NICKELDEON ASIA HOLDINGS PTE LTD, MUMBAI V. DDIT (IT) 4(2), MUMBAI

ITA 7384/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92867 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 16-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2012
• Court: TRIBUNAL
• Assessee Lawyers: F V IRANI
• Keywords: Business income; Earning of tax free income; Permanent establishment
• Section: 234B

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.7384/MUM/2012 ASSESSMENT YEAR: 2008-09 NICKELODEON ASIA HOLDINGS PTE. LTD., C/O-VIACOM 18 MEDA PVT. LTD. ZION BIZWORLD, SUBHASH ROAD-A, NEAR GARWARE OFFICE, VILE PARLE (E), MUMBAI-400057 / VS. DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)-4(2) MUMBAI ( ! ' /ASSESSEE) ( # / REVENUE) P.A. NO. AABCN3147K ! ' / ASSESSEE BY SHRI F.V.IRANI # / REVENUE BY SHRI YOGESH KAMAT-DR $ #% & ' ' / DATE OF HEARING : 01/07/2015 & ' ' / DATE OF ORDER: 04/08/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 21/09/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ASSESSEE RAISED THE FOLLOWING GROUNDS. NICKELODEON ASIA HOLDINGS PTE LTD ITA NO.7384/MUM/2012 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED ASSESSING OFFICER ('AO') ERRED IN PROPOSING AND THE DISPUTE RESOLUTION PANEL ('DRP') FURTHER ERRED IN UPHOLDING THAT THE APPELLANT HAS AN AGENCY PERMANENT ESTABLISHMENT ('PE') IN IND IA UNDER ARTICLE 5(8) OF THE INDIA-SINGAPORE TAX TREATY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED AO ERRED IN PROPOSING AND THE DRP FURTHER E RRED IN UPHOLDING THAT 10% OF THE ADVERTISING RECEIPTS EARNED BY THE APPELLANT FROM INDIA ARE ATTRIBUTABLE TO THE PE IN INDIA AND ACCOR DINGLY, TAXABLE IN INDIA. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED AO AND THE DRP ERRED IN NOT APPRECIATING TH AT EVEN ASSUMING (WITHOUT ADMITTING) THAT THE APPELLANT HAS A PE IN INDIA, PAYMENT OF ARM'S LENGTH REMUNERATION TO VIACOM 18 MEDIA PVT LT D IN RELATION TO MARKETING OF AIR-TIME, EXTINGUISHES THE TAX LIABILI TY OF THE APPELLANT IN INDIA. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED AO AND THE DRP ERRED IN NOT APPRECIATING TH AT EVEN ASSUMING (WITHOUT ADMITTING) THAT THE APPELLANT IS CONSIDERE D TO HAVE A PE IN INDIA AND EVEN IF PROFITS ARE TO BE ATTRIBUTABLE TO THAT PE DESPITE PAYING ARM'S LENGTH CONSIDERATION TO THE INDIAN AGE NT, NO PROFITS CAN BE ATTRIBUTED TO THE PE IN INDIA IN VIEW OF THE LOS S INCURRED BY THE APPELLANT FROM ITS INDIA OPERATIONS. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE RATE OF 10% AS ADOPTED BY THE AO AND CONFIRMED BY THE DRP W ITH RESPECT TO TAXABILITY OF ADVERTISING REVENUES IS HARSH, ARBITR ARY AND INCONSISTENT WITH THE FINANCIAL STATEMENTS OF THE APPELLANT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED AO ERRED IN PROPOSING AND THE DRP FURTHER ERRED IN CONFIRMIN G THAT THE DISTRIBUTION REVENUES EARNED BY THE APPELLANT ARE I N THE NATURE OF ROYALTY INCOME AND HENCE, TAXABLE IN INDIA. NICKELODEON ASIA HOLDINGS PTE LTD ITA NO.7384/MUM/2012 3 THE LEARNED AO OUGHT TO HAVE HELD THAT THE DISTRIBU TION REVENUES ARE IN THE NATURE OF BUSINESS INCOME NOT LIABLE TO TAX IN INDIA. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED AO ERRED IN LEVYING AND THE DRP ERRED IN NO T GIVING DIRECTIONS FOR NON-LEVY OF INTEREST UNDER SECTION 2348 OF THE INCOME-TAX ACT, 1961. 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, SHRI F. V. IRANI, DID NOT PRESS GROUN D NOS 1 TO 6 (ABOVE) OUT OF THE TOTAL SEVEN GROUNDS RAISED BY THE ASSESSEE. THE LD. DR, SHRI YOGESH KAMAT HAD NO OBJE CTION, THEREFORE, GROUNDS NO. 1 TO 6, RAISED BY THE ASSESS EE, ARE DISMISSED AS NOT PRESSED. 3. THE ONLY GROUND REMAINED FOR ADJUDICATION PERTAINS TO LEVYING AND THE LD. DRP NOT DIRECTING F OR NON LEVY OF INTEREST U/S 234B OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE ASSESSEE FILED LETTER DATED 10/07/2012 STATING THAT IN VIEW TO AVOID PROTRACTED LITIGATION, THEY DONT PRESS OB JECTION NO.1 TO 5 DEALING WITH TAXABILITY OF ADVERTISEMENT AND DISTRIBUTION REVENUE PROVIDED RELIEF IS GRANTED WIT H RESPECT TO INTEREST U/S 234B OF THE INCOME TAX ACT. IN EARL IER YEAR ALSO, THE ASSESSEE MADE SIMILAR SUBMISSION BEFORE T HE LD. DRP. THE ASSESSEE RELIED UPON THE DECISION FROM HON BLE BOMBAY HIGH COURT IN NGC NETWORK ASIA LIC. WE HAVE FIND THE CONCLUSION OF THE LD. DRP, WHEREIN, IT HAS BEEN OBSERVED AS UNDER:- NICKELODEON ASIA HOLDINGS PTE LTD ITA NO.7384/MUM/2012 4 WE HAVE CONSIDERED THE ASSESSEES ARGUMENTS AND WE ARE OF THE VIEW THAT SINCE THIS ISSUE DOES NOT PERTAIN TO ANY VARIATION OF INCOME OR LOSS RETURNED, WHICH IS PREJUDICIAL TO THE I NTERESTS OF THE ASSESSEE, WE ARE OF THE OPINION THAT NO DIRECTIONS AR E REQUIRED TO BE GIVEN. IN VIEW OF THE ABOVE, WE DIRECT THE LD. ASSESSING O FFICER TO DELETE THE INTEREST, THUS, THE APPEAL OF THE ASS ESSEE IS PARTLY ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 01/07/2015. SD/ - (RAJENDRA) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ( DATED : 04/08/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 $ 1' ( *+ ) / THE CIT, MUMBAI. 4. 0 0 $ 1' / CIT(A)- , MUMBAI 5. 3#4 .' , 0 *+' * 5 , $ % / DR, ITAT, MUMBAI 6. 6 7% / GUARD FILE. / BY ORDER, /3+' .' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI