TMI Blog2017 (6) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. TDS u/s 194J - Disallowance u/s 40(a)(ia) - Subscription fee paid by the assessee to M/s Bloomberg Data Services India Pvt.Ltd data service - Held that:- After analyzing the relevant facts we have noted that the subscription fee paid by the assessee to M/s Bloomberg Data Services India Pvt.Ltd data service was for accessing the database and is in the nature of subscription of e-magazine/journal. Therefore, the payment made cannot be treated as royalty or Fees Paid for Technical Services coming within the purview of section 194J. Notably, the aforesaid view has also been expressed by the Co-ordinate Bench of the Tribunal in the case of M/s. India Capital Markets P. Ltd (2013 (1) TMI 646 - ITAT MUMBAI). DR has failed to controvert the contention of the assessee that the payee has offered the income received towards subscription charges as in the return filed by it - neither there is requirement for the assessee to deduct tax at source on payment towards subscription charges paid to M/s Bloomberg Data Services India Pvt.Ltd. nor the assessee can be treated as an assessee in default u/s 201(1) - decided in favour of assessee Addition on account of transfer price adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the expenditure incurred prior to the date of execution of the furniture agreement dated 18.1.2010 are in the nature of pre-operative expenses. Therefore, he directed the assessee to show cause as to why the expenditures claimed being in the nature of pre-operative expenses should not be restricted to the amount as per the provisions of section 35D of the Act. Though the assessee objecting to proposed disallowance submitted that it has commenced its business activity from June, 2009 and the expenditure incurred were after commencement of the business activities, however, the AO rejecting the claim of the assessee worked out the allowable expenses u/s 35D at ₹ 9,95,000/- and restricted the deduction to 1/5th of the allowable expenses so worked out by quantifying it at ₹ 1,99,000/-. Resultantly, the excess amount of ₹ 1,06,08,152/- out of the expenditure claimed by the assessee was added back to the total income of the assessee. Assessee challenged the disallowance before the ld.CIT(A). However, ld.CIT(A) also sustained the addition by observing that the assessee had not produced supporting evidence to establish that the business has commenced from June 2009. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the AO. 6. Ld.DR submitted, since the assessee was not able to produce any evidence before the AO and ld.CIT(A), in spite of adequate opportunity being given such evidence should not be admitted now. Relying upon the observations of the CIT(A) and AO, the ld.DR submitted, the assessee having failed to establish the commencement of the business from June, 2009, deduction claimed by the assessee prior to commencement of business cannot be allowed fully. He, therefore, submitted, the decision of the ld.CIT(A) be affirmed. 5. We have considered the rival submissions and perused the material on record. As could be seen, the dispute in relation to assessee s claim of deduction u/s 35D arises in limited context; viz, when the business of the assessee can be said to have commenced. Though, the assessee has claimed that the business has commenced from June, 2009, however, the AO has rebutted the claim relying upon the furniture agreement executed on 18.1.2010 by observing that the business could not have commenced without furniture and fixtures. Whereas, taking note of the fact that the first sale invoice was raised by assessee in December, 2009 and in absence of any other evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of requisite fee. He, therefore submitted, the payment made does not attract the provisions of section 194J of the Act. However, the AO, did not find merit in the submissions of the assessee and disallowed an amount of ₹ 8,23,275/- u/s 40(a)(ia) of the Act. Though the assessee challenged the decision of the AO before the ld.CIT(A), he refused to interfere with the same. 8. The ld. AR submitted that the payment made by the assessee is merely for accessing the data of the payee company. It was submitted, since the payment made was for terminal charges for online information and data base access and retrieval services, no TDS u/s 194J was required to be deducted since such payments was for subscription of financial e-magazine. The ld. AR submitted that the ITAT, Mumbai Bench in the case of M/s. India Capital Markets P. Ltd. V/s DCIT in ITA.No.2948/Mum/2010 and 4851/Mum/2010( Ay 2006-2007) dated 12-12-2012 while considering similar payment made to the same company has held that such payments do not require deduction of tax at source u/s 194J. The ld. AR submitted even otherwise also, the payee has certified that the payments received by it have been shown as income an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MM) as the most appropriate method. The assessee selected 11 companies as comparables with average margin of 22.60% as compared to 17.50% shown by it. Therefore, price charged for international transaction to the AE was found to be at Arm s Length. The AO, however, was not agreeable to the Transfer Price analysis made by the assessee. He was of the view that certain comparables selected by the assessee were not having data for the year ending March, 2009 and 2010, hence, the arithmetical mean in respect of the comparables can not be determined. According to the AO those comparables are to be ignored. In respect of three other comparables, the AO found that they have negative markup, therefore cannot be compared with the assessee. Thus, he finally found three companies having positive margin to be comparables with the assessee. The Arithmetic mean of these comparables worked out to 22.60%. By adding further 5% to the arithmetic mean of 22.60% of the three comparables AO worked out the margin of the comparables at 27.60%. Thereafter, by applying the margin of 27.60% to the total expenses/cost of ₹ 1,45,03,938/-,he worked out profit at ₹ 40,03,087/-. The assessee having sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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