VIACOM 18 MEDIA P.LTD,MUMBAI vs. ADDL CIT 11(1), MUMBAI

Since all the aforesaid appeals pertain to the same assessee involving multiple issues, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. We now proceed to decide the issues on merit, as per the chronology of the assessment years under consideration.

The assessee in the present appeals, formerly known as MTV Networks India Pvt. Ltd., is wholly owned subsidiary of MTV Asia Ventures India Pvt. Ltd., Mauritius. During the year under consideration, the assessee continued its business of acting as a sales

Grounds no.1 and 2, being consequential to other grounds which we have decided elsewhere in this order.

Insofar as ground no.3, is concerned, we find that this ground being general in nature, hence no adjudication is required.

Grounds no.4, 5 and 6, relates to adjustment in the content segment of ` 5,17,25,848.

Facts in brief are, for the year under consideration, MTV Asia LDC (MTVA) and Nickelodeon Asia Holdings Pte. Ltd. (Nick Asia) had engaged Viacom 18 Media Pvt. Ltd. (the assessee herein) for the production and supply of programmes, promos, interstitial

The Transfer Pricing Officer had asked the assessee to conduct a fresh search based on the methodology and search criterion adopted in transfer pricing order for the A.Y. 2005–06. In response to the same, the assessee had submitted vide letter dated 17 September 2009, a set of 18 comparable companies. The assessee‟s analysis was replaced by the said benchmarking analysis consisting of 18 comparable. As per said analysis, comparable margin was derived by Transfer Pricing Officer at 19.41% and transfer pricing adjustment of ` 5,17,25,848, was made.

The DRP confirmed the action of the Transfer Pricing Officer.

During the course of hearing, the learned A.R., Shri Nimesh Vora, appearing for the assessee, at the very outset, submitted that the issue for adjudication is squarely covered by the decision of the Co–

In this regard, the learned A.R. submitted that broadcasting companies are not functionally comparable to the assessee and the same is covered by the order of Tribunal, Mumbai Benches, rendered in assessee‟s own case in ACIT v/s M/s. Viacom 18 Media Pvt. Ltd., ITA 8th February no.8406/Mum./2010, order dated 2019, for the assessment year 2005-06. He further submitted that similar issue had came before the CIT(A) for the assessment year 2007–08, wherein the CIT(A) directed to remove broadcasting companies being not functionally comparable. He submitted that the said direction of the

Insofar as exclusion of loss-making companies under comparable set is concerned, the learned A.R. for the assessee submitted that the Transfer Pricing Officer while conducting its bench marking analysis, had excluded certain comparable (sr no 18 to 25) on account of they being loss making companies. In this regard, he submitted that only consistent loss-making companies should be excluded from benchmarking set. The comparable like M/s. Moving Pictures and M/s. Cinevista, which have made losses only in single year, should be considered.

The learned A.R. submitted that the Tribunal in assessee‟s own case for the assessment year 2005-06 cited supra held that loss making functionally comparable companies are to be considered for benchmarking purposes and specifically mentioned that M/s. Creative Eye Ltd., to be accepted as a valid comparable. The learned A.R. for the assessee further pointed out that the comparable like M/s. Moving Pictures and M/s. Cinevista, were considered as comparable for benchmarking by the Transfer Pricing Officer itself in the assessment year 2005–06, because it had positive margin. Further other comparable like M/s.Crest Animation Studios Ltd., M/s. Radaan Media Works Ltd. and M/s. Color Chips (India) Ltd., were though rejected

The learned Departmental Representative relied upon the orders of the authorities below.

Considered the rival submissions and perused the material on record. Both the parties conceded before us that the issues raised in the ground no.5 of appeal are now settled by the decision of the

With regard to grounds no.6 and 7, both the parties conceded before us that the issues raised in these grounds are now settled by

Since the issues for our adjudication are squarely covered by the aforesaid decision of the Tribunal rendered in assessee‟s own case in an appeal filed by the Revenue cited supra, wherein we have decided this issue in favour of the assessee and against the Revenue for the

As far as grounds no.4, 9, 10, 11 and 12 are concerned, we find that these grounds being consequential to the outcome of grounds no.5, 6 and 7, which we have decided above vide Para–6 to 15 above, therefore, grounds no. 4, 9, 10, 11 and 12, are also allowed.

The issue arising out of grounds no. 13 to 16, relates to transfer pricing adjustment on account of distribution revenue of ` 4,82,72,402.

From the records available before us, it is seen that MTVA and NICK Asia had appointed Viacom 18 to act as the distributor of the “MTV channel”, “Vh1 channel” and “Nickelodeon channel”. The assessee earned ` 40,536,903, as its income from distribution and had remitted ` 90,311,952 to its A.Es as a pass-through entity. The assessee had earned a margin of (-)37.85% as these being initial years of operations.

The Transfer Pricing Officer following the order of its predecessor–in–office, determined arm's length price and application of TNMM method by taking cable T.V. operators as comparable by

The DRP confirmed the adjustment proposed by the Transfer Pricing Officer and also did not adjudicate on the alternative benchmarking using CUP method.

Before us, the learned A.R. for the assessee submitted that the assessee was appointed as distributor by its A.E. and the assessee had in turn appointed third party being Set Discovery Ltd. and Zee Turner Ltd., as sub–distributor and shared the distribution revenue with them. Accordingly, the assessee benchmarked the said transaction under CUP method and held that the transaction is at arm‟s length as the assessee gets 50% revenue share from its A.E. whereas the third party distributor gets only 31.60% / 37.50% from the assessee. Thus, the CUP being direct method shall be preferred over TNMM applied by the Transfer Pricing Officer. The learned A.R. further submitted that the comparable taken by the Transfer Pricing Officer under TNMM are random comparable selected from internet and not following any scientific search process and such approach of the Transfer Pricing Officer shall not be accepted. The learned A.R. for the assessee further submitted that the Tribunal, Mumbai Bench, in assessee‟s own case for the assessment year 2005–06, in ACIT v/s M/s. Viacom 18 Media Pvt. Ltd., ITA no.8406/Mum./2010, order dated 8th February 2019 accepted

The learned Departmental Representative relied upon the observations of the Revenue authorities and further submitted that this issue may be remitted back to the Assessing Officer / Transfer Pricing Officer for fresh verification and assessment.

Considered the rival submissions and perused the material on record. We find that the issue arising out of the aforesaid grounds of appeal have been decided by the Tribunal in assessee‟s own case in ACIT v/s M/s. Viacom 18 Media Pvt. Ltd., ITA no. 8406/Mum./2010, order dated 8th February 2019, wherein the Tribunal decided the issue against the Revenue by observing as under:–

The issue before us being covered by the aforesaid decision of the Tribunal rendered in assessee‟s own case cited supra in an appeal filed by the Revenue wherein the Co–ordinate Bench has decided the issue against the Revenue and in favour of the assessee, consistent with the findings given as aforesaid, we set aside the impugned order passed by the DRP and allow the grounds of appeal no.15. The other grounds raised by the assessee i.e., ground no.13, being general in nature, ground no.14 and 16, becomes academic in nature considering the fact that we have allowed ground no.15, in favour of the assessee. Consequently, grounds no.13, 14 and 16 being academic in nature are left un–adjudicated.

The issue arising out of grounds no.17 to 19, relates to transfer pricing adjustment relating to mark–up on reimbursement of expenses at ` 1,32,82,364.

The assessee during the year under consideration had incurred certain expenses for its business and recovered the same from its A.E. the same was the initial period of its business operations. For certain

The Transfer Pricing Officer considered ad–hoc 10% mark-up on the ground that the assessee has provided financial and manpower services to its A.E. and made addition of ` 1,32,82,364.

The DRP confirmed the action of the Transfer Pricing Officer.

The learned A.R. for the assessee submitted before us that from the nature of expenses which are reimbursed by the AEs, the major part was on account of advertisement and sales promotion expenses which were incurred for the purpose of the business of the assessee and the same were reimbursed to support the business operations of the assessee and similarly, the assessee had made full and final settlement with its Managing Director, which also got reimbursed from its AE. These two types of expenses accounts for 2/3rd of the total reimbursement received. The balance of various expenses incurred on behalf of A.E. and subsequently recovered.

Further, the learned A.R. submitted that the assessee had not funded by the A.E. but there was always amount payable to A.Es and thus there is no financial services provided by the assessee. The activities are done for the purpose of business of the assessee and no specific manpower is deployed to provide services to the A.E. benefit,

The learned A.R. for the assessee further submitted that identical adjustment of mark–up on reimbursement of advertisement and marketing expenses was made in immediately preceding year i.e., A.Y. 2005-06 and the Tribunal has deleted the same.

The learned Departmental Representative on the other hand relied upon the observations of the authorities below.

