Appeal Details
Counselvise Citation
[2020] 111 COUNSELVISE.COM (IT) 2848 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-03-2020
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
Not Allotted
Assessment Year
2011-2012
Appeal Filed On
26-02-2016
Judgement Text
IN THE INCOME-TAX APPELLATE TRIBUNAL J BENCH MUMBAI BEFORE SHRI PRAMOD KUMAR, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.971/MUM/2016 (ASSESSMENT YEAR 2011-12) SONY PICTURES NETWORKS INDIA PVT. LTD. [SUCCESSOR OF MSM DISCOVERY (P.) LTD.] INTERFACE BUILDING NO.7, 5 TH FLOOR, MALAD LINK ROAD, MALAD (WEST), MUMBAI- 400064. P AN: AABCS1728D VS. DCIT CIRCLE-3 (2) 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. APPELLANT RESPONDENT APPELLANT BY : SHRI P.J. PARDIWALLA WITH SH. HITEN CHANDE (AR) RESPONDENT BY : SHRI UODHAL RAJ SINGH (DR) DATE OF HEARING : 16.12.2019 DATE OF PRONOUNCEMEN T : 13.03.2020 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL WAS ADJUDICATED VIDE ORDER DATED 26.07. 2017. THEREAFTER, THE ASSESSEE FILED A MISCELLANEOUS APPLICATION (MA) UND ER SECTION 254(2) OF THE ACT FOR SEEKING RECTIFICATION OF CERTAIN MISTAKE IN THE ORDER. IN THE SAID MA, THE ASSESSEE SOUGHT CONSIDERATION OF ISSUE; VIZ CHA RACTER OF DISTRIBUTION FEES WHETHER ROYALTY OR NOT. THE MA WAS DISMISSED BY TRI BUNAL VIDE ITS ORDER DATED 13.04.2018. 2. THE ASSESSEE CHALLENGED THE ORDER OF TRIBUNALS DAT ED 13.04.2018 BEFORE HONBLE BOMBAY HONBLE HIGH COURT IN WRIT PETITION BEFORE THE; VIDE W.P. NO. 3508/2018. THE HONBLE HIGH COURT VIDE ORDER DA TED 03.01.2019 SET- ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 2 ASIDE THE ORDER OF TRIBUNAL DATED 28.07.2017 AND RE STORED THE MATTER BACK TO THE TRIBUNAL FOR FRESH ADJUDICATION. THE HONBLE HI GH COURT ALSO DIRECTED TO DECIDE THE CHARACTERIZATION OF DISTRIBUTION FEE I.E . ROYALTY OR NOT. 3. ACCORDINGLY, AS PER THE DIRECTION OF HONBLE HIGH C OURT THE APPEAL WAS HEARD AFRESH. THE ASSESSEE HAS RAISED FOLLOWING GRO UNDS OF APPEAL: GENERAL GROUND 1. ERRED IN ASSESSING THE TOTAL INCOME OF THE APPEL LANT AT RS 344,89,29,574 AGAINST RS 47,26,78,397 AS COMPUTED BY THE APPELLAN T IN ITS RETURN OF INCOME; TRANSFER PRICING GROUNDS 2. ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS. 297,62,51,177 TO THE TOTAL INCOME OF THE APPELLANT ON THE PREMISE THAT THE INT ERNATIONAL TRANSACTIONS ENTERED BY THE APPELLANT WITH ITS ASSOCIATED ENTERP RISES ('AES') WERE NOT AT ARM'S LENGTH; REFERENCE MADE TO THE TRANSFER PRICING OFFICER 3. ERRED IN REFERRING THE APPELLANT'S CASE TO THE L EARNED TRANSFER PRICING OFFICER ('TPO') UNDER SECTION 92CA(I) OF THE ACT, WITHOUT S ATISFYING THE CONDITIONS SPECIFIED THEREIN; REJECTION OF ECONOMIC ANALYSIS UNDERTAKEN BY THE AP PELLANT IN ITS TRANSFER PRICING STUDY REPORT 4. ERRED IN NOT FOLLOWING THE APPELLANT'S OWN ORDER FOR AY 2010-11 WHICH WAS PASSED BY THE HON'BLE DRP ACCEPTING SOFTWARE DISTRI BUTORS AS APPROPRIATE COMPARABLE TO BENCHMARK THE APPELLANT'S INTERNATION AL TRANSACTIONS INSPITE OF THERE BEING NO CHANGE IN FACTS IN A Y 2011-12. 5. 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 COM PARABLES TO BENCHMARK MSMD'S IN TERNATIONAL TRANSACTIONS IN THE ABSENCE OF ANY DIRECT COMPARABLES. 6. ERRED IN LAW AND IN FACTS, IN REJECTING THE FOLL OWING COMPANIES FROM THE TRANSFER PRICING STUDY FOR FY 2010-11 WHICH ARE COM PARABLE TO THE APPELLANT: (I) ADVANCE TECHNOLOGY LIMITED (II) EMPOWER INDUSTRIES INDIA LIMITED (III) SONATA INFORMATION TECHNOLOGY LIMITED ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 3 (IV) SVAM SOFTWARE LIMITED BENCHMARKING ANALYSIS UNDERTAKEN BY THE LEARNED TPO / HON'BLE DRP BY CONSIDERING ROYALTY AGREEMENTS AS COMPARABLE UNCONT ROLLED PRICE (CUP') TO BENCHMARK APPELLANT'S INTERNATIONAL TRANSACTIONS 7. ERRED IN SELECTING THE CUP TO BENCHMARK THE INTE RNATIONAL TRANSACTIONS OF THE APPELLANT WITHOUT APPRECIATING THAT TRANSACTION NET MARGIN ('TNMM') IS THE MOST APPROPRIATE METHOD TO BENCHMARK THE APPELLANT' S INTERNATIONAL TRANSACTIONS; 8. