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2016 (9) TMI 1328 - AT - Income TaxTPA - application of turnover filter - Held that:- We are of the view that the turnover filter must be applied not as a tool for cherry picking at a later stage but at the time of the search process and by applying a quantitative filter. It can not be one sided process to exclude companies after the qualitative level based on FAR analysis where no filter has been applied in the earlier. Consistency also requires that it can not be used to exclude it in an individual given year, when it has not been applied in earlier year and subsequent year. There can not be a pick and choose of comparables every year unless there are some material differences in facts and circumstances. Therefore, based on the above cited reasoning we direct the DRP/TPO/AO to delete this addition. Determination of higher profitability for advertisement receipts received by STAR Ltd. - whether it was a Non-Associated Enterprise (Non-AE) receipt, hence, outside PSM - Held that:- We noticed merit in the submissions of the Ld. AR for the assessee, as the combined net profit as per the PSM under Rule 10B (1) (d) at 17.30% has been found to be at arm’s length except for the exclusion of 3 companies for 10% turnover filter applied by the TPO. On the present facts, all the international transactions in respect of the advertisement and distribution stream cannot be separated. We therefore set aside the orders of lower authorities on this issue and restored the same back to AO/TPO for deciding afresh in terms of our above discussion. Disallowance of foreign content fees and uplinking cost under Section 40(a)(ia) - Held that:- We noticed the merit in the submissions of the Ld. AR for the assessee, hence, in the light of the order of AO and the Hon’ble ITAT for A.Y. 2007-08 in the case of assessee that disallowance under section 40(a) (i) of the Act uplifted the profitability and increasing the assessee’s profit chargeable to tax in India. It is wholly inconsistent and contrary to Law, not to allow the reversal in the years when the taxes have been deducted and paid in accordance with section 40(a) (i) of the Act, merely on the erroneous contention that no disallowance had been made by him under section 40(a) (i) of the Act in A.Y. 2007-08 while determining the final taxable income at 27.18%, therefore, we allow the appeal of the assessee on this ground. Disallowance of Transponder hire charges under section 40(a)(i) paid to Asia Sat while computing the profitability of 22.57% - Held that:- As gone through the facts and circumstances of the case and perused the material available on record. We noticed that the provisions of section 195 of the Act do not apply to transaction between one non-resident to another non-resident and it is supported by the case law cited above, therefore, we allow the appeal of the assessee on this ground. Double disallowances of Transponder hire charges under section 40(a) (i) paid to Asia Sat - Held that:- We noticed the merit in the proposition canvassed by the Ld. AR for the Assessee, as he submitted that the assessee had already made disallowance under section 40 (a) (i) of the Act while computing PSM profit percentage and despite the same the AO also made further disallowance under section 40(a) (i) of the Act again, which is not justified, accordingly we direct the AO to verify the same should delete the addition after proper verification. We direct accordingly. Levy of interest under section 234B and 234C - Held that:- We noticed the merit in the proposition of the assessee and found that, if the non-resident assessee is not liable to pay advance tax then there is no any question to levy interest under sections 234B and 234C of the Act. For this purpose reliance can be placed on the decision of Bombay High Court in the case of DIT Vs. NGC Network Asia LLC, (2009 (1) TMI 174 - BOMBAY HIGH COURT) wherein similar issue has been decided by the Bombay High Court, and therefore, we allow the assessee’s appeal on this ground.
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