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Facts
An appeal was filed by the assessee against a final assessment order passed by the Dispute Resolution Panel-1, Mumbai, which resulted in an addition of Rs. 7,20,38,319/-. The assessee subsequently opted to resolve the dispute under the ‘Vivad Se Vishwas Scheme-2024’ and sought withdrawal of the appeal.
Held
The tribunal dismissed the assessee's appeal as withdrawn, acknowledging the assessee's election to opt for the Vivad Se Vishwas Scheme. The dismissal is conditional, allowing the assessee the liberty to restore or revive the appeal if the application under the scheme does not materialize or is not accepted by the department.
Key Issues
The primary issue was the assessee's challenge to an assessment order making significant additions and various transfer pricing adjustments. The tribunal's decision revolved around the assessee's choice to opt into the Vivad Se Vishwas Scheme.
Sections Cited
144C(5), 153, 92CA(1), 92C(3), 271AA, 270A
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Income Tax Appellate Tribunal, “K” BENCH MUMBAI
Before: SMT. BEENA PILLAI & SHRI GIRISH AGRAWAL
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by assessee is against the order of Dispute no. Resolution Panel-1, Mumbai, vide order ITBA/DRP/F/144C(5)/2024-25/1066256604(1), dated 29.06.2024, passed u/s. 144C(5) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), for Assessment Year 2020-21.
“General Ground 1. erred in assessing the total taxable income/(loss) of the Appellant at INR (10,02,08,178) as against the total taxable income/(loss) of INR (17,22,46,497) reported by the Appellant in the return of income for AY 2020-21;
erred in determining a sum of Rs. 24,79,585 as demand payable by the Appellant on account of excess refund granted to the Appellant
3. erred in short grant of withholding tax credit to the tune of Rs. 8,14,808 Time barred proceedings
4. erred in not appreciating that the time limit under Section 153 of the Act is the outer limit for passing of the final assessment order and hence, the final assessment order dated 29 July 2024 is time barred and liable to be quashed; Reference to the ТРО
5. erred in making a reference of the Appellant's case to the Ld. TPO under Section 92CA(1) of the Act, without satisfying any of the conditions laid down in clauses (a) to (d) of Section 92C(3) of the Act based on the information / documents available with him; Transfer Pricing Adjustment on Licensing of content rights for over-the- top ('OTT') business Rejection of economic analysis undertaken by the Appellant
6. erred in rejecting the economic analysis undertaken by the Appellant using the Other Method, in accordance with the provisions of the Act read with Income Tax Rules, 1962 ('the Rules'), for determination of the arm's length price ('ALP') of international transaction of licensing of content rights for OTT business, without providing any cogent reasons for the same; Comparability analysis of uncontrolled transaction
erred in outrightly disregarding the Indian third-party agreements which were comparable to the content license rights granted by the Associated Enterprise ('AE') to the Appellant without providing any cogent reasons for the same;
erred in rejecting various foreign third-party agreements by merely stating that the license fees were higher on account of composite rights vis-à-vis the license fees charged by the AE to the Appellant;
erred in not appreciating the suitability of the Other Method and the benchmarking analysis carried out by the Appellant to identify comparable agreements for the purpose of ascertaining the arm's length price; Ad-hoc benchmarking of the international transaction
erred in determining the ALP of the international transaction at 50% of the amount paid on an ad-hoc basis by applying the Other Method as the most appropriate method without providing any comparable uncontrolled data for arriving at the ALP as 50% of the amount paid, which is not in accordance with the transfer pricing regulations; Incorrect computation of the transfer pricing adjustment
without prejudice to the above, adjustment if any should be restricted to 50% of the international transaction of the Appellant (i.e., 50% of INR 8,95,28,852 resulting to INR 4,47,64,426) as against the adjustment of INR 4,47,78,175 as per the Final Assessment order; Transfer Pricing adjustment on Technical Fees for use of OTT platform services Rejection of economic analysis undertaken by the Appellant
erred in rejecting the economic analysis undertaken by the Appellant using the Other Method, in accordance with the provisions of the Act read with the Rules, for determination of the ALP of the international transaction of payment of technical fees for use of OTT platform services, without providing any cogent reasons for the same; Comparability analysis of uncontrolled transaction
erred in outrightly disregarding the Indian third-party agreement which was considered for comparability purposes in the transfer pricing report prepared and maintained by the Appellant, without providing any cogent reasons for the same;
erred in not considering the expert opinion obtained by the Appellant and supporting industry reports highlighting the core underlying technologies for functioning of OTT platform and confirming the criticality of technologies availed by the Appellant from both i.e. its AE and the Indian third-party;
erred in dismissing the comparative analysis performed by the Appellant depicting the technical fees incurred by third-party OTT players in their initial year of operations;
erred in rejecting third-party quotations as non-contemporaneous without relying on the intrinsic value of these quotations for undertaking the comparability analysis;
erred in not appreciating the suitability of the Other Method and the benchmarking analysis carried out by the Appellant to identify comparable agreements for the purpose of ascertaining the arm's length price; Ad-hoc benchmarking of the international transaction
erred in determining the ALP of the international transaction at 50% of the amount paid on an ad-hoc basis applying the Other Method as the most Lions Gate India LLP AY 2020-21 appropriate method without providing any comparable uncontrolled data for arriving at the ALP as 50% of the amount paid, which is not in accordance with the transfer pricing regulations; Incorrect computation of the transfer pricing adjustment 19. without prejudice to the above, adjustment if any should be restricted to 50% of the international transaction of the Appellant (i.e., 50% of INR 4,37,43,198 resulting to INR 2,18,71,599) as against the adjustment of INR 2,72,60,144 as per the Final Assessment Order; Levy of penalty 20. erred in initiating penalty proceedings under Section 271AA of the Act by not appreciating that the transfer pricing provisions do not apply to the capital infusion by an AE disqualifying it as an international transaction; 21. erred in initiating penalty proceedings under Section 270A of the Act; 22. erred in basing the assessment on findings, which are erroneous in law, contrary to facts and which are entirely based on conjectures, surmises, and a failure to consider relevant materials.”
Brief facts of the case are that a final assessment order was passed according to the directions of the Dispute Resolution Panel-1, Mumbai, making an addition of Rs.7,20,38,319/- in the hands of the assessee. Aggrieved, assessee is in appeal before the Tribunal.
At the outset, we note that assessee has placed on record a written submission dated 02.04.2025, wherein it has opted to resolve the dispute in this appeal under ‘Vivad Se Vishwas Scheme-2024’ (VSV, 2024 scheme) and sought withdrawal of the appeal.
Ld. Sr. DR does not have any objection if the assessee is availing the VSVS scheme and the appeal is dismissed as withdrawn. Considering the facts on record, we find it appropriate to dismiss the appeal as withdrawn, pursuant to the option availed by assessee for resolving the dispute in the appeal under VSV, 2024. Accordingly, appeal of the assessee is dismissed with a liberty to restore / revive the
In the result, appeal of the assessee is dismissed as withdrawn.