Having considered the rival submissions and having perused the material on record in the light of the decisions relied upon, we find that this issue has been decided by the Co–ordinate Bench of this Tribunal in assessee‟s own case for the assessment year 2005–06 in an appeal filed by the Revenue in ACIT v/s M/s.Viacom 18 Media Pvt. Ltd., ITA no.8406/Mum./2010, order dated 8th February 2019, wherein the Co–ordinate Bench allowed the issue in favour of the assessee and against the Revenue. For better appreciation of facts, the relevant observations of the Tribunal are reproduced below:–

Since the issue for our consideration is covered by the aforesaid decision of the Tribunal in assessee‟s own case cited supra, consistent with the view taken therein, we set aside the impugned order passed by the DRP and allow the grounds of appeal no.17 to 19.

Ground no.20, relates to disallowance of advertisement and sales promotion expenses under section 37(1) of ` 2,63,41,675.

The assessee had incurred advertisement and marketing expenses for its business and claimed as revenue expenditure. The total expenses incurred was ` 8,12,80,876, (net of recovery from A.E. of ` 6,22,30,226). Out of the same, ` 5,23,56,231, was considered as part of direct cost of production of programmes which has been recovered by the assessee from MTV Asia and Nick Asia at cost plus 10% mark–up. Balance advertisement and marketing cost of ` 2,89,24,645, was claimed as have been incurred for the purpose of business of acting as advertising sales agent and distribution of channels. The Assessing Officer observed that the income from export of programmes, exchange gain on exports and commission (referred

The DRP confirmed the disallowance made by the Assessing Officer since as per DRP, the expenses were incurred by the assessee without any legal obligation.

Before us, the learned A.R. for the assessee submitted that the expenses are incurred for the purpose of business and, hence allowable under section 37(1) of the Act. The expenses are incurred for achieving the following targets like more popularise a channel, more advertisers are willing to advertise on such channels and higher Ad–sales would result in higher revenue for the assessee (commission revenue, distribution revenues and revenue from licensing and merchandising) which are all linked to the popularity of the channel. The learned A.R. further submitted that its case is squarely covered by the decision of Hon‟ble Bombay High Court rendered in assessee‟s own

The learned Departmental Representative relied upon the observations of the authorities below:–

Considered the rival submissions and perused the material on record. Before us, the learned A.R. appearing for the parties conceded that the issue is now settled by the decision of the Co–ordinate Bench of this Tribunal rendered in assessee‟s own case for the assessment year 2005–06 in an appeal filed by the Revenue in ACIT v/s M/s.Viacom 18 Media Pvt. Ltd., ITA no.8406/Mum./2010, order dated 8th February 2019, wherein the Co–ordinate Bench has decided the issue in favour of the assessee and against the Revenue. The relevant observation of the Tribunal is reproduced below for the sake of ready reference:– “24. It was contended by the learned A.R. that this order of Tribunal was affirmed by Hon'ble Bombay High Court in the case of CIT vs. Viacom 18 Media Private Limited in Income Tax appeal No. 4599 of 2010 vide order dated 25.11.2011 , wherein it is held as under:-

The issue in hand is covered by the aforesaid decision of the Co– ordinate Bench of the Tribunal cited supra. We also find that the Hon'ble Jurisdictional High Court has confirmed the order of the Tribunal rendered in assessee‟s own case for the assessment year 2003–04. Consistent with the view taken therein in assessee‟s own case cited supra and respectfully following the decision of the Hon'ble Jurisdictional High Court as aforesaid, we set aside the impugned order passed by the DRP by allowing ground no.20, raised by the assessee.

Ground no.21, relates to disallowance on account of irrecoverable deposit written–off at ` 1,25,00,000.

The assessee had taken a flat on leave & license for providing accommodation to its Managing Director. Unknown to the assessee,

As per the Assessing Officer, write–off is not allowable as deduction as bad debts as any income in respect thereof has not been accounted for in the profit and loss account of the assessee for earlier years. On the alternate claim of the assessee of allowing the same as trading loss, the Assessing Officer held that it has not arisen in the ordinary course of business as the assessee is engaged in the business of telecast of various programs on its TV channels and distribution of satellite channels via cable.

The DRP confirmed the disallowance as the assessee was not been able to establish that hiring of residential unit is incidental to the business of the assessee to claim it as business loss. 46. Before us, the learned A.R. for the assessee submitted that the deposit for the residential unit was given for providing residential

He submitted that the Hon'ble Jurisdictional High Court in IBM World Trade Corp. v/s CIT, [1990] 186 ITR 412 (Bom.) has in similar circumstances held that write–off of deposit given for taking premises on lease on landlord becoming insolvent, is an allowable as business loss as the lease was taken for the purpose of business. In support of these contentions, the learned A.R. placed reliance on the following decisions:–

The learned Departmental Representative on the other hand relied upon the observations of the authorities below.

Considered the rival submissions and perused the material on record. We noticed that the assessee has taken a flat on leave and license basis for providing accommodation to its managing director. Providing accommodation to its key employees is part of business expenditure. It is needless to say that these facilities were charged to tax under “Fringe Benefit Tax”. The assessee has taken this flat to provide accommodation to its managing director and the deposit made to secure this flat is also for the purpose of business. When the assessee unable to recover the same, it can only be considered as the loss incurred for the purpose of business. Therefore, we are inclined to accept the submissions of the assessee and accordingly ground no.21, raised by the assessee is allowed.

Ground no.22, relates to levy of interest under section 234B and 234C of the Act.

Levy of interest under section 234B and 234C of the Act is consequential in nature and hence the Assessing Officer is directed to give consequential effect in view of our directions as aforesaid and in accordance with law.

The issue arising out of grounds no.23 and 24, relates to lack of opportunity of hearing.

During the course of hearing, the learned A.R. for the assessee has not pressed these grounds. Consequently, these grounds are dismissed as not pressed.

In the result, assessee‟s appeal for the assessment year 2006–07 is partly allowed.

Grounds no.1 and 2, raised by the assessee being consequential to other grounds decided by us in this appeal elsewhere.

The issue raised in ground no.3 to 9, by the assessee is with regard to the adjustment relating to content segment of ` 4,53,39,826.

Both the learned A.R. appearing for the parties agreed before us that this issue has been decided by us in grounds no.3 to 12, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, vide Para–13 to 15 of this order, wherein we have set aside the impugned order passed by the DRP by deciding the issue in favour of the assessee and against the Revenue. Consequent upon the decision taken by us on this issue as aforesaid,

The issue raised in grounds no.10 and 11, by the assessee relates to taxability of advance income of ` 36,46,492.

The assessee had received income from certain parties in advance. The income was pertaining to more than 12 months of between two accounting years. The proportionate income pertaining to the assessment year 2007–08 was offered to tax in assessment year 2007–08 and the balance income was offered to tax in the subsequent assessment years and was shown as received in advance in assessment year 2007–08 which is tabulated below:–

The Assessing Officer was of the view that the said advance income should have been offered to tax in assessment year 2007-08 and accordingly made addition to total income.

The learned CIT(A) confirmed the action of the Assessing Officer as the relevant documents were not filed before the Assessing Officer and though filed before the CIT(A), were not filed under Rule 46A requesting for admission of additional evidences.

Before us, the learned A.R. for the assessee submitted that the relevant details could not be filed before the Assessing Officer as the basic details were filed for the first time vide letter dated 21st December 2010, and then the Assessing Officer passed the assessment order on 31st December 2010. He submitted that the relevant details were filed before the learned CIT(A) for the first time, which were not entertained by him on technical reasons. The assessee has, therefore, filed application for admission of additional evidences on 19th February 2021, with a request to admit the documents to be admitted as additional evidences. On merits, the learned A.R. submitted the assessee has already offered the income accrued during the year and balance advance income is already offered to tax in subsequent assessment years. This practice is consistently followed by the assessee and the same is accepted in other years.

The learned Departmental Representative relied upon the observations of the authorities below.

Considered the rival submissions and perused the material on record. In view of the submissions made by the learned A.R. for the assessee, we set aside the impugned order passed by the learned CIT(A) and restore the issue back to the Assessing Officer and direct him to verify the additional evidence filed before the learned CIT(A) and if the income is already offered to tax in subsequent assessment year, then the same may not be again taxed in assessment year 2007–08. Thus, the ground no.10 and 11, are allowed in terms indicated above.

Ground no.12, relates to levy of interest under section 234B and 234C of the Act.

Levy of interest under section 234B and 234C of the Act is consequential in nature and hence the Assessing Officer is directed to give consequential effect in view of our directions as aforesaid and in accordance with law.

Ground no.13, relates to deduction of distribution expenses.

