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2017 (5) TMI 911 - ITAT MUMBAI

2017 (5) TMI 911 - ITAT MUMBAI - TMI - Reopening the assessment u/s.147 - apportioning the expenses @75.705% instead of 67.58% - whether no income was attributable to assessee in India and there is also no PE? - Held that:- As relying on assessee's own case giving effect to the ITAT order [2016 (8) TMI 504 - ITAT MUMBAI] no income is attributable to the assessee in India, losses would not been available for set off and therefore, total income was computed as Nil. As the AO himself has accepted t .....

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EP GOSAIN, JM For The Revenue : Shri M.V.Rajguru For The Assessee : Shri Madhur Agarwal ORDER PER R.C.SHARMA (A.M): This is an appeal filed by the Revenue against the order of CIT(A)-10, Mumbai dated 30/08/2013 for the A.Y.2005-06 in the matter of order passed u/s.143(3) r.w.s. 144C of the IT Act. 2. In this appeal, revenue is aggrieved by the action of CIT(A) holding that reopening the assessment u/s.147 was not valid. On merits revenue is aggrieved for allowing the opportunity of expenditure t .....

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s case was re-opened by the AO through issuance of notice u/s. 148 of the I.T. Act dt. 29-3-2010. The AO has observed that while drawing the final statement of the Indian Operation in comparison to the Global Revenue that the expenses apportioned were @ 75.705% whereas the expenses should have been apportioned at the rate of 67.58% as detailed by the AO in para 3 to 4 of the assessment order. Accordingly, on the reasons discussed by the AO in para 3 & 4 of the assessment order, the AO restri .....

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pellant's submission. Having considered both, I find that all the details which were subjected to the reopening of the assessment was filed by the 'appellant company alongwith its original return of income filed. Thus, all such details were available on record, which were taken note by AO for re-opening of the assessment which was completed u/s. 143(3) of the I.T. Act as on 27-12-2007. Even the AO took note of the detailed submissions of the appellant itself which was available before th .....

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alysis of both the assesses. The appellant has disclosed its income in the current AY based on its past practice as it was disclosed in earlier year. Thus, I find that the appellant has disclosed its income in a consistent manner which was accepted by the department in all preceding AYs in the appellant's case. Taking note of all these facts as enumerated above, I am of the considered view that the re-opening of the assessment was not justified and correct on the part of the AO and hence the .....

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,745/-. In the course of appellate proceedings, the appellant's AR has vehemently argued against the aforesaid action- of the AO and stated that the AO could not take note of the details available already on record. The appellant's AR argued that the comparison carried out by the AO for expenses was incorrect as the appellant has already reduced operating income, sale of decoders, receipt from Syndicate of Broadcast rights from the Global revenue, which were not in relation to the Indian .....

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these years and the same has been audited by the auditors as well as accepted by the tax authorities (including Honorable CIT(A) for earlier years as well as for the captioned assessment year. 2.0 The gross revenues as per the global operations for the year ended 31 March 2005 based on the global audited financial statements (audited by KPMG Mauritius) is tabulated as under: Revenue US$ Remarks relevant to Indian Operations Advertisement Sports Sales 9,902,181 Global revenue apportioned between .....

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of decoders Other operating income 1,054,428 Reduced from the operating costs Total Revenue 19,035,454 3.0 The break up of the revenues as per the allocation sheet, which is used for compiling the financial statements of the Indian operations is as under: Particulars Global Revenue (US$) Revenue from Indian Operations (US$) Advertisement Spot Sales 10,027,182 7,688,723 Distribution Revenue 3,140,572 1,350,635 Production Income 1,575,000 1,575,000 Supreme Court Award 2,250,000 2,250,000 Global R .....

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tal expenses. 4.0. Taj 'Submits the break up of Global Revenue as shown in financial statements of Indian operations as under:- Particulars Amount US$ Global Revenue as per Audited Global Financial Statements 19,035,454 Less: Operating Income which has been reduced from operating costs (the balance operating costs have been apportioned in the ratio of direct revenue i.e. 75.70%) 1,054,428 Less: Syndication Sales which has been reduced from Programming costs (the balance programming costs hav .....

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ome not considered for determining allocation ratio Taj has acquired telecasting rights for certain territories / countries based on the event / programmes, in terms of tender and other circumstances. However, Taj does not telecast in all the territories / countries covered by the agreement. On account of this and due to other business reasons, Taj disposes part of such telecasting rights for certain territories and exploits the balance rights for telecasting. As such, the cost of telecasting ri .....

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g programming costs and productions costs were apportioned to the India operations and hence, it means that 75.70% of such syndication income & operating income is impliedly taxed in India, The aforesaid is evident from the allocation sheet as enclosed. 6.0 Explanation as regards Sale of Decoders not considered for determining allocation ratio * During the year, decoders were sold in the region other than India and hence allocated to particular territory on actual basis. Similarly, there are .....

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reversed. Since the same was pertaining to 100% outside India, it has not been considered for determining allocation ratio. 8.0 Calculation of the income 1 loss attributable to Indian Operations Revenues allocation Revenues considered by your Appellant Particulars Global Operations (US$) Indian Operations (US$) Revenues considered for allocation 16,992,754 12,864,358 Total costs (As per the allocation sheet) 20,152,688 13,961,158 Income / Loss) (3,159,934) (1,096,800) case the syndication revenu .....

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67.58% 22,195,388 14,999,643 Income / Loss) (3,159,934) (2,135,285) 6. On merits, CIT(A) held as under:- I have considered the AO's order as well as the appellant's submission. Having considered both, I am in agreement with the appellant's AR request that the comparison carried out by the AO to restrict the expenses to the extent of 67.58% instead of 75.70% as claimed by appellant company was based on wrong notion. Hence, the same was incorrectly carried out as the AO could not take .....

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nt company was completely unjustified and incorrect in view of the aforesaid detailed submission of the appellant. Hence, in my considered view, the action of the AO was unjustified even as per the accounting Principle also. In the result, the addition so made by the AO is held to be incorrect and unjustified even as per accepted norms of the accounting Principle. Accordingly the addition so made by AO is deleted. Thus, the appellant's this ground of appeal is allowed. 9. Against the above o .....

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