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN CHARACT ERIZING THE DISTRIBUTION FEE PAID/ PAYABLE BY THE APPELLANT TO ITS AES TO BE IN THE NATURE OF ROYALTY; 9. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN NOT APP RECIATING THAT A 'DISTRIBUTION' AGREEMENT LIKE THAT ENTERED INTO BY THE APPELLANT W ITH ITS AE IS DIFFERENT FROM A 'LICENSE/ ROYALTY' AGREEMENT SELECTED BY THE HON'BL E DRP/ LEARNED TPO TO BENCHMARK THE APPELLANT'S INTERNATIONAL TRANSACTION S; 10. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN CONSID ERING ROYALTY AGREEMENTS AS COMPARABLE TO APPELLANT'S INTERNATIONAL TRANSACTION S WITHOUT APPRECIATING THAT SUFFICIENT INFORMATION IS NOT AVAILABLE IN THE PUBL IC DOMAIN TO RELY ON THEIR COMPARABILITY; 11. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN CONSID ERING ROYALTY AGREEMENTS AS COMPARABLE TO BENCHMARK THE APPELLANT'S DISTRIBUTIO N ACTIVITY WITH ITS AES DISREGARDING THE FACT THAT ALL AGREEMENTS ARE FUNCT IONALLY DIFFERENT AND ARE ENTERED INTO IN DIFFERENT GEOGRAPHIES (IE OTHER THA N INDIA) HENCE THE ECONOMIC AND COMMERCIAL CIRCUMSTANCES UNDER WHICH THEY ARE E NTERED WOULD BE DIFFERENT FROM THE DISTRIBUTION AGREEMENT ENTERED INTO BY MSM D; INTERNAL COMPARABILITY 12. ERRED IN OBSERVING THAT THIRD PARTY CHANNELS DI STRIBUTED BY THE APPELLANT IN FY 2010-11 ARE COMPARABLE TO AE CHANNELS DISTRIBUTE D BY THE APPELLANT DURING THE YEAR WITHOUT APPRECIATING THAT THEY ARE NOT COM PARABLE; 13. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN NOT AP PRECIATING THAT WHILE SOFTWARE DISTRIBUTORS ARE APPROPRIATE COMPARABLES, INTERNAL COMPARABLES ARE SUITABLE OVER THE ROYALTY AGREEMENTS SELECTED BY THE HON'BLE DRP/ LEARNED TPO TO BENCHMARK THE APPELLANT'S INTERNATIONAL TRANSACTIONS; 14. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT USING ROYALTY AGREEMENTS AS CUP AFTER OBSERVING THA T MARGIN EARNED BY THE ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 4 APPELLANT FROM THIRD PARTY CHANNELS DISTRIBUTED DUR ING THE YEAR ARE COMPARABLE TO BENCHMARK THE APPELLANT'S INTERNATIONAL TRANSACT IONS; 15. ERRED IN OBSERVING THAT OPERATING PROFIT TO OPE RATING COST IS DETERMINED AT 1.3 9% AND 5.84% FOR AES AND NON-AES SEGMENT RESPECTIVE LY AS AGAINST 3.48% AND 4.77% RESPECTIVELY AS WORKED OUT BY THE APPELLA NT IN AY 2011-12; 16. ERRED IN NOT ALLOCATING SUNDRY BALANCES AND PRO VISIONS NO LONGER REQUIRED WRITTEN BACK, MISCELLANEOUS INCOME, GENERAL AND ADM INISTRATION EXPENSES AND REVERSAL OF PROVISION FOR DOUBTFUL DEBTS BETWEEN AE AND NON-AE CHANNEL SEGMENTS; 17. ERRED IN ALLOCATING MARKETING EXPENSES RELATING TO NON-AE CHANNELS TO BOTH AE AND NON-AE SEGMENT AND NOT APPRECIATING THAT MAR KETING EXPENSES INCURRED IN THE AE SEGMENT WAS REIMBURSED TO THE APPELLANT; 18. ERRED IN NOT APPRECIATING THAT 'NUMBER OF CHANN ELS' USED BY THE APPELLANT TO ALLOCATE COMMON COSTS BETWEEN AE AND NON-AE CHANNEL S IS A MORE APPROPRIATE ALLOCATION KEY INSTEAD OF 'TURNOVER' USED BY THE HO N 'BLE DRP; 19. ERRED IN OBSERVING THAT THE NET MARGIN AS COMPU TED BY THE APPELLANT OR AS COMPUTED BY THE HON'BLE DRP DOES NOT FALL WITHIN TH E +/- 5% RANGE WITHOUT APPRECIATING THAT SUCH RANGE NEEDS TO BE COMPUTED W ITH RESPECT TO THE VALUE OF THE INTERNATIONAL TRANSACTION; 20. ERRED IN OBSERVING THAT THE GROSS PROFITABILITY IN AY 2012-13 IN THE NON-AE SEGMENT IS 27.21 % AS AGAINST 4.6% AS SUBMITTED BY THE APPELLANT; 21. ERRED IN OBSERVING THAT THE SUBSCRIPTION FEES O F NON-AE BUSINESS FOR A Y 2010-11 IS MORE THAN 50% OF TOTAL SUBSCRIPTION RECE IPTS AND THE RESULTANT MARGINS OF