TAJ TV LTD, MUMBAI V. DCIT (IT) 4(1)(2), MUMBAI

MA 354/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0951 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 17-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Transfer pricing; Double taxation relief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MU MBAI BEFORE SHRI G.S. PANNU, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER M.A. NO. 354/M/2019 IN ITA NO.1501/MUM/2018 (A Y 20 11-12 ) TAJ TV LTD. C/O. M/S. SURESH SURANA & ASSOCIATES LLP, CHARTERED ACCOUNTANTS, 13 TH FLOOR, BAKHTAWAR, 229, MUMBAI-400021 . PAN: AABCT6542J VS. DCIT (IT)- 4(1)(2), ROOM NO. 1609, 16 TH FLOOR, AIR INDIA BUILDING, MUMBAI-400021. APPELLANT RESPONDENT APPELLANT BY : SHRI MADHUR AGGARWAL (ADVOCATE) RESPONDENT BY : SHRI MANOJ KUMAR SINGH (SR. DR) DATE OF HEARING : 30.08.2019 DATE OF PRONOUNCEMENT : 30.08.2019 ORDER UNDER SECTION 254(2)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS MISCELLANEOUS APPLICATION (M.A.) IS FILED BY A SSESSEE FOR SEEKING RECTIFICATION OF THE ALLEGED MISTAKE IN THE ORDER D ATED 22.05.2019 PASSED IN ITA NO. 1501/MUM/2018. THE LD. AUTHORIZED REPRES ENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT THE TRIBUNAL WHILE DECIDI NG THE GROUND NO. 2 TO 6, WHICH RELATES TO DISTRIBUTION OF REVENUE, HE HAS RELIED UPON THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR S 2009-10 & 2010- 11, WHEREIN THE DECISION FOR ASSESSMENT YEAR 2006-0 7 WAS FOLLOWED. HOWEVER, DUE TO INADVERTENCE, THE PARAGRAPH-11 OF T HE ORDER WAS EXTRACTED IN PLACE OF PARAGRAPH-7 & 8 OF THE ORDER DATED 20.07.2018. THE LD. AR OF THE ASSESSEE FURTHER INVITED OUR ATTENTIO N THAT ADJUDICATION ON M.A NO. 354 MUM 2019-TAJ TV LTD. 2 SIMILAR GROUND FIND PLACE IN PARAGRAPH-7 & 8 OF THE ORDER DATED 20.07.2018. 2. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE AFTER GOING THROUGH THE DECISION OF TRIBUNA L IN ASSESSMENT YEAR 2009-10 IN ITA NO. 6326/MUM/2016 FAIRLY AGREED THAT THE FINDING OF TRIBUNAL FOR THAT YEAR FIND PLACE IN PARAGRAPH-7 & 8. 3. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND FIND THAT THERE IS MISTAKE APPARENT IN THE ORDER DATED 22.05.2019 P ASSED IN ITA NO. 1051/MUM/2018 WHICH WE RECTIFIED AND DIRECT THAT PA RAGRAPH-13 & 14 OF THE ORDER DATED 22.05.2019 BE READ IN THE FOLLOWING MANNER: 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE OF PE AND CONSEQUENT TAXABILITY OF INCOME IN INDIA IS NO LONGER RES- INTEGRA. THE ITAT, IN ASSESSEES OWN CASE FOR AY 2 006-07 IN ITA NO. 9079/MUM/2010, AFTER CONSIDERING THE RATIO LAID DOW N BY THE HONBLE SUPREME COURT IN THE CASE OF DIT VS MORGAN STANLEY & CO. & OTHER CASES REPORTED IN (2007) 292 ITR 416 (SC) HELD THAT SINCE TAJ INDIA I S BEING REMUNERATED AT ARMS LENGTH PRICE, NO FURTHER INCOME OR PROFIT CAN BE SA ID TO BE ATTRIBUTABLE TO THE ASSESSEE IN INDIA FROM ITS PE. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW:- '9. AS REGARDS THE AO'S CONCLUSION AND FINDING THAT DISTRIBUTION INCOME EARNED BY THE ASSESSEE FOR THE PERIOD 01.04,2002 TO 12.07.2002, THAT IS, FOR THE PERIOD OF LITTLE OVER 3 MONTHS, THE DISTRIBUTION IN COME EARNED BY THE ASSESSEE IS BE TREATED AS 'ROYALTY' INCOME WITHIN THE MEANIN G OF SECTION LJ(VI), BECAUSE PRIOR TO 13.07.2002, ASSESSEE WAS NOT RESIDENT OF M AURITIUS AND THEREFORE, THE BENEFIT OF DTAA WILL NOT BE APPLICABLE AND ACCORDIN GLY THE INCOME SHALL BE TAXABLE AS PER THE DOMESTIC LAW, THAT IS, INDIAN INCOME-TAX ACT ; LD, CIT(A) HELD THAT POST 12.07.2002, THE AO HIMSELF HAS HELD