOLLOWING THE APPELLANTS OWN ORDER FOR AY 2010-11 WHICH WAS PASSED BY THE HONBLE DRP ACCEPTING SOFTWARE DISTRI BUTORS AS APPROPRIATE COMPARABLE TO BENCHMARK THE APPELLANTS INTERNATION AL TRANSACTIONS; 7. ERRED IN REJECTING THE TRANSFER PRICING ANALYSIS UNDERTAKEN BY THE APPELLANT UNDER SECTION 92C OF THE ACT AND DISREGARDING THE F ACT THAT SOFTWARE DISTRIBUTORS ARE APPROPRIATE COMPARABLES TO BENCHMA RK MSMDS INTERNATIONAL TRANSACTION IN THE ABSENCE OF ANY DIR ECT COMPARABLES; 8. ERRED IN LAW AND IN FACTS, IN REJECTING THE FO LLOWING COMPANIES FROM THE TRANSFER PRICING STUDY FOR FY 2013-14 WHICH ARE COM PARABLE TO THE APPELLANT; (I) ADVANCE TECHNOLOGY LTD. (II) INTEGRA TELECOMMUNICATION AND SOFTWARE LI MITED. (III) SONATA INFORMATION TECHNOLOGY LIMITED (IV) TRIJAL INDUSTRIES LIMITED. BENCHMARKING ANALYSIS UNDERTAKEN BY THE LEARNED TPO /HONBLE DRP BY CONSIDERING ROYALTY AGREEMENTS AS COMPARABLE UNCONTROLLED PRICE (CUP) TO BENCHMARK APPELLANTS INTERNATIONAL TRANSACTIONS 9. ERRED IN NOT SELECTING CUP TO BENCHMARK THE INT ERNATIONAL TRANSACTIONS OF THE APPELLANT WITHOUT APPRECIATING THAT TRANSACTION NET MARGIN (TNMM) IS THE MOST APPROPRIATE METHOD TO BENCHMARK THE APPELLANT S INTERNATIONAL TRANSACTIONS; 10. ERRED IN NOT APPRECIATING THAT A 'DISTRIBUTION' AGREEMENT LIKE THAT ENTERED INTO BY THE APPELLANT WITH ITS AE IS DIFFERENT FROM A 'L ICENSE/ ROYALTY' AGREEMENT SELECTED BY THE HON'BLE DRP/LEARNED TPO TO BENCHMAR K THE APPELLANT'S INTERNATIONAL TRANSACTIONS; 11. ERRED IN CONSIDERING ROYALTY AGREEMENTS AS COMP ARABLE TO BENCHMARK THE APPELLANT'S DISTRIBUTION ACTIVITY WITH ITS AES DISR EGARDING THE FACT THAT ALL AGREEMENTS ARE FUNCTIONALLY DIFFERENT AND ARE ENTER ED INTO IN DIFFERENT GEOGRAPHIES (I.E. OTHER THAN INDIA) HENCE THE ECONO MIC AND COMMERCIAL CIRCUMSTANCES UNDER WHICH THEY ARE ENTERED WOULD BE DIFFERENT FROM THE DISTRIBUTION AGREEMENT ENTERED INTO BY THE APPELLAN T; INTERNAL COMPARABILITY 12. WITHOUT PREJUDICE TO THE OTHER GROUNDS, SHOULD SOFTWARE DISTRIBUTORS NOT BE APPROPRIATE COMPARABLES, INTERNAL COMPARABLES ARE S UITABLE OVER THE ROYALTY AGREEMENTS SELECTED BY THE HON'BLE DRP/ LEARNED TPO TO BENCHMARK THE APPELLANT'S INTERNATIONAL TRANSACTIONS; SELECTION OF LOCAL CABLE OPERATORS ('LCOS')/ MULTI SYSTEM OPERATORS ('MSOS')/ DIRECT TO HOME ('DTH') AS COMPARABLES 13. WITHOUT PREJUDICE TO THE OTHER GROUNDS, SHOULD SOFTWARE DISTRIBUTORS BE REJECTED AS COMPARABLES THEN LOCAL CABLE OPERATORS ('LCOS')/ MULTI SYSTEM 4 ITA NO.6630/MUM/2018(A.Y.2014-15) OPERATORS ('MSOS')/ DIRECT TO HOME ('DTH') COMPANIE S CAN BE CONSIDERED AS APPROPRIATE COMPARABLES; IMPUGNED ORDER PASSED IN THE NAME OF NON-EXISTENT E NTITY (I.E. MSM DISCOVERY PRIVATE LIMITED) 14. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED ORDER DATED 23.10.2018 PASSED UNDER SECTION 143(3) R.W.S. 144C(1) OF THE ACT IS WITHOUT JURISDICTION, ILLEGAL AND BAD IN LAW; 15. ERRED IN LAW AND FACTS IN PASSING THE IMPUGNED ORDER IN THE NAME OF 'MSM DISCOVERY PRIVATE LIMITED', THOUGH THE SAID ENTITY WAS NOT IN EXISTENCE AS ON THE DATE OF PASSING THE SAID ORDER DATED 23.10.2018 AND THAT SUCH AN ASSESSMENT ORDER ON A NON-EXISTENT ENTITY IS VOID A ND AN INCURABLE DEFECT IN LAW; SHORT GRANT OF TAX DEDUCTED AT SOURCE (TDS) 16. ERRED IN SHORT GRANTING CREDIT OF TAXES DEDUCTE D AT SOURCE OF RS 82,64,263 WHILE COMPUTING THE TAX LIABILITY FOR THE YEAR; INTEREST UNDER SECTION 234A OF THE ACT 17. ERRED IN LEVYING INTEREST OF RS 1,94,74,594 UN DER SECTION 234A OF THE ACT SINCE THE APPELLANT HAD FILED ITS RETURN OF INCOME ON 28 TH NOVEMBER 2014 WHICH IS BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME (I.E. 30 TH NOVEMBER 2014) INTEREST UNDER SECTION 234B OF THE ACT 18. ERRED IN LEVYING INTEREST OF RS 53,55,51,335 UN DER SECTION 234B OF THE ACT; 19. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN COMPUT ING THE INTEREST UNDER SECTION 234B OF THE ACT AT RS 53,55,51,335 INSTEAD OF RS 53 ,10,05,989; INTEREST UNDER SECTION 234D OF THE ACT 20. ERRED IN LEVYING INTEREST OF RS 2,07,16,512 UND ER SECTION 234D OF THE ACT; 21. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN COMPUT ING THE INTEREST UNDER SECTION 234D OF THE ACT AT RS 2,07,16,512 INSTEAD OF RS 2,0 0,65,302; PENALTY PROCEEDINGS 22. ERRED IN INITIATING PENALTY PROCEEDINGS UNDER S ECTION 271(1 )(C) OF THE ACT. 5 ITA NO.6630/MUM/2018(A.Y.2014-15) ADDITIONAL GROUND OF APPEAL: GROUND NO.16- DEDUCTION OF EDUCATION AND SECONDARY AND HIGHER EDUCATION CESS PAID ON THE INCOME-TAX LIABILITY. 1. THE ASSESSEE SUBMITS THAT DEDUCTION SHALL BE GRANT ED UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION WITH RESPECT TO EDUCATION CESS AND SECONDARY HIGHER EDUCATION CESS LEVIED ON INCOME TA X. 3. SHRI JAHANGIR MISTRY, APPEARING ON BEHALF OF TH E ASSESSEE EXPLAINING THE FACTS OF THE CASE SUBMITTED THAT THE ASSESSEE IS A JOINT VENTURE BETWEEN MULTISCREEN MEDIA PVT. LTD. AND DISCOVERY COMMUNICATION INDIA. THE ASSESSEE IS ENGAGED IN DISTRIBUTION OF TV CHANNELS TO LOCAL CABLE OPERATOR S/MULTI SYSTEM OPERATORS/DTH OPERATORS. FOR THIS ACTIVITY THE ASSESSEE IS REMUNE RATED AT COST + MARK-UP OF 5%. THE COSTS INCLUDE MARKETING, PERSONNEL, GENERAL AND ADM INISTRATIVE AND DEPRECIATION. APART FROM ABOVE, THE ASSESSEE IS ENTITLED TO REIMB URSEMENT OF EXPENDITURE VIZ. DISTRIBUTION COMMISSION WITHOUT ANY MARK-UP. 3.1. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMI TTED THAT THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APPEAL IN RESPECT OF DE DUCTION OF EDUCATION AND SECONDARY AND HIGHER EDUCATION CESS PAID ON THE IN COME-TAX LIABILITY UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. T HE LD. COUNSEL OF THE ASSESSEE POINTED THAT THE ADDITIONAL GROUND RAISED BY THE AS SESSEE IS A LEGAL ISSUE FOR WHICH ALL THE FACTS ARE ALREADY ON RECORD OF THE LOWER AUTHOR ITIES. NO NEW FACTS OR ADDITIONAL EVIDENCES ARE REQUIRED TO BE ADDUCED IN SUPPORT OF THE SAME. THE TRIBUNAL IN ASSESSEES APPEAL IN ITA NO.6676/MUM/2017 FOR ASSES SMENT YEAR 2013-14 HAS ADMITTED IDENTICAL ADDITIONAL GROUNDS AND HAS ADJUD ICATED THE SAME VIDE ORDER DATED 29/06/2020. THE LD. COUNSEL OF THE ASSESSEE SUBM ITTED THAT IF THE ADDITIONAL GROUND RAISED IS ADMITTED THEN GROUNDS OF APPEAL NO. 3, 4 AND 12 TO 15 WOULD BECOME ACADEMIC. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE FACTS IN THE ASSESSMENT YEAR UNDER APPEAL ARE IDENTICAL TO THE F ACTS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2013-14. THE L D. COUNSEL FOR THE ASSESSEE 6 ITA NO.6630/MUM/2018(A.Y.2014-15) PLACED RELIANCE ON THE FOLLOWING DECISIONS TO CONTE ND THAT ADDITIONAL GROUND CLAIMING DEDUCTION OF EDUCATION CESS IS PURELY A LEGAL ISSUE : 1. SESA GOA LTD. VS JCIT, 117 TAXMANN.COM 96 (BOMBA Y); 2. VOLTAS INDIA LTD. VS. ACIT, 117 TAXMANN.COM 547 (MUM-TRIB.); 3. ATLAS COPCO INDIA LTD. VS. ACIT, 112 TAXAMANN.CO M 120 (PUNE-TRIB.); AND 4. SYMANTEC SOFTWARE INDIA P. LTD. VS. DCIT,114 TAX MANN.COM 455 (PUNE-TRIB.). 3.2. IN RESPECT OF GROUND NO.5 OF THE APPEAL, THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRANSFER PRICING OFFICER (TPO) H AS ERRED IN HOLDING THAT DISTRIBUTION FEE PAID BY THE ASSESSEE TO ITS ASSOCI ATED ENTERPRISE (AE) IS IN THE NATURE OF ROYALTY. THE TRIBUNAL IN ASSESSEES APPEAL FOR A SSESSMENT YEAR 2013-14 HAS ALREADY DEALT WITH THIS ISSUE AND AFTER PLACING RELIANCE ON THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12, HELD THAT DIS TRIBUTION FEE PAID BY THE ASSESSEE IS NOT IN THE NATURE OF ROYALTY. 