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2020 (11) TMI 93 - AT - Income TaxCharacterization of distribution fee - Royalty or not? - HELD THAT:- As decided in own case [2020 (3) TMI 781 - ITAT MUMBAI] as the assessee had merely acted as an intermediary between the broadcaster and the ultimate customers to use the channels, therefore, the distribution fee paid by the assessee to its AEs could not be termed as royalty. Accordingly, we herein vacate the view taken by the lower authorities that channel distribution fees paid by the assessee to its AEs was in the nature of payment of royalty. The Ground of appeal No. 4 is allowed. TPA - Comparable selection - HELD THAT:- Avance Technology Ltd - From actual position, we find that the aforesaid company which had generated its entire revenue from sale of software product could safely be adopted as a valid comparable for benchmarking the international transactions of the assessee for the year under consideration. As the functions of the aforementioned company had not witnessed any change as in comparison to the immediately preceding and succeeding years i.e A.Y.2012-13 and A.Y. 2013-14, therefore, finding no reason to take a different view we respectfully follow the aforesaid order of the Tribunal, and direct the A.O/TPO to include the aforementioned company in the final list of comparables for benchmarking the international transactions of the assessee for the year under consideration. Empower Industrial India Ltd - Include the said company as a valid comparable for the purpose of benchmarking the international transactions of the assessee for the year under consideration. Sonata Information Technologies Ltd. - In the assesses own case for the immediately preceding year i.e. A.Y. 2011-12 had accepted the aforementioned company whose generation of revenue from software distribution during the said year was 97%, as a valid comparable, for benchmarking the international transactions of the assessee for the said preceding year. Also, the aforementioned company was selected as a valid comparable by the Tribunal while disposing off the assessee’s appeal for A.Y. 2013-14. Integra Telecommunications Software Ltd. - We are not inspired by the reasoning given by the TPO for rejecting the aforementioned company which was into software distribution business, as a valid comparable for benchmarking the international transactions of the assessee for the year under consideration. Direct the A.O/TPO to include the aforementioned company as a valid comparable for the purpose of benchmarking the international transactions of the assessee for the year under consideration. Short grant of TDS - HELD THAT:- As the adjudication of the aforesaid issue would require verification of records, therefore, we restore the issue to the file of the A.O. The A.O is directed to verify the aforesaid claim of the assessee, and in case there is any short credit of TDS, the same may therein be allowed. Deduction of “Education cess” and “Secondary and higher education cess” paid on the income-tax liability while computing of its income under the head “Profits and gains of business or profession” - Additional ground raise - HELD THAT:- We respectfully follow the aforesaid judgment of the Hon’ble High Court of Bombay in the case of Sesa Gold Limited [2020 (3) TMI 347 - BOMBAY HIGH COURT] and therein conclude that the assessee shall be entitled for deduction under the head “Profits and Gains from Business or Profession” of the amount of “Education Cess” and the “Secondary higher Education Cess” levied on its income under the Act. The additional ground of appeal raised by the assessee is allowed.
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