BBC Worldwide Ltd, New Delhi V. ADIT, New Delhi

MA 500/DEL/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6396 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 20-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND SONDE
• Keywords: Transfer pricing; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A (FRIDAY) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL M.A.NOS. 500 & 501(DEL)/2010 (ARISING OUT OF ITA NOS. 2458 & 2459(DEL)/2010) ASSESSMENT YEAR: 2001-02 & 2003-04 BBC WORLDWIDE LTD., ASSISTA NT DIRECTOR OF INCOME C/O HAUZ KHAS ENCLAVE, VS. TAX, CIRCL E-1, DIRECTORATE OF NEW DELHI-16. I NTERNATIONAL TAXATION, NEW DELHI. (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI ARVIND SONDE, ADVOCA TE RESPONDENT BY : SHRI SUDESH GARG, DR ORDER PER K.G. BANSAL : AM THE TRIBUNAL HAD PASSED A CONSOLIDATED ORDER ON 23.07.2010, IN WHICH ASSESSEES APPEALS FOR ASSESSMENT YEARS 2001-02 AND 2003-04 HAD BEEN DISPOSED OFF. THE ASSESSEE MOVED MISCELLANE OUS APPLICATIONS IN RESPECT OF THE CONSOLIDATED ORDER MENTIONING INT ER-ALIA THAT MISTAKES APPARENT FROM RECORD CREPT INTO THE ORDER, WHIC H REQUIRE RECTIFICATION U/S 254(2) OF THE ACT. 2. IN THE BEGINNING, WE MAY DEAL WITH THE MISTAK ES WHICH ARE ADMITTEDLY APPARENT FROM RECORD WITH A VIEW TO RECTIFY THEM: MA NOS. 500 & 501(DEL)/2010 2 (I) IN THE CAUSE TITLE, AGAINST THE NAME SHRI AR VIND SONDE, THE ALPHABET AND PUNCTUATION C.A. ARE REPLACED WITH THE WOR D ADVOCATE. (II) IN PARAGRAPH NO. 2.2 ON PAGE 4, THE WORD A PPELLANT IN THE FOURTH LINE IS REPLACED WITH THE WORD APPELLATE; (III) IN PARAGRAPH NO. 4 ON PAGE 14, THE WOR DS, FIGURES AND PUNCTUATION ASSESSMENT YEAR 2002-03 OCCURRING AT TWO PLA CES, ARE REPLACED WITH THE WORDS, FIGURES AND PUNCTUATION ASSESSMENT YE AR 2000-01; AND (IV) RECTIFICATION AS AT (III) (SUPRA) IS ALS O CARRIED OUT IN THE FOURTH LINE OF PARAGRAPH NO. 8.2 ON PAGE 18 OF THE ORDER. 3. FURTHER, THE LD. COUNSEL DREW OUR ATTENTION TOW ARDS PARAGRAPH NO. 2 OF THE ORDER ON PAGE 2, WHICH DEALS WITH TWO ISSUES, NAMELY, THAT (I) THE ASSESSEE HAD PE IN INDIA OR NOT; AND (II) THE PAYMENT OF COMMISSION @ 15% PAID TO THE BWIPL OF THE ADVERTISEMENT REVENUE GENERATED IN INDIA CONSTITUTES ARMS LENGTH PAYMENT THEREBY E XHAUSTING THE ASSESSMENT IN THE CASE OF THE ASSESSEE. THE FINDINGS OF TH E TRIBUNAL IN THESE MATTERS ARE CONTAINED IN PARAGRAPH NO. 4 ON PAGE 14. IT HAS BEEN HELD THAT THE MA NOS. 500 & 501(DEL)/2010 3 PAYMENT TO THE BWIPL WAS AT ARMS LENGTH AND THE PAYMENT EXHAUSTS THE PROFITS, LEAVING NOTHING TO BE TAXABLE IN T HE HANDS OF THE ASSESSEE. THIS CONCLUSION WAS ARRIVED AT ON THE BASIS OF THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR AN EARLIER YEAR. THE PRIMARY CASE OF THE ASSESSEE HAS BEEN THAT NOTHING IS TAXABLE IN ITS HANDS IN RESPECT OF BUSINESS OPERATIONS, IF ANY, CARRIED ON IN INDIA, WHIC H HAS BEEN ACCEPTED. IN VIEW OF THE AFORESAID, THE LD. COUNSEL FOR THE ASSESSEE HAD NOT ARGUED THE QUESTION REGARDING EXISTENCE OF PE EVEN AFTER THE QUERY RAISED BY THE BENCH IN THIS BEHALF. A MENTION HAS BEEN MADE I N PARAGRAPH NO. 2 THAT WHEN THE LD. COUNSEL WAS QUESTIONED AS TO WHE THER GROUNDS IN THIS BEHALF MAY BE TREATED AS NOT PRESSED, IT HAS BEEN SUBMITTED THAT THAT IS NOT THE CASE. IT HAS FURTHER BEEN MENTIONED THA T WE ARE FACED WITH A PIQUANT SITUATION IN WHICH SOME GROUNDS EXIST O N RECORD BUT THE LD. COUNSEL DOES NOT WANT THE GROUNDS TO BE DECIDED. THEREAFTER, REFERENCES WERE MADE TO THE ORDER OF THE LD. CIT(APPEALS) AN D THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SET SETT ALITE (SINGAPORE) PVT. LTD., (2008) 307 ITR 205 (BOM.). FINALLY, IT HA S BEEN HELD THAT SINCE NO ARGUMENT HAS BEEN ADVANCED AGAINST THE FINDINGS OF THE LD. CIT(A), WE HAVE NO OPTION BUT TO HOLD THAT THE ASSESSEE HAS B USINESS CONNECTION AS WELL AS PE IN INDIA. MA NOS. 500 & 501(DEL)/2010 4 3.1 THE LD. COUNSEL HAS OBJECTION TO THIS FINDING . IT IS SUBMITTED THAT THE DECISION IN THE CASE OF SET SETALLITE (SINGAPOR E) PVT. LTD. WAS SOMEWHAT DIFFERENT AND IT HAS BEEN MENTIONED AT PLACITUM 22 THAT IN OUR OPINION CONSIDERING THE JUDGMENT, IF THE CORRECT ARMS LENGTH PRICE IS APPLIED AND PAID THEN NOTHING FURTHER WOULD BE TAXED IN TH E HANDS OF THE FOREIGN ENTERPRISE. 