THAT DISTRIBUTION INCOME IS NOT 'ROYALTY' ALBEIT IS A BUSINESS INCOME AND WILL NOT FALL WITHIN THE MEANING OF 'ROYALTY' AS DEFINED UNDER ARTICLE 12 OF THE INDIA MAURITIUS DTAA POST 13.07.2002. THUS, THERE CANNOT BE TWO DIFFERENT TRE ATMENTS FOR SAME INCOME. THE ASSESSEE'S CASE BEFORE THE C1T(A) IN THIS REGAR D WAS THAT, BUSINESS OF M.A NO. 354 MUM 2019-TAJ TV LTD. 3 TELECASTING OF CHANNELS PROCESS IS CONTINUOUS AND N ON-STOP, WHICH IS INITIATED BY THE CHANNEL COMPANIES AND ULTIMATELY ENJOYED BY THE VIEWERS. THE BUSINESS CARRIED ON BY THE CHANNEL COMPANIES IS AN INDIVISIBLE AND WHOLESOME CHAIN OF ACTIVITIES, WHICH CANNOT BE SEGREGATED AND PACKED AS INDEPENDENT MODULES. ALL THE PLAYERS INVOLVED IN THE BUSINESS T AKE PART SIMULTANEOUSLY IN CARRYING ON OF THE TELECASTING BUSINESS WHICH RUNS INSTANTLY. IN SUPPORT THE ASSESSEE HAS REFERRED AND RELIED UPON THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF SATELLITE TELEVISION ASIAN REGION LTD. IN ITA NO.5066/MUM/2004 DATED 18.01.2006. THUS, IT WAS SUBMITTED BY THE ASS ESSEE THAT, SUBSCRIPTION/DISTRIBUTION REVENUE EARNED DOES NOT F ALL IN THE NATURE OF 'ROYALTY' AS DEFINED IN SECTION 9(L)(VI) . THE LD. CIT(A) AFTER EXAMINING THE DEFINITION OF 'ROYALTY' AS GIVEN IN NATION 2 TO SECTION 9(L)(VI) HELD THAT, THE DISTRIBUTION INCOME EVEN UP TO 12TH JULY, 2002 CANN OT TO BE TAXED AS A 'ROYALTY' UNDER SECTION 9(L)(VI) OF THE ACT, AS COPYRIGHT OVER THE PROGRAMS BELONG TO THE ASSESSEE COMPANY, WHEREAS THE DISTRIBUTORS OR CABLE OPERATORS ONLY TRANSMIT THE SIGNALS RECEIVED FROM THE ASSESSEE COMPANY. THE Y DO NOT MODIFY, ALTER, OR REPLACE THE CONTENT OF THE TELECAST BUT BROADCAS T THE CONTENT AS IT IS RECEIVED BY THEM FROM THE ASSESSEE COMPANY. THEREFORE, IT DO ES NOT AMOUNT TO TRANSFER OF ANY RIGHT OVER THE COPYRIGHT OR GRANTIN G ANY LICENSE OVER THE COPYRIGHT TO THE CABLE OPERATORS. THEREFORE, THE AO HAS ERRED IN TAXING DISTRIBUTION INCOME AS 'ROYALTY' UNDER THE ACT.' 8. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH T HE VIEW TAKEN BY THE CO-ORDINATE BENCH, WE ARE OF THE VIEW THAT TAJ INDIA DOES NOT C ONSTITUTE AGENCY PE IN TERMS OF INDIA MAURITIUS DTAA. CONSEQUENTLY, NO FURTHER INCO ME / PROFIT CAN BE SAID TO BE ATTRIBUTABLE TO THE ASSESSEE IN INDIA FROM ITS PE, SINCE TAJ INDIA IS BEING REMUNERATED AT ARMS LENGTH PRICE. ACCORDINGLY, WE DIRECT THE AO TO DELETE ADDITIONS MADE TOWARDS COMPUTATION OF INCOME ATTRIB UTABLE TO THE ASSESSEE IN INDIA. 9. THE FACTS AND ISSUES INVOLVED IN ITA NO. 6366/ MUM/2016 FOR AY 2020-11 IS IDENTICAL TO THE FACTS AND ISSUES DISCUSSED IN ITA NO. 6367/MUM/2016. THEREFORE, FOR THE SAME REASONS, WE DIRECT THE AO TO DELETE AD DITION MADE TOWARDS COMPUTATION OF INCOME ATTRIBUTABLE TO THE ASSESSEE IN INDIA. 4. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE WHEREIN CONSISTENT VIEW IS TAKEN BY CO-ORDINATE BENCH IN EA RLIER YEARS, AND WHEN NO MATERIAL CHANGE IN THE FACT IS BROUGHT TO OUR NO TICE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE FOR D ISALLOWANCE OF M.A NO. 354 MUM 2019-TAJ TV LTD. 4 PROGRAMMING COST, TRANSPONDER CHARGES AND UP-LINKIN G CHARGES UNDER SECTION 40(A)(I). IN THE RESULT, GROUND NO.2 TO 6 A RE DISMISSED. 13. IN THE RESULT, M.A.(S) FILED BY ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.08.2019. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICI AL MEMBER MUMBAI, DATE: 30.08.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR I BENCH, ITAT, MUMBAI 6. GUARD FILE BY OR DER, DY./ASST. REGISTRAR ITAT, MUMBAI