3.3. IN RESPECT OF GROUND NO.6 TO 8 OF THE APPEAL, THE LD. COUNSEL FOR THE ASSESSEE AGAIN REFERRED TO THE ORDER OF CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2013-14. THE LD. COUNSEL FOR THE ASSESSEE POINTED THAT THE GROUND RAISED ARE IDENTICAL TO THE GROUND RAISED IN IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE FACTS BEING IDENTICAL, THE GR OUND CAN BE DECIDED IN SIMILAR MANNER. 3.4. IN RESPECT OF GROUND NO. 9 TO 11 OF THE APPEAL , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE ADOPTED TNMM AS THE MOS T APPROPRIATE METHOD TO BENCHMARK ITS INTERNATIONAL TRANSACTION. THE TPO A FTER HOLDING THAT THE DISTRIBUTION FEE PAID BY THE ASSESSEE IS IN THE NATURE OF ROYALT Y, APPLIED CUP. SINCE THE TRIBUNAL IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR HAS HELD THAT DISTRIBUTION FEE PAID BY THE ASSESSEE IS NOT IN THE NATURE OF ROYALTY, THE METHO D ADOPTED BY TPO TO BENCHMARK THE TRANSACTION WOULD NOT HOLD GOOD. 7 ITA NO.6630/MUM/2018(A.Y.2014-15) 3.5. IN RESPECT OF GROUND NO.16 & 17 RELATING TO SH ORT GRANT OF TDS AND INTEREST UNDER SECTION 234A OF THE ACT, RESPECTIVELY. THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED RECTIFICATION PETITION BEFORE THE ASSESSING OFFICER. THE SAME HAS NOT BEEN DISPOSED OFF TILL D ATE. THE LD. COUNSEL FOR THE ASSESSEE PRAYED THAT A DIRECTION MAY BE GIVEN TO TH E ASSESSING OFFICER FOR AN EARLY DISPOSAL OF APPLICATION. 4. PER CONTRA, SHRI A. MOHAN, REPRESENTING THE DEPA RTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSED THE ADMISSION OF ADDITIONAL GROUND OF APPEAL FILED BY T HE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT AS PER SECTION 143(2) OF THE ACT AS MENDED BY FINANCE ACT, 1987, ONLY UPWARD REVISION OF INCOME I S PERMISSIBLE. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE, IF ADMITTED AND ALLO WED WOULD RESULT IN AN ASSESSMENT OF INCOME LESS THAN THE RETURNED INCOME. THIS IS IMPERMISSIBLE. TO SUPPORT HIS CONTENTION, THE LD. DEPARTMENTAL REPRES ENTATIVE PLACED RELIANCE ON THE DECISION RENDERED IN THE CASE OF GOETZE (INDIA) LTD . VS. CIT, 284 ITR 323(SC). THE LD.DEPARTMENTAL REPRESENTATIVE FURTHER PLACED RELIA NCE ON CBDT CIRCULAR EXPLAINING THE FINANCE ACT, 1987. AS REGARDS THE FACT THAT TH E GROUND RAISED BY THE ASSESSEE IN THE PRESENT APPEAL HAVE BEEN CONSIDERED BY THE TRIB UNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2013-14, THE LD.DEPARTMENTAL REPRES ENTATIVE FAIRLY ADMITTED THAT ALL THE ISSUES RAISED BY THE ASSESSEE IN PRESENT APPEAL HAVE BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE LD. DEPARTMENTAL REPRESENTATIVE ASSERTED THAT THE I MPACT OF AMENDMENT TO SECTION 143(2) VIDE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 W ERE NOT SUBJECTED TO THE JUDICIAL SCRUTINY. THE LD. DR TO FURTHER BUTTRESS H IS CONTENTIONS PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F M/S. ULTRATECH CEMENT LTD VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX IN INCOME TAX APPEAL NO. 1060 OF 2014, DECIDED ON 18.04.2017 AND DISTINGUISHED THE JUDGMEN TS RENDERED IN THE CASE OF CIT 8 ITA NO.6630/MUM/2018(A.Y.2014-15) VS. PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. (349 I TR 336) AND NATIONAL THERMAL POWER CORPORATION VS COMMISSIONER OF INCOME TAX 229 ITR 383 (SC) . 5. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE EXAMINED THE ORDERS OF AUTHORITIES BELOW. THE GROUND NO.1 AND 2 OF THE APPEAL ARE GENERAL IN NATURE AND HENCE, REQUIRE NO ADJUDICATION. 