During the course of hearing, it was brought to the notice of the Bench that this claim is made for the first time before the Tribunal,

Further the learned A.R. submitted that subsequent to the completion of assessment for the year under consideration, the assessment for the assessment year 2006-07 was re–opened. In the re–assessment proceedings, the Assessing Officer disallowed a sum of ` 5,55,28,565, under section 40(a)(ia)of the Act being distribution fees paid by the assessee to its A.E. for non-deduction of tax at source.

Before the learned CIT(A), the assessee pleaded that since the assessee has deducted tax at source in subsequent years, relevant deduction shall be allowed in the year in which tax was paid to the Government. Accordingly, the assessee claimed that direction may be given to the Assessing Officer to allow sum of ` 3,33,69,334, in assessment year 2007–08. The learned CIT(A), however, did not accept the plea of the assessee. On appeal before the Tribunal, vide order dated 26th November 2014, the Tribunal directed the learned CIT(A) to consider the assessee‟s claim and restored the issue back to the file of the learned CIT(A).

Before us, the learned A.R. for the assessee submitted that till date, no effect is given to the directions of the Tribunal and hence this ground is taken before the Tribunal requesting to issue appropriate directions and the Assessing Officer / CIT(A) may be directed to allow claim of the assessee after verifying fact of deposit of tax deducted at source.

The learned Departmental Representative supported the orders of the authorities below.

Considered the rival submissions and perused the material on record. The assessee made this new claim before us which is borne out as a result of appellate decisions in the earlier assessment year. By relying upon the decision of the Hon'ble Jurisdictional High Court in CIT v/s Pruthvi Brokers and Shareholders Pvt. Ltd., [2012] 349 ITR 336 (Bom.), we consider this new claim made by the assessee as fit and proper for adjudication. Now, on merit of this new claim, we find that identical issue came up before the Tribunal in assessee‟s own case for the assessment year 2008–09 in Viacom 18 Media Pvt. Ltd. v/s ACIT, ITA no.7336/Mum./2012, order dated 29th October 2016, wherein the assessee had claimed deduction of ` 48,70,516 (out of ` 5,55,28,565) on account of TDS paid during the assessment year 2008–09. The Tribunal restored the matter back to the file of the learned CIT(A) for deciding the issue afresh along with similar issues

Since the issue before us is identical to the issue as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) and direct him to decide the issue of deduction of ` 3,33,69,334, after verifying the fact of deposit of tax deducted at source and in accordance with law after providing reasonable opportunity of being heard to the assessee. Thus, ground no.13, is allowed for statistical purposes.

In the result, assessee‟s appeal for A.Y. 2007–08 is partly allowed.

Ground no.1(i) and 1(ii) relates to adjustment relating to Content Segment.

Both the learned A.R. appearing for the parties agreed before us that related facts and circumstances of the issue raised by either party is mutatis mutandis and materially identical to the issue decided by us vide grounds no.3 to 12, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, vide Para–13 to 15 of this order, wherein we have set aside the impugned order passed by the learned CIT(A) by allowing the issue raised by the assessee. Consequent upon the decision taken by us on this issue as aforesaid, while maintaining the consistency with the view taken therein, we do not find any infirmity with the order of the learned CIT(A) which is upheld on this issue by dismissing the grounds no.1(i) and 1(ii) raised by the Revenue.

Ground no.2(i) to 2(iv) raised by the Revenue relates to transfer pricing adjustment relating to mark–up on reimbursement of expenses at ` 21,99,60,689.

Having heard both the parties and having perused the material on record, we find that related facts and circumstances of the issue raised by the Revenue is mutatis mutandis and materially identical to the issue decided by us vide grounds no.17 to 19, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, vide Para–33 and 34 of this order, wherein we have set aside the impugned order passed by the learned CIT(A) by allowing the issue raised by the assessee. Consequent upon the decision taken by us on this issue as aforesaid, while maintaining the consistency with the view taken therein, we uphold the order of the learned CIT(A) on this issue and dismiss the grounds no.2(i) and 2(iv) raised by the Revenue.

Ground no.3, raised by the Revenue relates to disallowance of advertisement and sale promotion expenses under section 37(1) of the Act at ` 4,11,60,573.

During the course of hearing, both the learned A.R. appearing for the parties conceded that related facts and circumstances of the issue raised by either party is mutatis mutandis and materially identical to the issue decided by us vide ground no.20, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, vide Para–40 and 41 of this order, wherein we have set

Grounds no.4 and 5, being general in nature, hence no separate adjudication is contemplated.

In the result, Revenue‟s appeal for A.Y. 2007–08 is dismissed. ITA no.2055/Mum./2014 Assessee’s Appeal – A.Y. 2009–10 85. Grounds no.1 and 2, being inter–connected to other grounds raised in this appeal, hence these grounds are left un–adjudicated. These issues will be decided in succeeding grounds of appeal.

Ground no.3, relates to transfer pricing adjustment on account of payment made for distribution of T.V. channels of ` 87,55,370, under the old business model.

Having considered the submissions of both the learned A.R. appearing for the parties in the light of the decisions relied upon, we find the related facts and circumstances of the issue raised by either party is mutatis mutandis and materially identical to the issue decided by us vide grounds no.13 to 16, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07,

Ground no.4, relates to transfer pricing adjustment at ` 50,29,119, on account of reimbursement of expenses by A.E. towards marketing and other expenses under old business model.

Having heard both the parties and perused the material on record in the light of the decisions relied upon, we find that that related facts and circumstances of the issue raised by either party is mutatis mutandis and materially identical to the issue decided by us vide grounds no.17 to 19, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, vide Para–33 & 34 of this order, wherein we have set aside the impugned order passed by the DRP by allowing the issue raised by the assessee. Consequent upon the decision taken by us on this issue as aforesaid and consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing ground no.4, raised by the assessee.

Ground no.5, relates to transfer pricing adjustment of ` 52,95,875, on account of payment for use of trademark and programming content under new business model.

Facts of this issue are, under the new business model, the assessee received right to use trademark of the channels owned by the A.Es and the programming content owned by the A.E. The assessee paid 7% of the relevant revenue to the A.Es as a consideration for the same. The assessee benchmarked the said transaction using CUP method. The assessee used „Lexis database‟ and arrived at set of three comparable agreements having average pay out of 7.27% and considered the transaction at arm‟s length.

During the proceedings before the Transfer Pricing Officer, the assessee undertook additional search considering lexis database and arrived at a set of eight comparable with average royalty rate of 10.42%. The TPO picked–up three comparable after considering both the comparable search done by the assessee as under:– Sr. Rate of Licensor and Licensee No Royalty Playboy Entertainment Group Inc and Playboy 1. Channel Japan Inc (From first search as per TP 2.50% study using Royalty stat database) Televisa S.A. de C.V. and Univision Communications Inc (from additional search 2. 9.36% furnished during TP assessment using lexis database) Venevision International Corporation and Univision Communications Inc (from additional 3. 7.50% search furnished during TP assessment using lexis database) Average 6.45%

Considering average rate of royalty of 6.45% versus royalty paid by assessee @ 7%, the Transfer Pricing Officer made adjustment of ` 52,95,875.

The DRP upheld the action of the Transfer Pricing Officer.

Before us, the learned A.R. for the assessee submitted that the comparable shown at sr. no.1 in the above table i.e., Playboy Entertainment Group Inc. was rejected by assessee in transfer pricing study as the transaction was between related parties and not between independent parties. Hence, the same cannot be taken as comparable. He further submitted that the assessee has also filed screen shot from Royalty stat database, which shows the mark–up of related party agreement. Once this comparable is removed from the set of the Transfer Pricing Officer, average rate of royalty for balance two comparable is 8.43% and accordingly the assessee‟s rate of royalty @ 7% is at arm‟s length. He submitted that the Transfer Pricing Officer has not given any specific reason to reject any of the comparables selected by the assessee and hence a set of comparable submitted during the assessment proceedings shall be accepted and accordingly, royalty paid by the assessee shall be treated as at arm‟s length.

The learned Departmental Representative supported the order of the authorities below and he raised a doubt that the service charges

Considered the rival submissions and perused the material on record. We notice that the Transfer Pricing Officer has selected Playboy Entertainment as comparable company to the assessee company. Before us, the learned A.R. brought to our notice that the Assessing Officer has selected this comparable without considering the fact that it is between two related party transactions. For transfer pricing study, the transaction has to be with independent parties. Therefore, the selection has to be with independent parties. Therefore, the selection criteria adopted by the Transfer Pricing Officer is bad and this related party comparable is not proper comparable. Accordingly, we direct the Transfer Pricing Officer to delete this company from list of comparable companies and determine the arm's length price adjustment with the available comparable companies afresh. Therefore, the ground no.5, raised by the assessee is allowed.

Ground no.6, relates to transfer pricing adjustment on account of commission paid to the A.E. from income from advertisement sales at ` 15,23,923, and advertisement sales–website at ` 75,881 totaling to ` 15,99,804, under the new business mode.

Under the new business model, the assessee availed certain marketing and sales support services from its A.Es viz., Viacom Inc, MTV Networks Europe and MTV Asia LDC for its T.V. channels and website and online services i.e., MTV, VH1 and Nickelodeon for the territories outside India. Under the service agreement, the A.Es retained 15% of the relevant Net revenue. The assessee benchmarked the transaction considering Run On Day Part (RODP) rates whereby the advertisement slots sales rate in Asia-Pacific region by the A.E. were higher than the rates at which the assessee‟s sales team sells the slots in India.

The Transfer Pricing Officer erroneously interpreted the CBDT circular no.742 r/w Circular no.765, and was of the opinion that the commission should have been paid @ 10% and accordingly, the Transfer Pricing Officer made adjustment @ 5%.

Before us, the learned A.R. for the assessee submitted that under old business model, the assessee was also earning 15% commission from A.Es which was accepted by the Transfer Pricing Officer. He submitted that the Advertisement Policy of Government of India recommends 15% Agency Commission. The CBDT Circular no.742, r/w Circular no.765 provides for 15% commission earned by Indian Agent of Foreign Telecasting Company which can be considered as CUP for benchmarking this transaction. He submitted that the Transfer Pricing

Considered the rival submissions and perused the material on record. We noticed that the Transfer Pricing Officer relying on the CBDT Circular no.742, dated 2nd May 1996, he benchmarked the commission payment to the A.E. for the income from advertisement sales and advertisement sales–website @ 10% by relying on the CBDT Circular cited supra. On careful reading of this CBDT Circular, we noticed that the CBDT acknowledged that out of the gross amount raised by foreign telecasting company, the advertisement agents retains commission @ 15%. Similarly, the Indian Agents also retains similar commission. From Para–4 of the aforesaid CBDT Circular, we notice that only in the absence of countrywise account and keeping in

Ground no.7, raised by the assessee relates to transfer pricing adjustment on account of income from at ` 65,84,986, under the new business model.

Under the new business model, the assessee had entered into agreement with its AE‟s to distribute its TV channels in neighbouring countries as under:– Remuneration Name of AE Function Amount Formulae A share of 50:50 of Distribution of MTV India the gross proceeds and VH1 channels in MTV Asia from subscribers in 41,87,364 Pakistan, Bangladesh, the market and USD Nepal, Sri Lanka etc. 50,000 lumpsum 80:20 of the net MTV revenue, when Distribution of MTV India Networks, calculated on gross, 96,56,202 channel in the USA Europe the Appellant earns approximately 50% Distribution of Nick Nick Asia channel in Bangladesh, USD 50,000 lumpsum 17,09,976 Nepal, Sri Lanka etc 105. The Transfer Pricing Officer compared the distribution arrangement of the assessee with one of its A.Es (MTV Asia) with the distribution arrangement of the assessee with other A.Es for different channels thereby comparing one controlled transaction with another controlled transaction.

The Transfer Pricing Officer determined the arm's length price and made an adjustment of ` 65,84,986, by following internal CUP method wherein the Transfer Pricing Officer compared the distribution mechanism between the assessee and MTV Asia with the arrangement between the assessee and MTV Networks and Nick Asia. While doing so, he also considered exchange rate between rupee and USD as at

The DRP confirmed the Transfer Pricing Officer‟s action.

Before us, the learned A.R. for the assessee submitted that the Transfer Pricing Officer failed to appreciate that the arm's length principle is based on comparison of the conditions in a controlled transaction with the conditions in transaction between two independent enterprises i.e., uncontrolled transaction. He further submitted that the Transfer Pricing Officer used controlled price to benchmark the transaction and on this count, itself, the action of the Transfer Pricing Officer fails. For this proposition, the learned A.R. placed reliance on the following decisions:–

The learned Departmental Representative relied upon the order of the authorities below and submitted that the non–charging of interest to non–A.E. are irrelevant. The undue advantage passed on to the A.E. is not acceptable and the Transfer Pricing provision is applicable.

Considered the rival submissions and perused the material on record. We noticed that in the given case, the Transfer Pricing Officer compared the distribution arrangement of the assessee with one of the assessee‟s A.Es (MTV Asia) with the distribution arrangement of the assessee with other A.Es for different channels. It certainly amounts to comparing one controlled transaction with another controlled transaction The Transfer Pricing Officer compared to the distribution mechanism between the assessee and MTV Asia Ventures India Pvt. Ltd., with the arrangement between the assessee and MTV Networks India Pvt. Ltd. and Nick Asia. Therefore, the Transfer Pricing Officer compared the controlled arrangements with another controlled arrangement with the A.E. MTV Asia Ventures India Pvt. Ltd. and controlled arrangement entered by the assessee with the other A.Es i.e., MTV Networks India Pvt. Ltd. and Nick Asia. It is aptly brought to our notice by the learned A.R. that similar issue has already been considered by this Tribunal (Third Member Case) in Tecnimont ICB Pvt. Ltd. v/s ACIT, [2012] 24 Taxmann.com 28 (Mum.) (Trib.), wherein the Tribunal observed as follows:–

Since the issue for our consideration is squarely covered by the aforesaid Third Member decision, respectfully following the same, we set aside the impugned order passed by the DRP by allowing the ground no.7, raised by the assessee i.e., two controlled transactions cannot be considered for the purpose of computation of arm's length price.

Ground no.8, relates to transfer pricing adjustment on account of finance cost on reimbursement receipts of carriage expenses, marketing & other expenses and travelling & other expenses at ` 99,81,739 (under both Business Models).

During the Transfer Pricing proceedings, the Transfer Pricing Officer asked time lag in receipt of the reimbursement of expenses from the A.Es. The assessee submitted that the reimbursements are in the nature of carriage fees paid to cable operators for distribution of channels, advertisement and marketing expenses for the promotion of

The Transfer Pricing Officer proposed an adjustment of ` 99,81,739 vis-à-vis the interest cost for the time lag in receipt of the reimbursement by adopting the PLR rate of the banks to the total income of the assessee.

The DRP confirmed the action of Assessing Officer / Transfer Pricing Officer.

Before us, the learned A.R. for the assessee submitted that the Tribunal in its order passed for the assessment year 2005-06 in assessee‟s own case stated that the said expenses are incurred for business purpose and benefits of assessee‟s business and still part of expenses recovered. Hence, no finance cost adjustment to be made. The learned A.R. further submitted that the assessee has never charged interest on overdue payments from non-AEs as well and

The learned A.R. for the assessee submitted that without prejudice, considering that the transaction is an international transaction, LIBOR rate should have been used to benchmark the transaction and not prime lending rate and reasonable credit period of 90 days shall be allowed before computing the adjustment. In support of these submissions, the learned A.R. placed reliance on the decision of the Hon'ble Rajasthan High Court in CIT v/s Vaibhav Gems Ltd., [2017] 88 Taxmann.com 12 (Raj.) which was decided against the Revenue and in favour of the assessee. Subsequently, this decision was again challenged by the Revenue before the Hon'ble Supreme Court by filing an SLP which also attained finality in favour of the assessee.

The learned Departmental Representative supported the order of the authorities below and submitted that the non–charging of interest to non–A.E. are irrelevant. The undue advantage passed on to the A.E. is not acceptable and the transfer pricing provision is applicable.

Considered the rival submissions and perused the material on record. We find that the issue arising out of the aforesaid ground of appeal has been decided by the Tribunal in assessee‟s own case in ACIT v/s M/s. Viacom 18 Media Pvt. Ltd., ITA no. 8406/Mum./2010, order dated 8th February 2019, wherein the Tribunal decided the issue against the Revenue by observing as under:–

The issue before us being covered by the aforesaid decision of the Tribunal rendered in assessee‟s own case cited supra in an appeal

Ground no.9, relates to disallowance of marketing and advertisement expense under section 37(1) of the Act.

After hearing both the learned A.R. appearing for the parties, we find that identical issue has been decided by us in this order in assessee‟s own case vide ground no.20, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006– 07, vide Para–40 & 41 of this order, wherein we have set aside the order of the learned CIT(A) by allowing the claim of the assessee for the reasons stated therein. Since the Tribunal has been maintaining the consistency in view of the decision rendered in assessee‟s own case cited supra and respectfully following the decision of the Hon'ble Jurisdictional High Court as aforesaid, we set aside the impugned order

Ground no.10, relates to disallowance of entertainment expenses under section 37(1) of the Act at ` 4,75,686.