NON-AE BUSINESS IS 24.57% (ON GROSS BASI S) WITHOUT APPRECIATING THAT THE APPELLANT HAD ENTERED INTO THE INTERNATION AL TRANSACTION OF LICENSE FEE PAYOUT ONLY FOR LAST TWO MONTHS OF THE FINANCIAL YE AR; 22. WITHOUT PREJUDICE TO GROUND NOS. 12 TO 14, ERRE D IN NOT GRANTING ECONOMIC ADJUSTMENTS ON ACCOUNT OF THE DIFFERENCES IN AE AND NON-AE SEGMENT. GRANT OF BENEFIT OF +/- 5% 23. BENEFIT OF +/-5% UNDER PROVISO TO SECTION 92C(2 ) OF THE ACT BE GRANTED TO THE APPELLANT IF THE ADJUSTMENT UNDER TRANSFER PRIC ING FALLS WITHIN THE RANGE SPECIFIED THEREIN; SHORT GRANT OF TAX DEDUCTED AT SOURCE (TDS) ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 5 24. ERRED IN SHORT GRANTING CREDIT OF TAXES DEDUCTE D AT SOURCE OF RS 1,61,53,825 WHILE COMPUTING THE TAX LIABILITY FOR THE YEAR; MAT CREDIT 25. ERRED IN GRANTING MAT CREDIT OF RS 30,07,126 IN STEAD OF RS 7,39,280 WHILE COMPUTING THE TAX LIABILITY FOR THE YEAR; INTEREST UNDER SECTION 234B OF THE ACT 26. ERRED IN LEVYING INTEREST OF RS 54,84,11,706 UN DER SECTION 234B OF THE ACT; 27. WITHOUT PREJUDICE TO THE ABOVE, ERRED IN COMPUT ING INTEREST UNDER SECTION 234B AT RS. 54,84,11,718 INSTEAD OF RS 54,04,96,711 ; PENALTY PROCEEDINGS 28. ERRED IN INITIATING PENALTY PROCEEDINGS UNDER S ECTION 271 (1)(C) OF THE ACT. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A JOINT VENTURE BETWEEN MULTI SCREEN MEDIA PRIVATE LIMITED (NOW KNOWN AS SONY PIC TURES NETWORKS INDIA PRIVATE LIMITED AND DISCOVERY COMMUNICATIONS INDIA) DURING THE RELEVANT FINANCIAL YEAR, THE ASSESSEE WAS ENGAGED IN THE BUS INESS OF DISTRIBUTION OF CHANNELS TO LOCAL CABLE OPERATORS (LCOS), MULTI S YSTEM OPERATORS (MSOS) AND DIRECT TO HOME (DTH) OPERATORS. THE ASSESSEE WHILE FILING RETURN OF INCOME REPORTED INTERNATIONAL TRANSACTION WITH ITS ASSOCIATE ENTERPRISES (AE) OF DISTRIBUTION FEE. THE ASSESSEE IN FORM 3CEB, REPORTED INTERNATIONAL TRANSACTION OF LICENSE FEE PAID/PAYAB LE FOR DISTRIBUTION OF TELEVISION CHANNELS IN THE FOLLOWING MANNER: SR. NO. DESCRIPTION OF TRANSACTION NAME AND ADDRESS OF THE AE TOTAL AMT. PAID OR PAYABLE IN THE TRANSACTION AS PER BOOKS OF ACCOUNT (INR) METHOD 1. LICENSE FEES PAID / PAYABLE TOWARDS DISTRIBUTION OF TELEVISION MSM SATELLITE (SINGAPORE) PTE. LTD. NO.5, TAMPINES CENTRAL 6, #02-19, TELEPARK BUILDING, SINGAPORE 529482 4,369,228,918 TNMM 2. SPE NETWORK INDIA INC. 10202 WEST WASHINGTON 361,355,460 ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 6 CHANNELS BOULEVARD, CULVER CITY, CA90232 USA 3. DISCOVERY ASIA INC. ONE DISCOVERY PLACE, SILVER SPRING, MARYLAND 20910, USA 8,33,817,957 4. ANIMAL PLANT ASIA LLC, CORPORATION TRUST CENTRE, 1209, ORANGE STREET, DELAWARE LIMINGTON, DE 19801, COUNTRY OF NEW CASTLE, USA 167,647,467 5,732,049,802 5. THE ASSESSEE BENCH MARKED THE TRANSACTION OF DISTRI BUTION FEE BY ADOPTING TRANSACTION NET MARGIN METHOD (TNMM) AND SELECTED SOFTWARE DISTRIBUTOR I.E. COMPANY ENGAGED IN SELLING INTANGI BLE PRODUCTS AS COMPARABLE ON THE GROUND THAT INFORMATION REGARDING THE COMPANIES CARRYING ON THE SAME FUNCTION WAS NOT AVAILABLE IN THE PUBLIC DOMAIN. THE ASSESSEE SELECTED THE FOLLOWING EIGHT COMPARABLE: S.NO. NAME OF THE COMPANY UPDATED OP/OR FOR F.Y. 2010-11 (%) 1. AVANCE TECHNOLOGIES LIMITED 0.18 2. AXON INFOTECH LIMITED NC 3. CRYSTAL SOFTWARE SOLUTION LIMITED NC 4. EMPOWER INDUSTRIES INDIA LIMITED (-)0.19 5. SOFTCEL TECHNOLOGIES LIMITED NA 6. SONATA INFORMATION TECHNOLOGY LIMITED 2.22 7. SVAM S OFTWARE LIMITED - 0.55 8. UNISYS SOFTWARE AND HOLDING INDUSTRIES LIMITED NC ARITHMETIC MEAN 0.42 6. THE ASSESSEE HAS SHOWN ITS MARGIN OF 3.48% FROM DIS TRIBUTION OF AE CHANNEL WHICH WAS HIGHER THAN THE ARITHMETICAL MEAN S OF 0.42% EARNED BY COMPARABLE COMPANY, HENCE, THE ASSESSEE CLAIMED THA T ITS TRANSACTION WITH ITS AE WAS AT ARMS LENGTH. ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 7 7. HOWEVER, DURING THE TRANSFER PRICING ASSESSMENT PRO CEEDING BEFORE THE TRANSFER PRICING OFFICER (TPO), THE ASSESSEE WAS AS KED TO BENCH MARK ITS TRANSACTION TAKING LOCAL CABLE OPERATORS (LCOS), MU LTI SYSTEM OPERATORS (MSOS) &DIRECTS TO HOME ( D.T.H) OPERATORS AS COMPA RABLE. ACCORDINGLY, THE ASSESSEE UNDERTOOK THE SEARCH TO IDENTIFY THE L COS, MSOS AND D.T.H. OPERATOR AND IDENTIFIED EIGHT COMPARABLE. THE SEARC H RESULTED IN THE COMPARABLE HAVING ARITHMETICAL MEANS OF 4.86% AND T HE ASSESSEE CLAIMED IT WAS WITHIN +/- 5% RANGE AND QUALIFIED FOR ARMS LENG TH TEST. 8. THEREAFTER, THE TPO FURTHER ISSUED A SHOW-CAUSE NOT ICE DATED 27.01.2015 AS TO WHY THE SOFTWARE DISTRIBUTION SEARCH CARRIED OUT ABOUT THE ASSESSEE SHOULD NOT BE REJECTED. IT WAS CONFRONTED THAT AS TO WHY T HE ROYALTY-STAT DATABASE SHOULD NOT BE SELECTED FOR THE PURPOSE OF BENCHMARK ING THE TRANSACTION OF DISTRIBUTION FEES. THE TPO RECORDED THAT NO REPLY WAS FILED BY ASSESSEE. THE TPO ALSO TOOK HIS VIEW THAT DISTRIBUTION FEES WAS IN THE NATURE OF ROYALTY AND ROYALTY AGREEMENTS FOUND IN THE ROYALTY -STAT DATABASE WERE BETTER FUNCTIONALLY COMPARABLE TO THE ASSESSEE THAN THE COMPARABLES SELECTED BY ASSESSEE. THE ASSESSEE WAS ALSO SHOW-CAUSED TO D ISCLOSE THE RATE CHARGE WITH 3 RD PARTY CHANNEL VIA COM 18 INDIA PVT. LTD., ND TELEV ISION LTD. AND T.P. TODAY NETWORK FOR DISTRIBUTION ACTIVITY AND TH AT WHY THE SAME RATE SHOULD NOT BE APPLIED. 9. THE TPO RECORDED THAT NO REPLY WAS RECEIVED FROM AS SESSEE. HOWEVER, IN ASSESSEES REPLY DATED 11.11.2015 THE ASSESSEE STAT ED THAT MSMD HAS TO PAY ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 8 GUARANTEE FEE TO THE CHANNEL OPERATOR IN ADDITION T O REVENUE. BUT UNDER THE DISTRIBUTOR AGREEMENT WITH ITS AES MSMD IS NOT REQU IRED TO PAY ANY MINIMUM GUARANTEE FEES. THE ASSESSEE IS EXCLUSIVE CHANNEL DISTRIBUTION FOR ITS AE CHANNELS AND THERE IS NO INTERNAL CUP AVAILA BLE. 10. THE TPO AFTER CONSIDERING THE REPLY AND IN ABSENCE OF DETAILED FURNISHED BY THE ASSESSEE THAT NO BENCHMARKING IS POSSIBLE, THE TPO HELD THAT DISTRIBUTION FEE PAID BY ASSESSEE IS IN THE NATURE OF ROYALTY AN D ACCORDINGLY BENCHMARKED THE INTERNATIONAL TRANSACTION ON THE BA SIS OF 7 ROYALTY-STAT DATABASE IN THE FOLLOWING MANNER: NAME OF LICENSOR NAME OF LICENSEE DESCRIPTION OF AGREEMENT ROYALTY RATE RUFFNATION FILMS, LLC (REF: L4513) NEW LINE TELEVISION, INC. EXCLUSIVE COPYRIGHTS LICENSE TO DISTRIBUTE, EXPLOIT, TRANSMIT AND TELECAST THE SNIPES MOTION PICTURE VIA FREE TELEVISION BROADCAST, SYNDICATION, PAY TV, CABLE, PAY-PER- VIEW, VIDEO-ON-DEMAND, SUBSCRIPTION, INTERACTIVE TV, AND ANY OTHER TELEVISION TRANSMISSION FORM. 30.00% AMERICAN BROADCASTING COMPANIES INC. (L12811) RADIO NETWORKS, LLC EXCLUSIVE LICENSE TO PROMOTE MARKET, DISTRIBUTE AND SUBLICENSE ENGLISH- LANGUAGE AUDIO VERSION OF NEWS SERVICE UNDER ABC NEWS NAME TO FCC-LICENSED, TERRESTRIAL RATIO BROADCAST STATIONS. 50.00% DUROMEDIA HOLDINGS CORP. (REF: L14933) ROGERS CABLE COMMUNIC ATIONS INC. NONEXCLUSIVE COPYRIGHTS LICENSE TO DISTRIBUTE AND EXHIBIT ENTERTAINMENT PROGRAMMING TO RESIDENTIAL SUBSCRIBERS OF DIGITAL CABLE TELEVISION SERVICE ON A VIDEO-ON-DEMAND BASIS. 50.00% INTERNATIONAL CABLECASTING TECHNOLOGIES, INC. (REF: L17659) KBLCOM, INC. ADDENDUM TO EXCLUSIVE DISTRIBUTION LICENSE TO BROADCAST, MARKET AND SELL A MULTI-CHANNEL AUDIO MUSIC SERVICE VIA DIRECT BROADCAST SATELLITE TO COMMERCIAL ESTABLISHMENTS. 31.50% DIGITAL CONTINUUM, INC. (REF: L18130) ETV, INC. EXCLUSIVE LICENSE TO USE A DIGITAL TECHNOLOGY SOLUTION TO DELIVER PROGRAM CONTENT FOR BROADBAND TELEVISION OVER THE INTERNET. 