6. THE GROUND NO.5 OF THE APPEAL IS AGAINST RE-CHAR ACTERIZATION OF DISTRIBUTION FEE PAID/PAYABLE BY THE ASSESSEE TO ITS AE AS ROY ALTY. WE FIND THAT IDENTICAL GROUND WAS RAISED BY THE ASSESSEE IN ITA NO.6676/MU M/2007 FOR ASSESSMENT YEAR 2013-14(SUPRA) ASSAILING THE ACTION OF DRP/AO IN HO LDING DISTRIBUTION FEE AS ROYALTY. THE CO-ORDINATE BENCH WHILE ADJUDICATIN G THE GROUND HELD AS UNDER:- 13. WE HAVE HEARD THE SUBMISSIONS OF LEARNED SENIO R COUNSEL SH. J.D. MISTRY (LD. AR), OF THE ASSESSEE AND THE LEARNED CIT-DR FOR THE REVE NUE. AT THE OUTSET THE LEARNED SR. COUNSEL MR. MISTRY SUBMITS THAT THE GROUNDS OF APPE AL RELATED WITH THE TRANSFER PRICING (TP) ADJUSTMENT ARE COVERED IN FAVOUR OF AS SESSEE BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 (ITA NO. 971/MUM/2016) DATED 16TH MARCH 2020, WHEREIN THE AS SESSEE RAISED IDENTICAL GROUNDS OF APPEAL. THE LEARNED AR OF THE ASSESSEE F URTHER SUBMITS THE LOWER AUTHORITIES WHILE PASSING THE ORDERS HAVE RELIED ON THE ORDERS FOR AY 2012-13, WHICH IN TURN HAS RELIED ON THE ORDERS FOR AY 2011-12. IN AY 2011-12, THE TRIBUNAL CATEGORICALLY HELD DISTRIBUTION FEES PAID BY THE AS SESSEE TO ITS ASSOCIATED ENTERPRISES (AE) IS NOT ROYALTY. THE LD. AR OF THE ASSESSEE F URTHER SUBMITS THAT DISTRIBUTION FEES IS NOT IN THE NATURE OF ROYALTY HAS BEEN UPHE LD BY TRIBUNAL AND AFFIRMED BY HONBLE BOMBAY HIGH COURT IN THE HANDS OF PAYER AS WELL AS THE RECIPIENT OF DISTRIBUTION FEES IN CASE OF SET INDIA PRIVATE LIMI TED (ITA NO. 1347/2013 AND IN CASE OF RECIPIENT OF DISTRIBUTION FEES IN CIT VS. MSM SA TELLITE (SINGAPORE) PTE LIMITED (ITA NO. 103 & 207/2017. THE LEARNED AR FURNISHED THE CO PY OF DECISION OF TRIBUNAL AND COPY OF DECISION OF HONBLE BOMBAY HIGH COURT. 14. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SU PPORTED THE ORDER OF THE LOWER AUTHORITIES. 15. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE ORDER OF THE LOWER AUTHORITIES. WE HAVE SEEN THAT O N SIMILAR SET OF FACTS THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 201-12 ON THE ISSUE HELD THAT THE DISTRIBUTION FEE PAID BY THE ASSESSEE TO ITS AE IS NOT ROYALTY. THE COORDINATE BENCH (AUTHORED BY JM) PASSED THE FOLLOW ING ORDER; 9 ITA NO.6630/MUM/2018(A.Y.2014-15) 30. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF TH E PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE FIRST ISSU E FOR OUR CONSIDERATION IS WHETHER THE DISTRIBUTION FEE IS IN THE NATURE OF ROYALTY OR NOT. BEFORE US THE LD. AR FOR THE ASSESSEE VEHEMENTLY SUBMITTED THAT THE TPO WRONGLY CHARACTERIZED THE CHANNEL DISTRIBUTION FEE AS ROYALTY. IT WAS FURTHER EXPLAIN ED THAT THE ASSESSEE ACTS AS A INTERMEDIARY BETWEEN THE BROADCASTER AND THE ULTIMA TE CUSTOMERS WHO USES THE CHANNELS. THUS, DISTRIBUTION FEE PAID BY THE ASSESS EE CANNOT BE TERMED AS ROYALTY. THIS FACT IN NOT CONTROVERTED BY LD. DR FOR THE REV ENUE NOR ANY CONTRARY FACTS WERE BROUGHT ON RECORD BY THE LOWER AUTHORITIES. THE LD. DRP IN ASSESSEES MSM SATELLITE (SINGAPORE) PTE LTD IN ITS ORDER DATED 19.12.2014 F OR AY 2010-11 BY FOLLOWING THE ORDER OF TRIBUNAL FOR AY 2005-06 & 2006-07 DATED 28 .08.2015 HELD THAT DISTRIBUTION REVENUE IS NOT ROYALTY INCOME. THE HONBLE BOMBAY H IGH COURT IN CIT VS SET INDIA PVT LTD (ITA NO. 1347 OF 2013) HELD THAT THE DISTRI BUTION FEE PAID IS NOT IN THE NATURE OF ROYALTY. SIMILAR VIEW WAS AFFIRMED BY HONBLE BO MBAY HIGH COURT IN CIT VS MSM SATELLITE (SINGAPORE) PTE LTD (ITA NO. 103 OF 2017) . CONSIDERING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT AND RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE VIEW THAT THE PAYMENT OF DISTRIBUTION FEE CANNOT BE TERMED AS ROYALTY. SINCE, WE HAVE HELD THAT DISTRIBUTION FEE CANNOT BE TERMED AS ROYALTY THUS; DISCUSSION ON THE ROYALTY AGREEMENT SELECTED FOR COMPARABILITY HAS BE COME ACADEMIC. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE FACTS IN THE ASSESSMENT YEAR UNDER APPEAL ARE DISTINGUISHABLE OR ANY JUDGMENT TO CONTROVERT THE FINDINGS OF THE TRIBUNAL . WE SEE NO REASON TO TAKE A DIVERGENT VIEW. THUS, FOLLOWING THE ORDER OF CO-OR DINATE BENCH WE HOLD THAT THE DISTRIBUTION FEE PAID BY THE ASSESSEE IS NOT IN T HE NATURE OF ROYALTY. THE GROUND NO.5 OF THE APPEAL IS ALLOWED. 