It is noticed that the assessee had incurred certain entertainment expenditure on clients and for its staff. The expenditure is towards food and refreshment (i.e., in the nature of staff welfare) and entertainment expenditure for soliciting clients and customers for its marketing and distribution business in the normal course of its business. The Assessing Officer made ad–hoc disallowance of ` 13,17,931 being 1/3rd of total expenses of ` 39,53,793, by stating that it is clear as to how much of the entertainment expenses has been adjusted against assessee‟s overseas income and how much has been adjusted against the Indian arm.

The DRP, after going through the details filed by the assessee and considering that historically, the DRP/CIT(A) have deleted the ad– hoc disallowance made in past, the DRP picked–up one item of expenses of ` 9,51,373 and held that in absence of details of the same, 50% of the same i.e., ` 4,75,686 needs to be disallowed. Aggrieved against the said disallowance, assessee has filed appeal before the Tribunal.

We have heard both the parties on this issue and perused the material on record. Ad–hoc disallowance made by the Assessing Officer without proper justification is not sustainable in the eyes of law. The DRP was not justified in picking up one item and disallowing the same holding that in the absence of details 50% of the same is disallowed. Even otherwise also, we have noted that in the preceding assessment year i.e., 2006–07 in assessee‟s own case, wherein the DRP has deleted the ad–hoc disallowance by deciding the issue in favour of the assessee and against the Revenue. Consequent upon such decision of the DRP/learned CIT(A), the Revenue has accepted the decision by not filing any appeal before the Tribunal on the same issue. A copy of DRP‟s order passed for assessment year 2006–07 deleting the ad–hoc disallowance is placed at Page–676 to 699 of FPB. In this view of the matter, we do not find any cogent reason to take a view other than the view taken by the authorities below. Consequently, we set aside the impugned order passed by the DRP and allow the claim of the issue. Accordingly, ground no.10, is allowed.

Ground no.11, relates to the disallowance on account of depreciation on goodwill amounting to ` 15,21,044.

During the financial year relevant to the assessment year 2008– 09, the assessee had acquired the „Studio 18‟ division of Network 18

The Assessing Officer disallowed the depreciation claimed by the assessee on goodwill following its order for assessment year 2008-09 wherein the depreciation was claimed for the first time. The deprecation of ` 15,21,044 [computed at 25% on the written down value (as on 1st April 2008) of ` 60,84,175 of the original goodwill of ` 69,53,343].

The first appellate authority confirmed the order of the Assessing Officer.

Before us, the assessee submitted that the Tribunal, Mumbai Bench, in the assessee‟s own case for the assessment year 2008-09 (the first year of claim for depreciation on aforesaid goodwill arising on account of „Studio18‟ division) has decided the issue in favour of the assessee. The Tribunal, vide its order dated 29th January 2016, has upheld the assessee‟s claim for depreciation on the aforesaid goodwill. The learned A.R. further submitted that the Department has not filed any appeal against the said order of the Tribunal. This fact is confirmed by the Assessing Officer in the final assessment order for assessment year 2012-13 wherein pursuant to the directions of the DRP, vide Para 8.2 at Page no.18 of the order deleted the disallowance on account of depreciation on goodwill following the order of the Tribunal rendered in assessee‟s own case for the assessment year 2008–09.

The learned Departmental Representative relied upon the observations of the authorities below.

Considered the rival submissions and perused the material on record. Both the parties agreed before us that the issue for our adjudication is covered by the decision of the Co–ordinate Bench of the

It is pertinent to note here that subsequent to the order passed by the Tribunal in assessee‟s own case for the assessment year 2008– 09, the Revenue has accepted the Tribunal‟s order for the assessment year 2008-09 and no further appeal is filed before the Hon'ble Jurisdictional High Court and the issue attained finality. In this view of the matter, we uphold the order passed by the DRP and direct the Assessing Officer to delete the disallowance on account of depreciation on goodwill. Ground no.11, raised by the assessee is hereby allowed.

Ground no.12, relates to disallowance of legal and professional fees for registration of trademark of ` 41,42,063.

During the financial year relevant to assessment year 2009–10, the assessee incurred expenses of ` 55,22,750, in relation to registration / renewal of various trademarks / brand names of the

The Assessing Officer treated the same as one time expenditure incurred for registration of trademark which will give benefit to the assessee for more than a year and it being one time expenditure treated it as capital in nature and granted depreciation on the same @ 25%. Thereby he made net addition of ` 41,42,062 (total expenditure of ` 55,22,750 less depreciation @ 25% of ` 13,80,688) to the total income of the assessee.

The DRP confirmed the disallowance as in its view, the registration will create intangible rights and hence the expenses cannot be treated as revenue in nature.

The learned A.R. for the assessee submitted before us that the assessee has made payment to Lega Solve for providing services in connection with registration of various trademarks and trade names in various jurisdictions across the world. He submitted that the assessee is already owner of the trademark and trade names, and mere registration thereof, does not bring into existence any new asset. The learned A.R. further submitted that by registration, the owner is

The learned Departmental Representative relied upon the observations of the authorities below.

Considered the rival submissions and perused the material on record in the light of the decisions relied upon. We find that the issue for our adjudication is covered by the decision of the Hon'ble Supreme

Since the issue before us is squarely covered by the aforesaid decision of the Hon'ble Supreme Court cited supra, there is no additional advantage for the assessee by getting the trademark registered. Respectfully following the aforesaid observations, we set aside the impugned order passed by the DRP and allow the ground no.12, raised by the assessee.

Ground no.13, relates to disallowance of up–linking charges under section 40(a)(ia) of the Act at ` 5,68,97,341.

The assessee is engaged in the business of broadcasting and telecasting of television channels. Accordingly, it incurs up–linking charges in connection with its broadcasting business. For the assessment year 2009-10, the assessee paid ` 5,68,97,341, towards up–linking fees to Television Eighteen India Ltd. on which it withheld tax at source @ 2% under section 194C of the Act. According to the Assessing Officer, in view of the retrospective amendment, the payment of up–linking charges would qualify as „royalty‟ being payment made for use of process and the assessee is required to withhold tax @ 10% under 194J of the Act. Since the assessee has not deducted tax thereon at 10%, the same is liable for disallowance under section 40(a)(ia) of the Act.

The DRP confirmed the disallowance stating that the process of up–linking involves operation of complex equipment at the uplink centre and payment will fall under the category of Royalty especially considering the retrospective amendment in the Act.

The learned A.R. for the assessee submitted that the payment of up–linking charges is for a standard facility provided by the service provider and not for use or right to use any right, property or

The learned A.R. further submitted that the Explanation (iv) to Section 194C of the Act specifically covers the term „broadcasting and telecasting‟ within the meaning of the term „work‟ and hence the payment of up–linking charges should be subject to TDS under Section 194C of the Act.

Without prejudice, the assessee submitted that it has deducted and paid taxes at source under Section 194C of the Act as per the law prevalent at the time of the captioned assessment year 2009-10. Thus, the assessee cannot be subject to an impossible act of deducting the taxes under section 194J of the Act having regard to a later amendment made in the law by the Finance Act, 2012. In this respect, reliance is placed on the decision of Hon'ble Jurisdictional High Court in

The learned Departmental Representative relied upon the observations of the authorities below.

Having considered the rival submissions and having perused the material on record, we find that the issue for our adjudication is covered by the decision of the Co–ordinate Bench of the Tribunal rendered in assessee‟s own case for the assessment year 2009–10 passed in ITA no.3515/Mum./2012, etc., order dated 14th October 2015, wherein the Tribunal has held that assessee has rightly deducted tax at source under section 194C of the Act. We also find that the Revenue had challenged the aforesaid order of the Tribunal before the Hon'ble Jurisdictional High Court and the Hon‟ble Court has confirmed / upheld the said decision of the Tribunal by observing as follows:–

Since the issue before us is covered by the aforesaid decision of the Co–ordinate Bench of the Tribunal cited supra in assessee‟s own case for the assessment year 2009–10, as well as respectfully following the decision of the Hon'ble Jurisdictional High Court as aforesaid, respectfully following the decision of the Hon'ble Jurisdictional High Court as well as consistent with the view taken by the Co–ordinate Bench decision rendered in assessee‟s own case, we set aside the impugned order of the DRP and delete the disallowance of up–linking charges under section 40(a)(ia) of the Act at ` 5,68,97,341. Ground no.13, raised by the assessee is allowed.

Ground no.14, relates to disallowance of ` 36,67,82,832, on account of agency commission under section 40(a)(ia) of the Act.