20.00% ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 9 PLAYBOY NETWORKS WORLDWIDE (REF: L20377) TVN EXCLUSIVE LICENSE TO MARKET, PROMOTE, DISTRIBUTE AND SELL THE ADULTVISION 24 HOUR PER DAY, ADULT MOVIE BASED ENTERTAINMENT CHANNEL, THROUGH PAY- PER-VIEW, PAY-PER-BLOCK, PAY-PER- NIGHT AND PAY-PER-DAY TO THE C-BAND HOME SATELLITE DISH MARKET, AND NONEXCLUSIVE DISTRIBUTION RIGHTS IN THE CABLE MARKET. 30.00% CHEQUEMATE INTERNATIONAL, INC. D/B/A C3D TELEVISION (REF: L22904) TELEPRO COMMUNIC ATIONS, INC. NONEXCLUSIVE COPYR IGHT LICENSE TO EXHIBIT THE C-3D SERVICE, WHICH IS A STEREOSCOPIC VIDEO ENTERTAINMENT PROGRAMMING SERVICE SHOWING MOTION PICTURES, PRE-RECORDED PROGRAMS, LIVE PRODUCTIONS, OR OTHER EVENTS, ON A SUBSCRIPTION BASIS THROUGH A CABLE TELEVISION SYSTEM, INITIALLY TO SUBSCRIBERS IN SAN BERNARNDINO, CALIFORNIA. 50.00% AVERAGE 37.36% 11. THE TPO MADE THE ADJUSTMENT IN THE FOLLOWING MANNER : THE ADJUSTMENT AMOUNT IN THE CASE OF ASSESSE E IS WORKED OUT AS UNDER: PARTICULARS AMOUNT (RS.) DISTRIBUTION FEES PAYOUT @ 90% OF TOTAL REVENUES (A) 5,739,503,019 DISTRIBUTION FEES PAYOUT @ 37.36% OF TOTAL REVENUES ARMS LENGTH PAYOUT (B) 2,382,531,491 PAYOUT IN EXCESS OF ARMS LENGTH (A-B) 3,356,971,52 8 12. THUS, THE TPO SUGGESTED ADJUSTMENT OF RS. 335,69,71 ,528/- ON ACCOUNT OF DISTRIBUTION FEE TO ITS AE. ON RECEIPT OF REPORT OF TPO, THE ASSESSING OFFICER PASSED THE DRAFT ASSESSMENT ORDER UNDER SECTION 143 (3) R.W.S. 144C(1) DATED 27.02.2015. THE COPY OF DRAFT ASSESSMENT ORDER WAS SERVED UPON THE ASSESSEE. THE ASSESSEE EXERCISED ITS OPTION FOR FIL ING OBJECTION BEFORE THE DISPUTE RESOLUTION PANEL (DRP). DURING THE HEARING BEFORE THE DRP, THE ASSESSEE FURNISHED THE DETAILS OF 3 RD PARTY CHANNEL DISTRIBUTOR AND URGED THAT ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 10 DUE TO INSUFFICIENT TIME, THE ASSESSEE COULD NOT FU RNISH THE SAME BEFORE THE TPO. THE NET MARGIN OF ASSESSEE FROM AE SEGMENT WAS 3.48% COMPARED TO 4.77% FROM NON-AE SEGMENT. THUS, THE ASSESSEE CL AIMED ITS TRANSACTION WITH AE IS WITHIN +/- 5% AS PRESCRIBED UNDER SECTIO N 92C(2). 13. THE DRP VIDE ITS DIRECTION DATED 30.11.2015 HELD TH AT DISTRIBUTION FEE PAID BY ASSESSEE TO ITS AE IS IN THE NATURE OF ROYALTY A S THE AUDITORS OF ASSESSEE IN ASSESSEES REPORT IN FORM 3CEB HAVE USED WORD L ICENCE FEE TO DECIDE THE DISTRIBUTION FEE PAID TO ITS AE AND ACCORDINGLY UPHELD THE ACTION OF TPO IN CONSIDERING ROYALTY AGREEMENT AS COMPARABLE TO D ISTRIBUTION AGREEMENT BY THE ASSESSEE. HOWEVER, THE LD. DRP EXCLUDED 4 RO YALTY AGREEMENTS OUT OF 7 AGREEMENTS SELECTED BY TPO ON THE GROUND THAT 4 A GREEMENTS WERE NOT IN FORCE DURING THE PREVIOUS RELEVANT YEAR. 14. THE LD. DRP ALSO CARRIED OUT ALTERNATIVE BENCHMARKI NG BY APPLYING INTERNAL TNMM AS COMPARED NET MARGIN EARNED BY ASSESSEE BY D ISTRIBUTING THE AE CHANNEL AS COMPARED THE NET MARGIN EARNED BY ASSESS EE DISTRIBUTING NON- AE CHANNELS. THE LD. DRP WHILE MAKING COMPARISON, B ENCHMARKED THE ALLOCATION OF EXPENSES TO THE AE AND NON-AE SEGMENT AT 5.84% WHICH WAS WITHIN +/- 5% TOLERANCE RANGE AS PRESCRIBED UNDER S ECTION 92C(2). THE LD. DRP ALSO MADE ALTERNATIVE ADJUSTMENT OF RS. 63,77,2 2,598/- BY APPLYING INTERNAL TNMM/CUP COMPARED THE GROSS MARGIN EARNED FROM DISTRIBUTION OF AE CHANNEL VIS--VIS GROSS MARGIN EARNED FROM DI STRIBUTION OF NON-AE CHANNEL. ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 11 15. ON RECEIPT OF THE DIRECTION OF THE DPR , THE ASSES SING OFFICER PASSED THE FINAL ASSESSMENT ORDER DATED 31.12.2015 BY MAKING T .P. ADJUSTMENT TO RS. 297,62,51,177/-. THE ADJUSTMENT WAS RECTIFIED BY TP O AND THE ADJUSTMENT WAS RESTRICTED TO RS. 212,55,29,284/- VIDE ORDER DA TED 06.12.2019. THUS, FURTHER AGGRIEVED, THE ASSESSEE HAS FILED THIS APPE AL BEFORE THE TRIBUNAL. 16. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A R OF THE ASSESSEE SUBMITS THAT ROYALTY STAT SEARCH UNDERTAKEN BY TPO AND ROYA LTY AGREEMENTS IDENTIFIED AS A COMPARABLE IN TWO FOLDS NAMELY (I) DISTRIBUTION FEE PAID BY ASSESSEE TO ITS AE IS NOT IN THE NATURE OF ROYALTY, HENCE, ROYALTY SEARCH UNDERTAKEN BY TPO IS NOT APPROPRIATE AND (II) ROYAL TY AGREEMENTS SELECTED ARE FUNCTIONALLY NOT COMPARABLE TO THE DISTRIBUTION AGREEMENTS ENTERED INTO BY ASSESSEE FOR DISTRIBUTION OF AE CHANNELS. IN SUP PORT OF HIS FIRST CONTENTION, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE DISTRIBUTION AGREEMENTS ENTERED BY ASSESSEE ONLY GRANTS THE RIGH T TO DISTRIBUTE THE CHANNEL OWNED BY THE AE OVER VARIOUS PLATFORMS NAME LY CABLE, DTH AND OTHER DIGITAL PLATFORMS. THE ASSESSEE ONLY ACTS AS AN INTERMEDIARY BETWEEN THE BROADCASTER AND THE ULTIMATE CUSTOMER WHO VIEWS THE CHANNEL. THE ASSESSEE NEITHER ANY RIGHT IN THE CONTENT THAT IS B ROADCASTED OVER THE CHANNEL NOR ANY RIGHT TO MAKE ANY CHANGES IN THE CONTENT TO BE BROADCASTED ON THE CHANNEL. THE ASSESSEE SIMPLY ACTS AS A DISTRIBUTOR AND DISTRIBUTES THE CHANNEL ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 12 TO VARIOUS LCOS/MSOS/DTH OPERATORS IN THE CHAIN WHO IN TURN DISTRIBUTE IT FURTHER TO THE ULTIMATE VIEWER. THUS, THE DISTRIBUT ION FEES PAID BY THE ASSESSEE CANNOT BE TERMED AS ROYALTY WITHIN THE M EANING OF SECTION 9(1)(VI) BY MAKING THE PAYMENT IT DOES NOT ACQUIRE ANY RIGHT TO USE ANY COPYRIGHT OR RIGHTS RELATING TO THE CONTENT THAT IS BROADCASTED ON THE CHANNEL. 17. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT DI STRIBUTION FEES IS NOT IN THE NATURE OF ROYALTY HAS BEEN UPHELD BY TRIBUNAL A ND 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 CI T VS. MSM SATELLITE (SINGAPORE) PTE LIMITED (ITA NO. 103 & 207/2017. FU RTHER, THE LD. DRP IN CASE OF MSM SATELLITE (SINGAPORE) PTE LIMITED IN A. Y. 2010-11 & 2011-12 HAS HELD THAT INCOME RECEIVED FROM MSMD AS DISTRIBU TION FEE IS NOT IN THE NATURE OF ROYALTY; THE COPY OF ORDER OF DRP IS FILE D. COPIES OF ALL THREE AFORESAID DECISIONS ARE PLACED ON RECORD. 18. ACCORDINGLY, THE LD. AR OF THE ASSESSEE SUBMITS THA T DISTRIBUTION PAID BY THE ASSESSEE TO ITS AES CANNOT BE CHARACTERIZED AS ROYA LTY AS HELD BY THE HONBLE BOMBAY HIGH COURT. HENCE, THE VIEW OF TPO T O DETERMINE ALP PAID BY ASSESSEE TO ITS AE BY COMPARING THE PAYMENT WITH THE ROYALTY AGREEMENTS IS DEVOID OF MERITS AND DESERVES TO BE R EJECTED. 19. ON SECOND CONTENTION REGARDING ROYALTY AGREEMENTS S ELECTED ARE FUNCTIONALLY NOT COMPARABLE TO THE DISTRIBUTION AGR EEMENT BY ASSESSEE WITH ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 13 ITS AE. THE LD. AR OF THE ASSESSEE SUBMITS THAT ROY ALTY AGREEMENTS SELECTED BY TPO FROM THE ROYALTY-STAT DATABASE FAIL THE COMP ARABILITY CRITERIA. THE LD. AR OF THE ASSESSEE FURNISHED THE COMPARABLE CRI TERIA WHICH HE WILL REFER WHILE DISCUSSING THE COMPARABILITY, IF NECESSITY AR ISE. 20. ON BENCHMARKING OF TRANSACTION SELECTING SOFTWARE C OMPARABLE, THE LD. AR OF THE ASSESSEE SUBMITS THAT BENCHMARKING CARRIED O UT BY ASSESSEE BY APPLYING TNMM AND SELECTING THE SOFTWARE COMPARABLE IS IN ACCORDANCE WITH THE LAW FOR THE REASONS THAT SOFTWARE DISTRIBU TORS WERE ACCEPTED IN A.Y. 2010-11 BY TPO/DRP AFTER DETAILED ANALYSIS. THE COP Y OF ORDER OF LD. DRP IS PLACED ON RECORD. THE LD. AR OF THE ASSESSEE SUB MITS THAT IF COMPARABLE ACCEPTED IN A.Y. 2010-11 ARE CONSIDERED FOR THE YEA R UNDER CONSIDERATION, THE ALP WILL BE AT 3.46% BASED ON TWO COMPARABLE WH ICH ARE COMMON IN THE YEAR UNDER CONSIDERATION. THE LD. AR FOR THE A SSESSEE FURNISHED THE DETAIL CHART SHOWING THE FUNCTIONAL COMPARABILITY O F FOUR COMPARABLE REJECTED BY THE TPO. THE LD. AR OF THE ASSESSEE FUR THER SUBMITS THAT SOFTWARE DISTRIBUTIONS ARE APPROPRIATE COMPARABLE T O BENCHMARKING CHANNEL DISTRIBUTION ACTIVITIES AND IS UPHELD BY TRIBUNAL I N THE FOLLOWING CASES. ACIT VS NGC NETWORK (INDIA) PVT. LTD. (ITA NO. 5307 /M/2008) DT. 23.02.2011, TURNER INTERNATIONAL INDIA PRIVATE LIMITED VS ACIT (ITA NO. 1204/DEL/2018 DT. 18.06.2018, TURNER INTERNATIONAL INDIA PRIVATE LIMITED VS DCIT (ITA NO. 218/DEL/2017 & ITA NO. 1069/DEL/2014) DT. 01.01.201 9 AND ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 14 TURNER INTERNATIONAL INDIA PRIVATE LIMITED VS DCIT [2019] 101 TAXMANN.COM 446 (DEL TRIB.) DT. 08.10.2018. 21. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPOR TED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FURTHER SUBMITS THAT IN ITS TPSR THE ASSESSEE CONTENDED THAT THAT NO DIRECT COMPARABLE COMPANIES ARE AVAILABLE FOR CHANNEL DISTRIBUTOR RESULT. IN ABSENCE OF DETAILS N O BENCHMARKING WAS POSSIBLE. THE TPO HAS NO OPTION BUT TO GO TO SEARCH ROYALTY STAT DATA FOR SEARCHING COMPARABLE. THE DECISION OF HIGH COURT IN NGC NETWORK (INDIA) PVT LTD (SUPRA) IS BASED ON DIFFERENT FACTS AND THE RATIO OF ORDER IN THAT CASE IS NOT APPLICABLE ON THE FACTS OF THIS CASE. WHILE EXAMINING THE COMPARABILITY FUNCTIONALITY HAS TO BE SEEN PREDOMIN ANTLY. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PA RTIES AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE FI RST ISSUE FOR OUR CONSIDERATION IS WHETHER THE DISTRIBUTION FEE IS IN THE NATURE OF ROYALTY OR NOT. BEFORE US THE LD. AR FOR THE ASSESSEE VEHEMENT LY SUBMITTED THAT THE TPO WRONGLY CHARACTERIZED THE CHANNEL DISTRIBUTION FEE AS ROYALTY. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE ACTS AS A INTER MEDIARY BETWEEN THE BROADCASTER AND THE ULTIMATE CUSTOMERS WHO USES THE CHANNELS. THUS, DISTRIBUTION FEE PAID BY THE ASSESSEE CANNOT BE TER MED AS ROYALTY. THIS FACT IN NOT CONTROVERTED BY LD. DR FOR THE REVENUE NOR A NY 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 FOR AY 2010-11 BY FOLLOWING THE ORDER OF TRIBUNAL FOR AY 2005-06 & 2006-07 DATED ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 15 28.08.2015 HELD THAT DISTRIBUTION REVENUE IS NOT RO YALTY INCOME. THE HONBLE BOMBAY HIGH COURT IN CIT VS SET INDIA PVT L TD (ITA NO. 1347 OF 2013) HELD THAT THE DISTRIBUTION FEE PAID IS NOT IN THE NATURE OF ROYALTY. SIMILAR VIEW WAS AFFIRMED BY HONBLE BOMBAY HIGH CO URT IN CIT VS MSM SATELLITE (SINGAPORE) PTE LTD (ITA NO. 103 OF 2017) . CONSIDERING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT A ND RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE VIEW THAT THE PAYMENT OF DI STRIBUTION FEE CANNOT BE TERMED AS ROYALTY. SINCE, WE HAVE HELD THAT DISTR IBUTION FEE CANNOT BE TERMED AS ROYALTY THUS; DISCUSSION ON THE ROYALTY AGREEMENT SELECTED FOR COMPARABILITY HAS BECOME ACADEMIC. 23. NOW, TURNING TO THE BENCHMARKING OF TRANSACTION ON THE BASIS OF SOFTWARE DISTRIBUTORS. THE ASSESSEE BENCHMARKED ITS TRANSACT ION BY ADOPTING TNMM AND SELECTED SOFTWARE COMPARABLES. THE ASSESSEE SEL ECTED 8 COMPARABLE COMPANIES. OUT OF 8 COMPARABLE COMPANIES, THE TPO R EJECTED 4 COMPARABLE COMPANIES ON THE GROUND OF FUNCTIONAL DISSIMILARITY . BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT 4 COMPARABLE WERE WR ONGLY REJECTED BY TPO WHICH ARE FUNCTIONALLY COMPARABLE. THE LD. AR FURTH ER SUBMITS THAT AVANCE TECHNOLOGY LTD. (AVANCE), EMPOWER INDUSTRIES LTD. ( EMPOWER), SONATA INFORMATION TECHNOLOGY (SONATA) AND SVM SOFTWARE LT D. ARE COMPARABLE WITH THE ASSESSEE. ALL THESE COMPARABLE COMPANIES A RE ENGAGED IN DISTRIBUTION OF SOFTWARE PRODUCT AND GOOD COMPARABL E WITH THE ASSESSEE. IN ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 16 SUPPORT OF SUBMISSION, THE LD. AR RELIED ON THE DEC ISION WHICH WE HAVE MENTIONED IN PARA 20 ABOVE. 24. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. 25. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND PERUSED THE RECORD. THE TPO DURING THE TP ADJUSTMENT PROCEEDING REJECTED AVANCE ON THE GROUND THAT THIS COMPANIES IS ENGAGED IN SOFTWA RE TRADING, SALES OF HARDWARE AND OTHER SERVICES AND NO SEGMENTAL INFORM ATION IS AVAILABLE. DRP UPHELD THE ACTION OF ON THE BASIS OF ORDER FOR A.Y. 2010-11.BEFORE TRIBUNAL, THE ASSESSEE HAS PLACED ON RECORD THE FINANCIAL STA TEMENT OF AVANCE. PERUSAL OF FINANCIAL STATEMENT REVEALS THAT THIS COMPANY HA S EARNED RS. 140 CRORE FROM SALE OF SOFTWARE OUT OF TOTAL SALES OF RS. 176 CRORE. THIS COMPANY HAS APPROXIMATELY 80% OF ITS INCOME FROM SOFTWARE PRODU CT. THUS, SEGMENTAL INFORMATION AS PLACED BEFORE US IS AVAILABLE AT (PA GE NO. 204 TO 205 OF PAPER BOOK). FURTHER, WHILE REJECTING EMPOWER, THE TPO HELD THAT THIS COMPANY IS ENGAGED IN SELLING OF HARDWARE AND NO SE GMENTAL ARE AVAILABLE. FROM THE FINANCIAL STATEMENT PLACED BEFORE TRIBUNAL AT (PAGE NO. 207 TO 219 OF THE PAPER BOOK) AS PER DISCUSSION AVAILABLE ON P AGE NO. 22 OF ANNUAL REPORT OF THIS COMPARABLE (PAGE NO. 209) THE COMPAN Y HAS EARNED MORE THAN 80% OF ITS REVENUE FROM SOFTWARE SALES. SIMILA RLY, SONATA WAS REJECTED BY TPO BY TAKING VIEW THAT THIS COMPANY IS ENGAGED IN SOFTWARE TRADING, CONSULTANCY SERVICES. WE HAVE NOTED THAT THIS COMPA RABLE WAS ACCEPTED IN ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 17 A.Y. 2020-11 BY TPO HIMSELF IN ITS ORDER DATED 29.0 1.2014. 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 FRO M SOFTWARE PRODUCT (PAGE NO. 224 OF THE PAPER BOOK). SVAM SOFTWARE WAS REJEC TED BY TPO ON THE GROUND THAT 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 REVE NUE OF RS. 20 CRORE. FROM THE FINANCIAL OF THIS COMPANY IT IS NOTED THAT ENTI RE 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 PRIMARILY ENGAGED IN DISTRIBUTION OF SOFTWARE PRODUCT AS NOTED ABOVE. THE SOFTWARE DISTRIBUTION COMPANY ARE HELD TO BE GOOD COMPARABLE TO DISTRIBUT OR SATELLITE CHANNELS IN TURNER INTERNATIONAL INDIA (P.) LTD. VS. ACIT (SUPR A). THEREFORE, WE ACCEPT THE SUBMISSION OF LD. AR OF THE ASSESSEE TO ACCEPT THESE COMPARABLE AS COMPARABLE WITH ASSESSEE AND DIRECT THE AO/TPO TO W ORK OUT THE T.P. ADJUSTMENT AFRESH. NEEDLESS TO ORDER THAT BEFORE PA SSING THE ORDER, THE TPO/ASSESSING OFFICER SHALL GRANT OPPORTUNITY TO TH E ASSESSEE. IN THE RESULT, THE GROUNDS RELATED TO COMPARABILITY OF COMPARABLE ARE ALLOWED IN ACCORDANCE WITH THE AFORESAID DIRECTIONS. CONSIDERI NG THE FACT THAT WE HAVE ALLOWED THE FUNCTIONAL COMPARABILITY, THEREFORE, DI SCUSSIONS ON ALTERNATIVE ADJUSTMENT HELD BY DRP HAVE BECOME ACADEMIC. ITA NO. 971 MUM 2016- SONY PICTURES NETWORKS INDIA PVT. LTD. 18 26. NEXT GROUND OF APPEAL (GROUND NO. 24) RELATES TO SH ORT DEDUCTION OF TDS OF RS. 1.61 CRORE. AND GROUND NO. 25 RELATES TO MAT CR EDIT. GROUND NO. 26 & 27 RELATES TO INTEREST U/S 234B. ALTHOUGH, NO SPE CIFIC SUBMISSION WAS MADE BY LD. REPRESENTATIVE OF THE PARTIES. HOWEVER, KEEPING IN VIEW THE PRINCIPLE OF NATURAL JUSTICE, THE AO IS DIRECTED TO VERIFY THE TDS DETAILS AND GRANT APPROPRIATE RELIEF TO THE ASSESSEE AS PER LAW . SIMILARLY ON MAT CREDIT, THE AO IS DIRECTED TO VERIFY THE FAC T AND GRANT RELIEF TO THE ASSESSEE IN ACCORDANCE WITH LAW. SO FAR AS LEVY OF INTEREST U/S 234B IS CONCERNED, THIS INTEREST IS CONSEQUENTIAL, THUS, TH E AO IS DIRECTED TO WORK OUT THE INTEREST AS PER LAW. GROUND NO. 28 RELATES TO INITIATION OF PENALTY U/S 271(1)(C). THIS GROUND OF APPEAL IS PREMATURE AND N EEDS NO SPECIFIC DIRECTION. 27. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT O N 13/03/2020. SD/- S D/- PRAMOD KUMAR PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE:13.03.2020 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR J BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI
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