7. IN GROUND NO.6 TO 8 OF THE APPEAL, THE ASSESSEE HAS ASSAILED REJECTION OF COMPARABLES BY THE TPO. THE ASSESSEE IN ITS TRANSF ER PRICING STUDY FOR THE FINANCIAL YEAR 2013-14 (RELEVANT TO ASSESSMENT YEAR 2014-15) INCLUDED FOLLOWING COMPANIES AS COMPARABLES: (I) ADVANCE TECHNOLOGY LTD. (II) INTEGRA TELECOMMUNICATION AND SOFTWARE LIM ITED. (III) SONATA INFORMATION TECHNOLOGY LIMITED (IV) TRIJAL INDUSTRIES LIMITED. WE FIND THAT THE AFORESAID COMPANIES WERE ALSO INCL UDED BY THE ASSESSEE AS COMPARABLES IN TRANSFER PRICING STUDY FOR ASSESSMEN T YEAR 2012-13 AND THE SAME WERE REJECTED BY THE TPO FOR THE SIMILAR REASONS. THE CO-ORDINATE BENCH PLACING RELIANCE ON THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2011-12 (ITA NO. 10 ITA NO.6630/MUM/2018(A.Y.2014-15) 971/MUM/2016) RESTORED THE ISSUE BACK TO THE FILE O F ASSESSING OFFICER. FOR THE SAKE OF COMPLETENESS THE RELEVANT EXTRACT OF THE FINDING S OF CO-ORDINATE BENCH ARE REPRODUCED AS UNDER:- 19. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE HAVE ALSO CONSI DERED THE WRITTEN SUBMISSIONS FILED BY LD. BRIEFING COUNSEL SH. HITEN CHANDE, ADV OCATE ON 26.06.2020. WE HAVE ALSO DELIBERATED ON THE CASE LAWS RELIED BY LEARNED SR C OUNSEL OF THE ASSESSEE. WE HAVE SEEN THAT IN ASSESSEES OWN CASE FOR AY 2011-12, (I TA NO. 971/MUM/2016) THE COORDINATE BENCH WHILE EXAMINING AND ACCEPTING THE VALIDITY OF COMPARABILITY OF AVANCE AND SONATA PASSED THE FOLLOWING ORDER; 25. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTIES AND PERUSED THE RECORD. THE TPO DURING THE TP ADJUSTMENT PROCEEDING REJECTE D AVANCE ON THE GROUND THAT THIS COMPANIES IS ENGAGED IN SOFTWARE TRADING, SALE S OF HARDWARE AND OTHER SERVICES AND NO SEGMENTAL INFORMATION IS AVAILABLE. DRP UPHE LD THE ACTION OF ON THE BASIS OF ORDER FOR A.Y. 2010-11.BEFORE TRIBUNAL, THE ASSESSE E HAS PLACED ON RECORD THE FINANCIAL STATEMENT OF AVANCE. PERUSAL OF FINANCIAL STATEMENT REVEALS THAT THIS COMPANY HAS EARNED RS. 140 CRORE FROM SALE OF SOFTW ARE OUT OF TOTAL SALES OF RS. 176 CRORE. THIS COMPANY HAS APPROXIMATELY 80% OF ITS IN COME FROM SOFTWARE PRODUCT. THUS, SEGMENTAL INFORMATION AS PLACED BEFORE US IS AVAILABLE AT (PAGE NO. 204 TO 205 OF PAPER BOOK). FURTHER, WHILE REJECTING EMPOWER, T HE TPO HELD THAT THIS COMPANY IS ENGAGED IN SELLING OF HARDWARE AND NO SEGMENTAL ARE AVAILABLE. FROM THE FINANCIAL STATEMENT PLACED BEFORE TRIBUNAL AT (PAGE NO. 207 T O 219 OF THE PAPER BOOK) AS PER DISCUSSION AVAILABLE ON PAGE NO. 22 OF ANNUAL REPOR T OF THIS COMPARABLE (PAGE NO. 209) THE COMPANY HAS EARNED MORE THAN 80% OF ITS RE VENUE FROM SOFTWARE SALES. SIMILARLY, SONATA WAS REJECTED BY TPO BY TAKING VIE W THAT THIS COMPANY IS ENGAGED IN SOFTWARE TRADING, CONSULTANCY SERVICES. WE HAVE NOT ED THAT THIS COMPARABLE WAS ACCEPTED IN A.Y. 2020-11 BY TPO HIMSELF IN ITS ORDE R DATED 29.01.2014. FURTHER, FINANCIALS OF THIS COMPARABLE SHOWN THAT THIS COMPA NY HAS EARNED RS. 584 CRORE FROM DISTRIBUTION OF SOFTWARE PRODUCT OUT OF TOTAL SALES OF RS. 597 CRORE, THUS, EARNED 97.49% OF ITS TOTAL REVENUE FROM SOFTWARE PRODUCT ( PAGE NO. 224 OF THE PAPER BOOK). SVAM SOFTWARE WAS REJECTED BY TPO ON THE GROUND THA T THIS COMPARABLE IS ENGAGED IN SOFTWARE DEVELOPMENT, SALE PURCHASE OF SOFTWARE AND COMPUTER RELATED HARDWARE. THE REVENUE OF SOFTWARE IS ONLY RS. 2 CRORE AGAINST THE TOTAL REVENUE OF RS. 20 CRORE. FROM THE FINANCIAL OF THIS COMPANY IT IS NOTED THAT ENTIRE INCOME OF RS. 2.09 CRORE IS SHOWN FROM SALES (SALE OF PRODUCT). CONSIDERING THE NATURE AND ACTIVITIES CARRIED OUT BY ALL THESE 4 COMPARABLE COMPANY WHICH ARE PRIMARI LY ENGAGED IN DISTRIBUTION OF SOFTWARE PRODUCT AS NOTED ABOVE. THE SOFTWARE DISTR IBUTION COMPANY ARE HELD TO BE GOOD COMPARABLE TO DISTRIBUTOR SATELLITE CHANNELS I N TURNER INTERNATIONAL INDIA (P.) LTD. VS. ACIT (SUPRA). THEREFORE, WE ACCEPT THE SUB MISSION OF LD. AR OF THE ASSESSEE TO ACCEPT THESE COMPARABLE AS COMPARABLE WITH ASSESSEE AND DIRECT THE AO/TPO TO WORK OUT THE T.P. ADJUSTMENT AFRESH. NEEDLESS TO OR DER THAT BEFORE PASSING THE ORDER, THE TPO/ASSESSING OFFICER SHALL GRANT OPPORTUNITY T O THE ASSESSEE. IN THE RESULT, THE GROUNDS RELATED TO COMPARABILITY OF COMPARABLE ARE ALLOWED IN ACCORDANCE WITH THE AFORESAID DIRECTIONS. CONSIDERING THE FACT THAT WE HAVE ALLOWED THE FUNCTIONAL COMPARABILITY, THEREFORE, DISCUSSIONS ON ALTERNATIV E ADJUSTMENT HELD BY DRP HAVE BECOME ACADEMIC. 