The assessee is engaged in the business of broadcasting of television channels. For the assessment year 2009-10, the assessee has earned advertising revenues of ` 262,25,49,780, from the sale of advertising airtime on the television channels. The assessee sells the advertising air-time slots to various advertising agencies on a principal to principal basis. The advertising agencies in-turn sell the air-time slots to advertisers (i.e., customers) at a mark-up not known to the assessee. The assessee has not sold the advertising air-time slots on its channels in India through the agent. The Assessing Officer was of the view that the assessee sold the advertisement airtime through advertising agencies who act as agent of the assessee. Hence, on commission paid to the advertisement agents, the assessee should have deducted tax at source under section 194H. Since the assessee failed to deduct tax at source, disallowance under section 40(a)(ia) of the Act at ` 39,67,82,832, was made by the Assessing Officer.

The DRP relied on the CBDT circular no.618 of 1991 and 715 of 1993 and upheld the disallowance made.

The learned A.R. for the assessee submitted that it does not control/manage the advertising agencies. The advertising agency is not an agent of the assessee. The assessee does not dictate the advertisers to whom the advertising agencies can sell the advertising airtime. The assessee is also not aware of the mark-up which is

The transaction between the assessee and the advertising agencies are on principal–to–principal basis and the same is confirmed the advertising agencies. The advertising agent has also confirmed that when they receive payment from advertisers, the advertiser withholds appropriate tax at source on the entire cost of advertisement including their remuneration.

Accordingly, the learned A.R. submitted that no disallowance under section 40(a)(ia) of the Act can be made as the assessee was not required to deduct tax at source.

The learned Departmental Representative supported the order of the learned CIT(A).

Considered the rival submissions and perused the material on record in the light of the decisions relied upon. We find that the issue raised by the assessee is covered by the decision the Hon‟ble Allahabad High Court in Jagran Prakashan Ltd. v/s DCIT, [2012] 345 ITR 288 (All.), wherein the Hon‟ble Court held as under:–

We also find that the CBDT vide its Circular no.F.No.133/119/95– TPL–III, dated 12th September 1995, has clarified that Broadcaster / media company is not required to deduct tax at source under Section 194C for payment retained by the advertising agents. The CBDT vide its Circular no.5 of 2016 dated 29th February 2016 clarified that no TDS is attracted on payment made to advertising agencies for booking / procuring / canvassing for advertisements by the television channel under section 194C or section 194H of the Act. In view of these facts and circumstances on the issue, respectfully following the aforesaid judgment of the Hon‟ble Allahabad High Court as well the CBDT circulars cited supra, we hold the DRP was not justified in confirming the disallowance of ` 36,67,82,832, on account of agency commission under section 40(a)(ia) of the Act. Consequently, we set aside the

In the result, assessee‟s appeal for A.Y. 2009–10 is allowed.

Grounds no.1 and 2, relates to disallowance of ` 2,66,06,294, on account of advertisement and marketing expenses pertaining to the period when the assessee was the sole sub–agent of its A.E.

Having heard the learned A.R. appearing for the parties and having perused the material on record, we find the related facts and circumstances of the issue raised by the Revenue is mutatis mutandis and materially identical to the issue decided by us vide ground no.20, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, which we have decided vide Para–35 and 36 of this order, wherein for the reasons stated therein, we have set aside the impugned order passed by the DRP by allowing the issue raised by the assessee. Consequent upon the decision taken by us therein, since the issue raised, facts and circumstances are materially identical, wherein we have decided this issue in favour of the assessee and against the Revenue for the reasons stated therein, consistent with the view taken therein, we uphold the order passed by the DRP

Ground no.3, relates to disallowance on account of payment of channel placement fees of ` 117,82,55,629, under section 40(a)(ia).

The assessee during the year under consideration, debited a sum of ` 117,82,55,629, on account of payments made to various Multi Service Operators („MSOs‟) / Cable Operators („COs‟) for placing the channels on preferred bands. While making these payments, it withheld tax at source @ 2% under Section 194C of the Act.

According to the Assessing Officer, in view of the retrospective amendment, the payment of placement fees would qualify as „royalty‟ being payment made for use of process and the assessee is required to withhold tax @ 10% under 194J of the Act. Since assessee has not deducted tax thereon @ 10%, the same is liable for disallowance under section 40(a)(ia) of the Act.

The DRP deleted the disallowance and agreed with the order passed by the CIT(A) under 201 proceedings that the assessee rightly deducted tax at source under section 194C. Aggrieved against the directions of the DRP, the Revenue is in appeal before the Tribunal.

Before us, the learned A.R. for the assessee submitted that the placement fee is a charge paid for obtaining a privilege / benefit of placing the channel on a preferred band. The placement fees is not in the nature of „royalty‟ as defined in Section 9(1)(vi) of the Act as the same is not paid for right to use any, right, property or information, model, design, secret formula or process or trademark or similar property. He submitted that in assessee‟s case the arrangement with MSOs / COs is for placement of channels on the pre-determined band/frequency and not for any transmission of signals, so as to fall within the meaning of the term „process‟ as amended by the Finance Act, 2012. The learned A.R. further submitted that the placement fee is not a charge for any „service‟ being rendered by the MSOs/COs to the assessee, leave aside a technical service. He submitted that merely because as part of providing the privilege / facility, it requires the MSOs / COs to put the channel on a particular band using technical equipment does not mean any technology or technical service is provided by the MSOs / COs to the assessee. Accordingly, the payment of placement fee for availing the standard facility/ privilege should not also constitute Fees for Technical Services („FTS‟) under the Act. The learned A.R. further submitted that the Explanation (iv) to Section 194C of the Act specifically covers the term „broadcasting and telecasting‟ within the meaning of the term „work‟ and hence the payment of placement charges should be subject to TDS under Section

The learned Departmental Representative relied upon the order of the Assessing Officer.

Having considered the rival submissions and having perused the material on record, we find that similar issue came up before the Tribunal in assessee‟s own case for the assessment year 2009‐10 in an

In the result, Revenue‟s appeal is dismissed.

Grounds no.1 and 2, raised by the assessee being inter– connected to other grounds raised in this appeal, hence these grounds are left un–adjudicated. These issues will be decided in succeeding grounds of appeal.

Ground no.3, raised by the assessee relates to transfer pricing adjustment of ` 1,16,74,083, on account of payment for use of trademark and programming content.

Both the learned A.R. appearing for the parties agreed before us that related facts and circumstances of the issue raised by either party is mutatis mutandis and materially identical to the issue decided by us

Ground no.4, raised by the assessee relates to transfer pricing adjustment on account of commission paid to the A.E. from income from advertisement sales of ` 13,00,318.

Both the learned A.R. appearing for the parties agreed before us that related facts and circumstances of the issue raised by either party is mutatis mutandis and materially identical to the issue decided by us vide grounds no.6, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para– 102 of this order, wherein we have decided this issue in favour of the assessee and against the Revenue. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, wherein we have decided this issue in favour of the assessee and against the Revenue for the reasons stated therein, consistent with the

Ground no.5, raised by the assessee relates to transfer pricing adjustment of ` 1,19,54,747, on account of income from channel distribution.

Under the new business model, the assessee had entered into agreement with its A.Es to distribute its T.V. channels in neighbouring countries as under:– Name of the Function Remuneration Amount (` ) AE Formulae MTV Distribution of MTV A share of 50:50 of 53,37,785 Networks, India and VH1 the gross proceeds Europe channels in Pakistan, from subscribers in Bangladesh, Nepal, Sri the market and USD Lanka etc. 50,000 lumpsum for MTV Channel A share of 10:90 of 5,22,242 the gross proceeds from subscriber for VH1 channel MTV Distribution of MTV 80:20 of the net 1,77,92,502 Networks, India channel in the revenue, when USA calculated on gross, the Appellant earns approximately 50% MTV Networks Distribution of Nick A share of 10:90 of 42,12,498 BV channel in Bangladesh, gross proceeds and Nepal, Srilanka etc. USD 50,000 lumpsum

The Transfer Pricing Officer compared the distribution arrangement of the assessee with one A.E. (MTV Networks Europe) with the distribution arrangement of the assessee with other A.Es for

The Transfer Pricing Officer determined the arm's length price and made an adjustment of ` 1,19,54,747 by following internal CUP method wherein the Transfer Pricing Officer compared the distribution mechanism between the assessee and MTV Network Europe with the arrangement between assessee and MTV Networks and MTV Networks B.V. While doing so, he also considered exchange rate between rupee and USD at yearend as exchange rate instead of the actual exchange rate at which the income was booked.

The DRP confirmed the Transfer Pricing Officer‟s action.

The learned A.R. for the assessee submitted that the Transfer Pricing Officer used controlled price to benchmark the transaction and on this count itself the action of the Transfer Pricing Officer fails. For this proposition, he placed reliance on the following decisions:–

The learned A.R. further submitted that the Transfer Pricing Officer has relied entirely on the transfer pricing order/directions of the DRP for the assessment year 2009-10 while computing the adjustment, thereby disregarding the documentation maintained under

The learned Departmental Representative relied upon the observations of the authorities below.