3.2 ON THE OTHER HAND, THE LD. DR SUBMITTED THAT VARIOUS ARGUMENTS FURNISHED BY THE LD. COUNSEL HAVE BEEN CONSIDERE D BY THE TRIBUNAL AND THE MATTER FINALLY STANDS DECIDED IN FAVOUR OF THE ASSESSEE AS NOTHING HAS BEEN FOUND TAXABLE IN ITS HAND EVEN BY T HE TRIBUNAL. THEREFORE, THERE IS NO SUCH ERROR IN THE ORDER WHICH CAN B E RECTIFIED U/S 254(2) OF THE ACT. 3.3 WE HAVE CONSIDERED THE FACTS OF THE CASE A ND SUBMISSIONS MADE BEFORE US. WE FIND THAT ALTHOUGH THE ASSESSEE H AD TAKEN GROUNDS IN RESPECT OF NON-EXISTENCE OF PE, HOWEVER, IN SPIT E OF THE QUESTION BY THE BENCH, THE LD. COUNSEL DID NOT ARGUE THESE GROU NDS. THEREFORE, THE FINDINGS OF THE LD. CIT(APPEALS) WERE CONFIRME D IN THE MATTER. IN THIS MA NOS. 500 & 501(DEL)/2010 5 SCENARIO, REFERENCE TO THE DECISION IN THE CAS E OF SET SETALLITE (SINGAPORE) PVT. LTD. CAN AT BEST BE SAID TO B E INCIDENTAL TO THE MAIN FINDING THAT THE ASSESSEE HAS DEPENDENT AGENT PE IN INDIA. ACCORDINGLY, WE DO NOT FIND ANY ERROR IN THE ORDER WHICH RE QUIRES CORRECTION FROM US. 4. THE LD. COUNSEL ALSO SUBMITTED THAT IN PARA GRAPH 9.2 ON PAGE 21, THE MATTER REGARDING APPROPRIATENESS OF THE NE W METHOD EMPLOYED BY THE ASSESSEE FOR DETERMINING THE VALUE OF INTERNAT IONAL TRANSACTION AT COST PLUS 10% METHOD WAS RESTORED TO THE FILE OF THE AO WITH A DIRECTION THAT THE SAME REQUIRES FURTHER EXAMINATION IN RESP ECT OF THE TRANSFER PRICING REPORTS AND THE PROSPECTIVE NATURE OF THE WITHD RAWAL OF THE BOARD CIRCULAR. IT IS SUBMITTED THAT OTHER ARGUMEN TS WERE ALSO MADE AND IN VIEW THEREOF, THE MATTER SHOULD HAVE BEEN RESTORE D TO THE FILE OF THE AO IN AN OPEN ENDED MANNER SO THAT ALL SUBMISSIONS OF THE ASSESSEE COULD BE CONSIDERED BY HIM. IN REPLY, THE CASE OF THE LD. DR IS THAT ALL THE MATTERS HAVE BEEN CONSIDERED BY THE TRIBUNAL AND THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE AO FOR DE-NOVO DETER MINATION AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASS ESSEE. THEREFORE, THERE IS NO MISTAKE IN THE ORDER WHICH CAN BE RECTIFIED U/S 254(2) OF THE ACT. MA NOS. 500 & 501(DEL)/2010 6 4.1 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE OPERATIVE PORTION OF THE ORDER O F THE TRIBUNAL READS THAT- THEREFORE, WE RESTORE THE MATTER TO THE FILE OF THE AO TO CONSIDER THE MATTER AFRESH AFTER GIVING A REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. THE ATTRIBUTION OF PROFIT, IF FOUND NECESSARY, SHALL BE SUBJECT TO LIMITATION MENTIONED IN THE CASE OF B.R. BAMSI (SUPRA). ALTHOUGH SOME MATTERS HAVE BEEN MENTIONED PRIOR TO RECORDING OF THIS FINDING, THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE AO SUBJECT TO THE LIMITATION MENTIONED ABOVE. THUS, THE AO IS FREE TO TAKE ALL SUBMI SSIONS INTO ACCOUNT AS PER THE EXISTING ORDER. THEREFORE, NO RECTIFICATION IS REQUIRED IN THIS MATTER ALSO. 5. IN THE RESULT, THE APPLICATIONS ARE PARTLY A LLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 APRIL, 2011. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 13TH APRIL, 2011. SP SATIA MA NOS. 500 & 501(DEL)/2010 7 COPY OF THE ORDER FORWARDED TO:- BBC WORLDWIDE LTD., NEW DELHI. ASSTT. DIRECTOR OF INCOME-TAX, CIRCLE-I, INTL. TAXA TION, NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.