11 ITA NO.6630/MUM/2018(A.Y.2014-15) 20. WE HAVE FURTHER SEEN THAT DELHI TRIBUNAL IN TUR NER INTERNATIONAL INDIA PRIVATE LIMITED (SUPRA) FOR AY 2012-13 HAS ACCEPTED INTEGRA AND TRIJAL AS VALID COMPARABLE AGAIN IN TURNER INTERNATIONAL INDIA PRIVATE LIMITED (SUPRA) FOR AY 2010-11 (2019 101 TAXMANN.COM 446 DEL TRI) AND IN AY 2006-07 (ITA NO. 1204/DEL/2014, WITH CHANNEL DISTRIBUTOR. 21. CONSIDERING THE FACTS THAT THE AVANCE AND SONAT A WERE ACCEPTED AS VALID COMPARABLE IN ASSESSEES OWN CASE IN AY 2011-12 IN ITA NO. 971/MUM/2016 AND TRIJEL AND INTEGRA WAS HELD AS VALID COMPARABLE WIT H CHANNEL DISTRIBUTION, THEREFORE, WE IN PRINCIPAL AGREE AND ACCEPT THE SUBMISSION OF LD. AR OF THE ASSESSEE TO ACCEPT THESE FOUR COMPARABLE AS COMPARABLE WITH ASSESSEE. HOWEVER, WE HAVE SEEN THAT THE TPO REJECTED THE COMPARABILITY OF THESE COMPARABLE SUMMARILY, WITHOUT EXAMINING THEIR SEGMENTAL DATA, HENCE WE DIRECT THE AO/TPO TO VERIFY THE SEGMENTAL DATA OF THESE FOUR COMPARABLE FOR THE RELEVANT FINANCIAL YE ARS AS PER RULE 10B(4) AND RECOMPUTE THE TP ADJUSTMENT AFRESH AND ALLOW APPROP RIATE RELIEF TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PROVIDE ALL NECESS ARY INFORMATION AND EVIDENCE TO THE TPO/AO. NEEDLESS TO ORDER THAT BEFORE PASSING THE O RDER, THE TPO/ASSESSING OFFICER SHALL GRANT OPPORTUNITY TO THE ASSESSEE. IN THE RES ULT, THE GROUNDS RELATED TO COMPARABILITY OF COMPARABLE ARE ALLOWED IN ACCORDAN CE WITH THE AFORESAID DIRECTIONS. SINCE, THE FACT IN THE IMPUGNED ASSESSMENT YEAR ARE PARI-MATERIA TO ASSESSMENT YEAR 2013-14, AND THE REASONS GIVEN BY THE TPO TO EXCLUD E THE AFORESAID COMPANIES ARE SIMILAR, THESE GROUNDS ARE RESTORED TO AO/TPO WITH SIMILAR DIRECTIONS. THE GROUND NO. 6 TO 8 OF THE APPEAL ARE ALLOWED FOR STATISTICA L PURPOSES . 8. IN GROUND OF APPEAL NO. 9 TO 11, THE ASSESSEE HA S ASSAILED BENCHMARKING OF INTERNATIONAL TRANSACTION OF ALLEGED ROYALTY PAYM ENT BY APPLYING CUP AS THE MOST APPROPRIATE METHOD. SINCE, WE HAVE HELD THAT DISTR IBUTION FEE PAID/PAYABLE BY THE ASSESSEE IS NOT IN THE NATURE OF ROYALTY, THE GRI EVANCE OF ASSESSEE IN GROUND NO. 9 TO 11 DOES NOT SURVIVE. THESE GROUNDS HAVE BECOME ACAD EMIC AND HENCE, ARE NOT DELIBERATED UPON. 9. THE GROUND NO.16 OF THE APPEAL IS AGAINST SHORT GRANT OF TDS CREDIT WHILE COMPUTING TAX LIABILITY IN THE IMPUGNED ASSESSMENT YEAR. IN GROUND NO.17, THE ASSESSEE HAS ASSAILED CHARGING OF INTEREST UNDER SE CTION 234A OF THE ACT. THE LD. COUNSEL OF THE ASSESSEE POINTED THAT ON BOTH THE IS SUES, THE ASSESSEE HAS FILED RECTIFICATION PETITION UNDER SECTION 154 OF THE ACT ON 22/11/2018 (AT PAGE 1120 TO 12 ITA NO.6630/MUM/2018(A.Y.2014-15) 1122 OF THE PAPER BOOK) BEFORE THE ASSESSING OFFICE R. THE SAID APPLICATION IS STILL PENDING FOR DISPOSAL. THE ASSESSING OFFICER IS DIRECTED TO DECIDE THE AFO RESAID APPLICATION FILED BY THE ASSESSEE, IN ACCORDANCE WITH LAW BY PASSING A S PEAKING ORDER WITHIN A PERIOD OF THREE MONTHS FROM THE DATE OF RECEIPT OF THIS ORDER . THE GROUND NO.16 AND 17 OF THE APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES WITH AB OVE DIRECTION . 10. IN GROUNDS NO.18 TO 21 OF THE APPEAL, THE ASSES SEE HAS ASSAILED CHARGING OF INTEREST UNDER SECTION 234B AND 234D OF THE ACT. T HE LEVY OF INTEREST UNDER SECTION 234B AND 234D IS MANDATORY AND CONSEQUENTIAL, HENCE , AFORESAID GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED, SANS-MERIT. 