Considered the rival submissions and perused the material on record. We find that this issue has been decided by us vide ground no.3, raised by the Revenue in its appeal being ITA no.1383/Mum./2014, for the assessment year 2009–10, vide Para– 170 and 170.1, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid wherein we have decided this issue in favour of the assessee and against the Revenue for the reasons stated therein, consistent with the view taken therein, we set aside the order passed by the DRP and allow ground no.5, raised by the assessee.

Ground no.6, relates to transfer pricing adjustment of ` 1,42,82,133, on account of channel distribution expenses for the period of September 2008 to December 2008.

The assessee during the year under consideration had paid its A.E. an amount of ` 2,26,28,475, for the up–linking of channel facility rendered by the A.E. The Transfer Pricing Officer had requested the

The learned A.R. for the assessee submitted that it is a one-of the transactions for payment of up–linking charges up to August 2008 and then payment for stand–by facility up to December 2008 to ensure smooth telecasting of the TV channels. He submitted that if compared with payment made to Television 18, it is at arm's length as the assessee's payment per month to A.E. is ` 41.14 Lakh (i.e., from 12th July 2008 to 31st December 2008) whereas TV18 has charged ` 52.16 lakh per month. He submitted that in view of the above, no adjustment is warranted.

The learned Departmental Representative relied upon the order of the learned CIT(A).

Considered the rival submissions and perused the material on record. We noticed that the Transfer Pricing Officer considered the information of TV18 to benchmark the payment towards up–linking of channel facility to its A.E. We also noticed that the payment made by TV18 for the same activity is @ ` 52.16 per month whereas the assessee has taken the services of the A.E. from 12th July to 31st December 2008 i.e., for five months and 21 days. In case, we consider the comparable rate of TV18, the assessee may have to incur the expenditure of ` 297 lakh, whereas, the assessee has paid ` 226 lakh. Therefore, the up–linking charges incurred by the assessee are within the benchmark selected by the Transfer Pricing Officer. Consequently, we direct the Assessing Officer / Transfer Pricing Officer to delete the adjustment made. Accordingly, the ground no.6, raised by the assessee is allowed.

Ground no.7, relates to transfer pricing adjustment on account of finance cost on reimbursement receipts of marketing, travelling and other expenses of ` 2,79,804.

During the hearing, the Transfer Pricing Officer asked time lag in receipt of the reimbursement of expenses from the A.Es. The assessee submitted that the reimbursement in the nature of carriage fees paid to cable operators for distribution of channels; advertisement and marketing expenses for the promotion of channels viz., MTV, VH1 and

The Transfer Pricing Officer held that there is delay beyond normal credit period for recovery of sum of ` 49,99,631, and accordingly considering the PLR of 12.25%, he computed interest adjustment of ` 2,79,804.

The DRP confirmed the action of the Transfer Pricing Officer.

Before us, the learned A.R. for the assessee submitted that the Tribunal in its order passed for assessment year 2005-06 stated that the said expenses are incurred for business purpose and benefits assessee‟s business and still part of expenses recovered. Hence, no finance cost adjustment to be made. He submitted that the assessee never charged interest on overdue payments from non-A.Es as well. Hence, question of adjustment should not arise in the instant case. For this proposition, the learned A.R. placed reliance on following decisions:–

Without prejudice, considering that the transaction is an international transaction, LIBOR rate should have been used to benchmark the transaction and not PLR and reasonable credit period of 90 days shall be allowed before computing the adjustment. The learned A.R. placed reliance on the decision of the Hon‟ble Rajasthan High Court in CIT v/s Vaibhav Gems Ltd. [2017] 88 taxmann.com 12 (Raj.), against which a Special Leave Petition was filed by the Revenue which was dismissed by the Hon'ble Supreme Court in CIT v/s Vaibhav Gems Ltd., [2018] 259 Taxmann 130 (SC).

The learned Departmental Representative supported the orders of the authorities below.

Having considered the submissions of the learned A.R. appearing for the parties, we find that this issue has been decided by us vide ground no.8, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para– 119 and 120, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by

Ground no.8, relates to disallowance of marketing and advertisement expenses under section 37(1) of the Act.

Having heard the learned A.R. appearing for the parties and having perused the material on record, we find the related facts and circumstances of the issue raised by the assessee is mutatis mutandis and materially identical to the issue decided by us vide ground no.20, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, which we have decided vide Para–35 and 36 of this order, wherein for the reasons stated therein, we have set aside the impugned order passed by the DRP by allowing the issue raised by the assessee. Consequent upon the decision taken by us therein, since the issue raised, facts and circumstances are materially identical, wherein we have decided this issue in favour of the assessee and against the Revenue for the reasons stated therein, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue and allow the claim of the assessee as aforesaid. Thus, ground no.8, raised by the assessee is allowed.

Ground no.9, relates to the disallowance on account of depreciation on goodwill amounting to ` 11,40,783.

Considered the rival submissions and perused the material on record. We find the related facts and circumstances of the issue raised by the assessee is mutatis mutandis and materially identical to the issue decided by us vide ground no.11, raised by the assessee in its appeal being ITA no.2055/Mum./2010, for the A.Y. 2009–10, which we have decided vide Para–124 and 125 of this order, wherein we have decided this issue in favour of the assessee and against the Revenue for the reason stated therein. Accordingly, we set aside the impugned order passed by the DRP on this issue and direct the Assessing Officer to delete the disallowance on account of depreciation on goodwill. Thus, ground no.9, raised by the assessee is allowed.

Ground no.10, relates to disallowance of legal and professional fees for registration of trademark of ` 3,50,626.

Both the learned A.R. appearing for the parties agreed before us that this issue has been decided by us vide ground no.12, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para–141 and 142, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid wherein we have decided this issue in favour of the assessee and against the Revenue for the reasons stated therein,

Ground no.11, relates to disallowance of ` 8,48,025,002, on account of up–linking charges under section 40(a)(ia) of the Act.

Having heard the learned A.R. appearing for the parties and having perused the material on record, we find the related facts and circumstances of the issue raised by the assessee is mutatis mutandis and materially identical to the issue decided by us vide ground no.13, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, which we have decided vide Para–150 & 151 of this order, wherein we have set aside the impugned order passed by the DRP by deleting the disallowance on account of up– linking charges under section 40(a)(ia) of the Act. Consequent upon the decision taken by us therein, since the issue raised, facts and circumstances are materially identical, and the issue has been decided in favour of the assessee and against the Revenue for the reasons stated therein consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue and delete the disallowance on account of up–linking charges under section 40(a)(ia) of the Act Thus, ground no.11, raised by the assessee is allowed.

Ground no.12, relates to the disallowance of ` 124,64,11,465, on account of agency commission under section 40(a)(ia) of the Act.

Having heard the learned A.R. appearing for the parties and having perused the material on record, we find the related facts and circumstances of the issue raised by the assessee is mutatis mutandis and materially identical to the issue decided by us vide ground no.14, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, which we have decided vide Para–159 & 160 of this order, wherein we have set aside the impugned order passed by the DRP by deleting the disallowance on account of agency commission under section 40(a)(ia) of the Act. Consequent upon the decision taken by us therein, since the issue raised, facts and circumstances are materially identical, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue and delete the disallowance made on account of agency commission under section 40(a)(ia) of the Act. Accordingly, ground no.12, raised by the assessee is allowed.

Ground no.13, relates to the disallowance of ` 46,26,001, on account of bad debt.

The assessee during the year under consideration, has written– off bad debts of ` 46,26,001, in its books of accounts. The party-wise

Before us, the learned A.R. for the assessee submitted that debts are written–off and details of income offered to tax in earlier years are filed. He submitted that a letter dated 1st March 2021 was filed to substantiate the details of income offered to tax in the assessment year 2009-10, wherein income from sale of Home video rights to Moser Baer of ` 40,00,000, and to Mediaway SP Zoo of ` 3,31,877, offered to tax in assessment year 2009-10. The learned A.R. further submitted that out of the same, ` 40,00,000, could not be recovered from Moser Baer and ` 65,048, could not be recovered from Mediaway SP Zoo. Accordingly, the same were written–off in the assessment year 2010-11 and claimed as Bad debts. He submitted that in view of the above, without prejudice to entire claim of bad debts of ` 46,26,001, being allowable as deduction, a deduction of ` 40,65,048, must be granted as corresponding income have been offered to tax in the assessment year 2009-10.

The learned Departmental Representative supported the orders of the authorities below.

