9911796707
TMI Blog2013 (3) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... e company was conducting the entire television channel activities for Asia Pacific Channels from Singapore and was telecasting six channels in the Asia Pacific Region including India. It was uplinking satellite from Singapore and telecasting the various channels to the Asia Pacific Region. The returns of income for the years under consideration were filed by the assessee from time to time showing Nil income. The reasons for not showing any income chargeable to tax in India were mainly as under : 1) It did not have a permanent establishment in India which could make its income being chargeable tax in India. 2) The profits attributable to the permanent establishment, if any, have already been taxed in India since arm's length remuneration had been paid to its agent in India viz. MTV India (P) Ltd. 3. The company incurred huge losses from its worldwide operation and thus only losses and not profits could be attributable to its operation/activities in India. 3. During the course of assessment proceedings, the AO noted that the assessee had appointed MTV India (P) Ltd. as its advertising agent in India by agreement dated 25-06-1996 for promoting and selling advertising time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the AO that the revenue generated by the assessee company in India to the extent attributable to the said PE in India, in addition to 15% remuneration paid to the Indian agent, was chargeable to tax in India. Such extent of revenue attributable to PE in India was held to be 25% by CIT(Appeals) in assessment year 2002-03 as against 40% attributed by the AO. In assessment year 2003-04 and 2004-05, he found it fair and reasonable to attribute 10% of the total revenue in India as profit of the agency PE in India as against 30% and 25% attributed by the AO. In assessment year 2005- 06, the learned CIT(Appeals) followed the decision of Hon'ble Bombay High Court in the case of Set Satellite (Singapore) Pvt. Ltd. reported in 307 ITR 205 to hold that 15% commission paid by the assessee company to its Indian agent having been considered to be at arm's length, no further profits could be attributed to the PE of the assessee in India. He, therefore, held that even though the assessee company had an agency PE in India during the previous year relevant to assessment year 2005-06, the advertisement revenue earned by it was not taxable in India. Aggrieved by the orders of the learned CIT(App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven by the AO as well as by the learned CIT(Appeals) in their respective orders for the years under consideration while applying different percentages of advertisement revenues to determine the profit attributable to the PE of the assessee company in India. After having perused the relevant portion of the orders of the AO and the learned CIT(Appeals), we find that the reasons given by the learned CIT(Appeals) to estimate 10% of the advertising revenue as profit attributable to the PE of the assessee company in India, in his impugned order for assessment year 2003-04 are more convincing and cogent. The relevant portion of the learned CIT(Appeals)' order as contained in paragraph No. 5.17 to 5.22 of the said order is extracted below : 5.17 I have gone through the above details. Though the appellant has not produced any details of the various expenses, by no stretch of imagination it can be said that the appellant has not incurred any expenses under these heads. At the same time, it cannot be said that income of Indian Operations of the appellant of is definitely ascertainable in view of the fact that the appellant has not produced documentary evidence in cases of various oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remittance abroad as the income of the Foreign Telecasting Companies ('FTC'). This circular was issued by the board to prescribe guidelines for the purpose of proper and efficient management of the assessment of FTCs. Further, the appellant had followed the said circular in earlier assessment years (assessment years prior to AY 2002-03) even though the circulars are not binding on the assessee. Though this circular has been withdrawn, there being no change in the business model of the appellant, the estimation of 10% is considered as reasonable. A perusal of the relevant portion of the learned CIT(Appeals)' impugned order for assessment year 2003-04 shows that he has relied on the Circular No. 742 issued by the CBDT prescribing in the guidelines for the purpose of proper and efficient management of the assessment of foreign telecasting companies. As further brought to our notice at the time of hearing, even the AO has estimated 10% of the advertisement revenues as profit attributable to the PE of the assessee company in India in assessment years 2006-07 and 2007-08 pursuant to the directions of DRP. We are, therefore, of the view that it would be fair and reasonable to estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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