11. IN GROUND NO.22 OF THE APPEAL, THE ASSESSEE HAS ASSAILED INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. CH ALLENGE TO PENALTY PROCEEDINGS AT THIS STAGE IS PREMATURE. THIS GROUND OF THE APPEAL IS DISMISSED, AS SUCH . 12. THE ASSESSEE HAS RAISED ADDITIONAL GROUND, CLAI MING DEDUCTION OF EDUCATION AND SECONDARY AND HIGHER EDUCATION CESS PAID ON TH E INCOME-TAX LIABILITY UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION . THE LD. COUNSEL FOR THE ASSESSEE HAS POINTED THAT IDENTICAL GROUND WAS RAIS ED BY THE ASSESSEE IN ASSESSMENT YEAR 2013-14. THE CO-ORDINATE BENCH OF TRIBUNAL AF TER CONSIDERING THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF SESA GOA L TD. (SUPRA.) ADMITTED ADDITIONAL GROUND AND HAS RESTORED THE SAME TO THE FILE OF ASS ESSING OFFICER. THE LD. DR HAS STRONGLY OPPOSED ADMISSION OF ADDITIONAL GROUND AND HAS EVEN EXPRESSED RESERVATIONS THAT IF ADDITIONAL GROUND IS ALLOWED, THE ASSESSED INCOME OF THE ASSESSEE WOULD GO BELOW THE RETURNED INCOME, AND THE SAME IS IMPERMISSIBLE IN THE LIGHT OF CBDT CIRCULAR. WE FIND THAT THE IN THE CASE OF SESA GOA LTD. (SUPRA.) SIMILAR WAS THE SITUATION WHERE THE ASSESSEE HAD CLAIMED DEDUCTION OF EDUCATION CESS BY RAISING ADDITIONAL GROUND BEFORE THE CIT(A) AND THE TRIBUNA L. THE LD. COUNSEL FOR THE ASSESSEE IN THE SAID CASE RAISED SIMILAR OBJECTIONS BEFORE THE HONBLE HIGH COURT 13 ITA NO.6630/MUM/2018(A.Y.2014-15) AGAINST THE ADMISSIBILITY OF ASSESSEES CLAIM. THE HONBLE HIGH COURT AFTER CONSIDERING VARIOUS DECISIONS REJECTED THE CONTENTIONS RAISED O N BEHALF OF THE DEPARTMENT AND HELD: 37 . MS. LINHARES, LEARNED STANDING COUNSEL FOR THE REV ENUE HOWEVER SUBMITTED THAT THE APPELLANT - ASSESSEE, IN ITS ORIGINAL RETU RN, HAD NEVER CLAIMED DEDUCTION TOWARDS THE AMOUNTS PAID BY IT AS 'CESS'. SHE SUBMI TS THAT NEITHER WAS ANY SUCH CLAIM MADE BY FILING ANY REVISED RETURN BEFORE THE ASSESSING OFFICER. SHE THEREFORE RELIED UPON THE DECISION OF THE SUPREME COURT IN GO ETZE (INDIA) LTD. V. COMMISSIONER OF INCOME-TAX (2006) 284 ITR 323 (SC) TO SUBMIT THA T THE ASSESSING OFFICER, WAS NOT ONLY QUITE RIGHT IN DENYING SUCH A DEDUCTION, BUT F URTHER THE ASSESSING OFFICER HAD NO POWER OR JURISDICTION TO GRANT SUCH A DEDUCTION TO THE APPELLANT - ASSESSEE. SHE SUBMITS THAT THIS IS WHAT PRECISELY HELD BY THE ITA T IN ITS IMPUGNED JUDGMENTS AND ORDERS AND THEREFORE, THE SAME, WARRANTS NO INTERFE RENCE. 38. ALTHOUGH, IT IS TRUE THAT THE APPELLANT - ASSE SSEE DID NOT CLAIM ANY DEDUCTION IN RESPECT OF AMOUNTS PAID BY IT TOWARDS 'CESS' IN THEIR ORIGINAL RETURN OF INCOME NOR DID THE APPELLANT - ASSESSEE FILE ANY REVISED RETUR N OF INCOME, ACCORDING TO US, THIS WAS NO BAR TO THE COMMISSIONER (APPEALS) OR THE ITA T TO CONSIDER AND ALLOW SUCH DEDUCTIONS TO THE APPELLANT - ASSESSEE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE RECORD BEARS OUT THAT SUCH DEDUCTION WAS CLEARLY CLAIMED BY THE APPELLANT - ASSESSEE, BOTH BEFORE THE COMMISSIONER (APPEALS) AS WELL AS THE ITAT. 39. IN CIT V. PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. 349 ITR 336, ONE OF THE QUESTIONS OF LAW WHICH CAME TO BE FRAMED WAS WHETHE R ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ITAT, IN LAW, WAS RI GHT IN HOLDING THAT THE CLAIM OF DEDUCTION NOT MADE IN THE ORIGINAL RETURNS AND NOT SUPPORTED BY REVISED RETURN, WAS ADMISSIBLE. THE REVENUE HAD RELIED UPON GOETZE (SUP RA) AND URGED THAT THE ITAT HAD NO POWER TO ALLOW THE CLAIM FOR DEDUCTION. HOWEVER, THE DIVISION BENCH, WHILST PROCEEDING ON THE ASSUMPTION THAT THE ASSESSING OFF ICER IN TERMS OF LAW LAID DOWN IN GOETZE (SUPRA) HAD NO POWER, PROCEEDED TO HOLD T HAT THE APPELLATE AUTHORITY UNDER THE IT ACT HAD SUFFICIENT POWERS TO PERMIT SU