Considered the rival submissions and perused the material on record. The learned A.R. brought to our notice Page–309 and 310 of the paper book and explained the list of parties and the amount of money which could not be recovered from the parties. He also submitted that the outstanding amount of money which are written–off are the outstanding for which the assessee has already declared the income and offered to tax. These are trade outstanding which are not recoverable. He also submitted that the ledger extracts were submitted before tax authorities, which they have not considered. He brought to our notice the relevant extract filed in the paper book. We deem it fit and proper to restore this issue to the file of the Assessing Officer to verify the same and allow the claim of the assessee to the extent the assessee has already declared the income for taxation and also if there is any outstanding which relats to the business carried on by the assessee. Accordingly, ground no.13, raised by the assessee is allowed for statistical purposes.

In the result, assessee‟s appeal for the A.Y. 2010–11 is partly allowed.

Grounds no.1 and 2, relates to disallowance out of advertisement and marketing expenses.

After hearing both the learned A.R. appearing for the parties, we find the related facts and circumstances of the issue raised by the Revenue is mutatis mutandis and materially identical to the issue decided by us vide ground no.20, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, which we have decided vide Para–40 & 41 of this order, wherein we have set aside the impugned order passed by the DRP by allowing the issue raised by the assessee. Consequent upon the decision taken by us therein, since the issue raised, facts and circumstances are materially identical, consistent with the view taken therein, we do not find any cogent reason to interfere with the order of the DRP which we upheld on this issue by dismissing the grounds no.1 and 2, raised by the Revenue.

Ground no.3, relates to disallowance of ` 115,76,52,055, on account of payment of channel placement fees u/s 40(a)(ia) of the Act.

Both the parties agreed before us that this issue has been decided by us vide ground no.3, raised by the Revenue in its appeal

In the result, Revenue‟s appeal for the A.Y. 2010–11 is dismissed.

Grounds no.1, 2 and 3, are consequential to other grounds decided by us in this appeal elsewhere.

Ground no.3.1, relates to transfer pricing adjustment of ` 97,51,307, on account of payment for use of trademark and programming content.

Both the learned A.R. appearing for the parties agreed before us that related facts and circumstances of the issue raised by either party is mutatis mutandis and materially identical to the issue decided by us vide grounds no.5, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para–97 of this order, wherein we have set aside the impugned order of the

Ground no.4, relates to transfer pricing adjustment on account of commission paid to the A.E. from income from advertisement sales and advertisement sales–websites of ` 6,47,706.

Both the learned A.R. appearing for the parties agreed before us that this issue has been decided by us vide ground no.20, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, vide Para–40 & 41, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing the ground no.4, raised by the assessee.

Ground no.5, relates to transfer pricing adjustment of ` 1,22,29,769, on account of income from channel distribution.

Before us, both the learned A.R. appearing for the parties conceded that this issue has been decided by us vide ground no.3, raised by the Revenue in its appeal being ITA no.1383/Mum./2014, for the assessment year 2009–10, vide Para–170 & 170.1, of this order

Ground no.6, relates to transfer pricing adjustment on account of Finance cost on reimbursement receipts of carriage expenses, marketing & other expenses and travelling and other expenses at ` 74,878.

Before us, both the learned A.R. appearing for the parties conceded that this issue has been decided by us vide ground no.8, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para–119 & 120, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing the ground no.6, raised by the assessee.

Ground no.7, relates to disallowance of ` 4,49,17,458, on account of marketing and advertisement expenses under section 37(1) of the Act.

Having considered rival submissions and having perused the material on record, we find that the issue in hand is identical to the issue which has been decided by us vide ground no.20, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, vide Para–40 & 41, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing the ground no.7, raised by the assessee.

Ground no.8, relates to disallowance of ` 8,55,587, on account of depreciation on goodwill.

Before us, both the learned A.R. appearing for the parties conceded that this issue has been decided by us vide ground no.11, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para–133 & 134, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing the ground no.8, raised by the assessee.

Ground no.9, relates to disallowance on account of legal and professional fees for registration of trademark.

Heard both the learned A.R. appearing for the parties and perused the material on record. Both the parties conceded that this issue has been decided by us vide ground no.12, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para–141 & 142, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing the ground no.9, raised by the assessee.

Ground no.10, relates to disallowance of ` 124,53,81,565, on account of payment of placement fees under section 40(a)(ia).

Having considered the submissions of the learned A.R. appearing for the parties, we find that this issue has been decided by us vide grounds no.3, raised by the Revenue in its appeal being ITA no.1383/Mum./2014, for the assessment year 2009–10, vide Para– 170 & 170.1 of this order, wherein for the reasons stated therein, we have decided the issue in favour of the assessee and against the Revenue. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing the ground no.10, raised by the assessee.

Ground no.11, relates to disallowance of ` 9,71,79,623, on account of up–linking charges under section 40(a)(ia) of the Act.

Before us, both the learned A.R. appearing for the parties agreed that this issue has been decided by us vide grounds no.13, raised by the assessee in its appeal being ITA no.2500/Mum./2014, for the assessment year 2009–10, vide Para–150 & 151 of this order, wherein the issue has been decided in favour of the assessee and against the Revenue. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) on this issue by allowing the ground no.11, raised by the assessee.

Ground no.12, relates to disallowance of ` 154,62,88,245, on account of agency commission under section 40(a)(ia) of the Act.

Both the learned A.R. appearing for the parties agreed before us that this issue has been decided by us vide ground no.14, raised by the assessee in its appeal being ITA no.2500/Mum./ 2014, for the assessment year 2009–10, vide Para–159 & 160 of this order, wherein the issue has been decided in favour of the assessee and against the Revenue. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken

In the result, assessee‟s appeal for A.Y. 2011–2012 is allowed. ITA no.1641/Mum./2016 Revenue’s Appeal – A.Y. 2011–12

The only issue arose out of grounds no.1 and 2, raised by the Revenue is, whether or not the learned CIT(A) was justified in deleting the disallowance out of advertisement and marketing expenses.

After hearing both the learned A.R. appearing for the parties, we find that we have decided this issue vide ground no.20, raised by the assessee in its appeal being ITA no.8754/Mum./2010, for the assessment year 2006–07, vide Para–40 & 41, of this order, wherein for the reasons stated therein, the issue raised by the assessee was decided in favour of the assessee and against the Revenue. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we do not find any cogent reason to take a view other than the view taken by us as aforesaid. Accordingly, the order of the DRP is hereby upheld by dismissing the grounds raised by the Revenue.

In the result, Revenue‟s appeal for A.Y. 2011–12 is dismissed.

Grounds no.1, 2 and 3, are consequential to other grounds decided by us in this appeal elsewhere.

Ground no.3.1, relates to transfer pricing adjustment of ` 51,20,167, on account of payment for use of trademark and programming content.

Both the learned A.R. appearing for the parties agreed before us that related facts and circumstances of the issue raised by either party is mutatis mutandis and materially identical to the issue decided by us vide grounds no.5, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para–97 of this order, wherein we have decided the issue in favour of the assessee and against the Revenue. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP and allow the ground no.3.1, raised by the assessee.

Ground no.4, relates to transfer pricing adjustment of ` 12,80,338, on account of commission paid to the A.E. from income from advertisement sales and advertisement sales–website.

Both the learned A.R. appearing for the parties agreed before us, we find that this issue has been decided by us vide ground no.6, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para–102, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing the ground no.4, raised by the assessee.

Ground no.5, relates to transfer pricing adjustment of ` 1,29,75,235, on account of income from channel distribution.

Having heard both the learned A.R. appearing for the parties agreed before us, we find that this issue has been decided by us vide ground no.15, raised by the assessee in its appeal being ITA no.8754/ Mum./2010, for the assessment year 2006–07, vide Para–23 and 24, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing ground no.5, raised by the assessee.

Ground no.6, relates to disallowance of ` 36,19,552, on account of legal and professional fees for registration of trademark.

Both the learned A.R. appearing for the parties conceded before us that this issue has been decided by us vide ground no.12, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for 0the assessment year 2009–10, vide Para–141 and 142, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing the ground no.6, raised by the assessee.

Ground no.7, relates to disallowance of ` 12,43,11,762, on account of up–linking charges under section 40(a)(ia) of the Act.

Having considered both the learned A.R. appearing for the parties and having perused the material on record, we find that this issue has been decided by us vide ground no.13, raised by the assessee in its appeal being ITA no.2055/Mum./2014, for the assessment year 2009–10, vide Para–150 and 151, of this order. Since the issue, facts and circumstances being identical to the issue decided by us as aforesaid wherein we have decided this issue in favour of the assessee and against the Revenue for the reasons stated therein, consistent with the view taken therein, we set aside the impugned order passed by the DRP on this issue by allowing the ground no.6, raised by the assessee.

In the result, assessee‟s appeal for A.Y. 2012–13 is allowed. Order pronounced in the open court on 3.9.21 Sd/- Sd/- C.N. PRASAD S. RIFAUR RAHMAN JUDICIAL MEMBER ACCOUNTANT MEMBER