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2024 (2) TMI 518 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- comparables cannot be excluded on the ground of loss making and the profit margin is low. Not applying the PSM as approved by the TPO to non AE transactions and determining the profit on estimate basis - HELD THAT:- Addition has been made purely on estimate basis and, therefore, cannot be sustained. The issue is covered by the decision of Star International Movies Ltd [2019 (10) TMI 1342 - ITAT MUMBAI] as considered the similar issue and has deleted the addition made by the Assessing Officer as held that the income from non–AE transaction cannot be taxed separately by applying net profit rate of 28%. Taxability of income from transfer of channel as short term capital gains - taxability in India or not? - HELD THAT:- From the perusal of the down linking license obtained by the assessee from Ministry of information and Broadcasting of India to operate Star World channel in India, it is also established that the ownership of the Star World channel is outside India. Given this, when the ratio laid down in in the case of Cub Pty Ltd [2016 (7) TMI 1094 - DELHI HIGH COURT] case is applied, we see merit in the argument of the ld AR that the impugned asset is not an asset situated in India since it is owned by a person outside India and therefore the situs of the asset is also outside India. Accordingly in our considered view, the income arising out of the transfer of Star World channel, being an asset outside India by the assessee to SIML will not fall within the provisions of section 9(1)(i) and accordingly not taxable in India. Asset as situated in India since there is clear cut nexus and strong business connection of the transferred asset to India due to very nature of the asset and its ability to continually and regularly generate income from India and therefore taxable in India -Though there may be merit in the argument that viewership in India affects the valuation / purchase price of the transaction, we are not in a position to concur with the said contention of the revenue in the absence of any concrete material brought on record to prove the claim that the substantial value of the channel is derived from assets located in India. We further notice that in the case of Asia Satellite Telecommunications Co Ltd [2011 (1) TMI 47 - DELHI HIGH COURT] has held that merely because the footprint area includes India and the programmers by ultimate consumers/viewers are watching the programs in India, even when they are uplinked and relayed outside India, would not mean that the assessee is carrying out its business operations in India. We are of the view that the Star World Channel having viewership India generation income cannot be a reason for holding that the channel is an asset situated in India. Therefore on this count also the addition made is not tenable. Taxation of ‘royalty income @42.23% by AO - AR submitted that since the assessee being a foreign company, the applicable tax rate of royalty income is as provided under section 115A of the Act which is at 10.5575% whereas the Assessing Officer has applied the tax rate at 42.23% - HELD THAT:- As relying on case of Star International Movies Ltd. [2019 (10) TMI 1342 - ITAT MUMBAI] we direct the Assessing Officer to tax the royalty income at the appropriate rate as provided in section 115A of the Act.
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