CH A DEDUCTION. IN TAKING THIS VIEW, THE DIVISION BENCH RELIED UPON THE FULL BENCH DECIS ION OF THIS COURT IN AHMEDABAD ELECTRICITY CO. LTD. V. CIT (199 ITR 351 TO HOLD TH AT THE APPELLATE AUTHORITIES UNDER THE IT ACT HAVE VERY WIDE POWERS WHILE CONSIDERING AN A PPEAL WHICH MAY BE FILED BY THE ASSESSEE. THE APPELLATE AUTHORITIES MAY CONFIRM, RE DUCE, ENHANCE OR ANNUL THE ASSESSMENT OR REMAND THE CASE TO THE ASSESSING OFFI CER. THIS IS BECAUSE, UNLIKE AN ORDINARY APPEAL, THE BASIC PURPOSE OF A TAX APPEAL IS TO ASCERTAIN THE CORRECT TAX LIABILITY OF THE ASSESSEE IN ACCORDANCE WITH LAW. 40. THE DECISION IN GOETZE (SUPRA) UPON WHICH RELI ANCE IS PLACED BY THE ITAT ALSO MAKES IT CLEAR THAT THE ISSUE INVOLVED IN THE SAID CASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POW ERS OF THE ITAT UNDER SECTION 254 OF THE SAID ACT. THIS MEANS THAT IN GOETZE (SUP RA), THE HON'BLE APEX COURT WAS NOT DEALING WITH THE EXTENT OF THE POWERS OF THE AP PELLATE AUTHORITIES BUT THE OBSERVATIONS WERE IN RELATION TO THE POWERS OF THE ASSESSING AUTHORITY. THIS IS THE 14 ITA NO.6630/MUM/2018(A.Y.2014-15) DISTINCTION DRAWN BY THE DIVISION BENCH IN PRUTHVI BROKERS (SUPRA) AS WELL AND THIS IS THE DISTINCTION WHICH THE ITAT FAILED TO NOTE IN TH E IMPUGNED ORDER. 41. BESIDES, WE NOTE THAT IN THE PRESENT CASE, THO UGH THE CLAIM FOR DEDUCTION WAS NOT RAISED IN THE ORIGINAL RETURN OR BY FILING REVI SED RETURN, THE APPELLANT - ASSESSEE HAD INDEED ADDRESSED A LETTER CLAIMING SUCH DEDUCTI ON BEFORE THE ASSESSMENT COULD BE COMPLETED. HOWEVER, EVEN IF WE PROCEED ON THE BA SIS THAT THERE WAS NO OBLIGATION ON THE ASSESSING OFFICER TO CONSIDER THE CLAIM FOR DEDUCTION IN SUCH LETTER, THE COMMISSIONER (APPEALS) OR THE ITAT, BEFORE WHOM SUC H DEDUCTION WAS SPECIFICALLY CLAIMED WAS DUTY BOUND TO CONSIDER SUCH CLAIM. ACCO RDINGLY, WE ARE UNABLE TO AGREE WITH MS. LINHARE'S CONTENTION BASED UPON THE DECISI ON IN GOETZE (SUPRA). WE FIND NO MERIT IN THE OBJECTIONS RAISED BY THE L D. DEPARTMENTAL REPRESENTATIVE AGAINST ADMISSION OF ADDITIONAL GROUND. THE LD. DEP ARTMENTAL REPRESENTATIVE HAS FAILED TO SHOW THAT THE FACTS IN THE ASSESSMENT YEA R UNDER APPEAL ARE DISTINGUISHABLE. FURTHER, THE LD.DEPARTMENTAL REPRESENTATIVE HAS ALS O NOT BEEN ABLE TO CONTROVERT, THAT NECESSARY FACTS FOR DECIDING ADDITIONAL GROUND OF APPEAL ARE ALREADY ON RECORD AND HENCE, NO NEW ADDITIONAL EVIDENCE IS REQUIRED T O BE ADDUCED FOR THE ADJUDICATION OF THIS LEGAL ISSUE. THE ADDITIONAL GR OUND RAISED BY THE ASSESSEE IS PURELY OF LEGAL NATURE. TAKING INTO CONSIDERATION THE FACT S AND THE DECISION RENDERED IN THE CASE OF SESA GOA LTD. (SUPRA.), WE ADMIT THE ADDITI ONAL GROUND AND RESTORE THE ISSUE TO THE FILE OF ASSESSING OFFICER FOR CONSIDERATION. THE ASSESSING OFFICER SHALL AFFORD REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE A ND SHALL PASS SPEAKING ORDER, IN ACCORDANCE WITH LAW. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS THU S, ALLOWED FOR STATISTICAL PURPOSE. 13. THE LD. COUNSEL FOR THE ASSESSEE STATED AT THE BAR THAT IN CASE ADDITIONAL GROUND IS ADMITTED, THEN GROUNDS OF APPEAL NO.3, 4 AND 12 TO 15 WOULD BECOME ACADEMIC. THUS, IN VIEW OF THE STATEMENT MADE BY L D. COUNSEL OF THE ASSESSEE, WE ARE NOT DELIBERATING ON THE AFORESAID GROUNDS OF AP PEAL. 15 ITA NO.6630/MUM/2018(A.Y.2014-15) 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS AFORESAID. ORDER PRONOUNCED ON MONDAY THE 21 ST DAY OF SEPTEMBER, 2020. SD/- SD/- (N.K.PRADHAN) (VIKAS AWASTHY) $ / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, 6 '/ DATED: 21/09/2020 VM , SR. PS (O/S) COPY OF THE ORDER FORWARDED TO : 1. . / THE APPELLANT , 2. #/ / THE RESPONDENT. 3. 7/ ( )/ THE CIT(A)- 4. 7/ CIT 5. 89#/' , . . . , / DR, ITAT, MUMBAI 6. 9:;<= / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI