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TMI Blog2019 (6) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... nterprises"('AE') of the Appellant within the meaning of section 92A of the Income Tax Act, 1961 ('the Act'). b. Appellant's profession was an 'enterprise' within the meaning of section 92F(iii) of the Act separate from the Appellant being an 'enterprise'. 3. The Appellant prays that the alleged 'international transaction' was not between AEs and therefore the addition be considered as bad in law and be deleted. WITHOUT PREJUDICE TO GROUND I GROUND II 1. On the facts and circumstances and in law the CIT(A) erred in considering that agreeing to be associated with 'Rajasthan Royals' franchise ('RR') amounted to an "international transaction" as contemplated in section 92C of the Act. 2. He failed to appreciate and ought to have held that: a. The alleged services, if any, were provided by the Appellant, a resident to Jaipur IPL Cricket Private Limited (;JICPL'), another resident and also the owner of the RR b. If at all the Appellant promoted her image by being associated with RR. 3. The Appellant, therefore prays that the action of the AO in making the transfer pricing adjustment was erroneous and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance made u/s. 14A r.w.r. 8D of Rs. 3,21,763A. 2. The Ld. Authorized Representative for Assessee [AR], at the outset, submitted that the first issue of Transfer Pricing [TP] Adjustment stood covered in assessee's favour by the earlier decision of this Tribunal for AY 2010-11 in assessee's own case vide order dated 21/08/2018 in ITA No.2445/Mum/2014. A copy of the same has been placed on record. The Ld. DR who could not controvert the said fact. 3.1 Facts in brief are that the assessee being a film actress was assessed for the impugned AY u/s 143(3) on 25/03/2014 wherein the income of the assessee was determined at Rs. 1303.15 Lacs after certain transfer pricing adjustments and disallowance u/s. 14A as against returned income of Rs. 759.94 Lacs e-filed by the assessee on 25/09/2011. 3.2 The issue of TP adjustment of Rs. 540 Lacs stem from the fact that the assessee acted as brand ambassador for Jaipur IPL Team. In the capacity of brand ambassador, the assessee involved herself in Cricket Matches, photo shoots, press interviews, personal appearances etc. However, no receipts were reflected by her during impugned AY on account of rendering of these services. Till the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpute the ALP of the same in terms of provisions of Section 92C(3). The number of days for which the services were rendered were 18 days. Applying comparable price with M/s Star India Pvt Ltd., being the price for 15 days @Rs. 30 Lacs per day, the ALP of the same was determined at Rs. 540 Lacs which was added to the income of the assessee as TP adjustment. 3.8 The Ld. first appellate authority, primarily relying upon the order of its predecessor in assessee's own case for AY 2010-11, confirmed the stand of Ld. AO. Aggrieved, the assessee is in further appeal before us. 4. Upon careful consideration, we find that the assessee agitated the stand of Ld. first appellate authority with success before this Tribunal vide ITA No. 2445/Mum/2014 order dated 21/08/2018. The matter has been concluded by co-ordinate bench in the following manner: - "6. We have heard the counsels for both the parties and we have also perused the material placed on record, judgment cited by both the parties as well as orders passed by revenue authorities. We find that although, the powers of Ld. CIT(A) being wider than that of any other appellate authorities or Court is not disputed, but the Ld. CIT(A) can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even as per sec. 92F(iii), an 'enterprise' means a 'person', engaged in activities etc. The Assessee's Profession cannot be considered as a person within the meaning of sec. 2(31), separate from her, as the Assessee's profession is not assessable separately from the Assessee. Therefore, the question of Assessee being an AE of Kuki, by holding that RK controlled Kuki and RK's relative, i.e. Assessee, controlled the 'enterprise' of assessee's profession, does not arise. 8. On the other hand, Ld. DR relied upon the orders passed by revenue authorities and submitted that assessee and Kuki were AE‟s u/s. 92A(2)(J) as: a) the Assessee's husband, RK, controlled Kuki. b) the Assessee is an individual and as such a 'person' within the meaning of sec. 2(31). During the course of hearing, the Ld. DR also argued that Kuki had controlled the Assessee as Kuki had paid association fee on behalf of the Assessee to EMSHL. 9. We have heard the counsels for both the parties, we find that both the above stated facts by Ld.DR, i.e. RK controlling Kuki and Assessee being a "person" u/s. 2(31), are not in dispute at all. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be applied to hold that transaction between Assessee and JICPL was an 'international transaction' as: a) Neither any of the parties to the SPA (i.e. prior agreement) was an AE of the Assessee; b) Nor JICPL entered into a prior agreement with the AE of the Assessee (JICPL was not a party to the SPA); and as such the pre-requisite of a prior agreement between a non-AE with the AE of an assessee is not fulfilled. 12. On the contrary, Ld. DR relied upon the orders of Ld. CIT(A). 13. After having considered the submission of both the parties, we find that Section 92B(2) of the Act cannot be applied to hold that transaction between assessee and JICPL was an "International transaction" as neither any of the parties to the SPA were an AE of the assessee nor JICPL entered into a prior agreement with the AE of the Assessee (JICPL was not a party to the SPA); and as such the pre-requisite of a prior agreement between a non-AE with the AE of an assessee is not fulfilled. 14. Now, we proceed to deal with the objection of assessee on existence of "international transaction" and "price" is concerned, Ld. AR submitted that in order to apply Chapter X, existence of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eventuality even otherwise the alleged transaction cannot be considered as an "international transaction" 16. On the other hand, Ld. DR relied upon the orders passed by Ld. CIT(A) and also on the decision of Hon'ble Special Bench of Kolkata ITAT in case of Instrumentarium Corporation Ltd. [2016] 179 TTJ 665, to submit that, since no fee was charged by the Assessee, the price was Zero and as such the ALP has to be substituted with the same. During the course of hearing, the Ld. DR had also relied on the decision of Hon'ble Delhi Tribunal in case of BMW India Pvt. Ltd. v. DOT [2017] ITA No. 1406/Del/2015, wherein, after considering Maruti Suzuki's case, determination of ALP was upheld. He also relied on the decision of Hon'ble Mumbai Tribunal in case of Sabre Asia Pacific Pte. Ltd. [2018] ITA No. 4882/M/2015, to submit that the Tribunal had upheld the transfer pricing adjustment on the basis of ALP determination in case of assessee advancing interest free loan to its AE, by considering the income offered as zero. After relying on these decisions, the Ld. DR contended that in Assessee's case, the price was zero and therefore, the transaction is subjected to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s far as the objection of assessee with regard to the applicability of chapter 10, when no income has arisen is concerned. In this respect, the Ld. AR submitted that Chapter X presupposes existence of 'income' and lays down machinery provisions to compute ALP of such income, if it arises from an 'international transaction'. Sec. 92 is not an independent charging section to bring in a new head of income or to charge tax on income which is otherwise not chargeable under the Act. Accordingly, since no income had accrued to or received by the Assessee u/s. 5, no notional income can be brought to tax u/s. 92. In this regard, Ld. AR relied upon the following judgments:- i. Dana Corporation [2010] 321 ITR 178 (AAR) - Pg. 192 & 193 ii. Amiantit International Holding Ltd [2010] 322 ITR 678 (AAR) - Pg. 682, 683 and 692 26 I.T.A. No. 2445/Mum/2014 Shilpa Shetty iii. Praxair Pacific Ltd [2010] 326 ITR 276 (AAR) - Pg. 279 and 286 iv. Deere & Co [2011] 337 ITR 277 (AAR) - Pg. 280 & 284 v. Venenburg Group B.V [2007] 289 ITR 464 (AAR) - Para 15 at Pg. 472 vi. Goodyear Tire & Rubber Co. [2011] 334 ITR 69 (AAR) - Para 10 at Pg. 78 vii. Vodafone India Services (P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HC) - Para 24 (Pg. 30), 40 (Pg. 37-38) ix. Vodafone India Services (P.) Ltd. v. Union of India [2015] 369 ITR 511 (Born HC) - Para 8 at Pg. 515 x. Vodafone India Services (P.) Ltd. v. CIT [2016] 385 ITR 169 (Born HC) - Pg. 312 and 320 And keeping in view of our above finding, we allow these grounds and direct the AO to deleted the additions. 21. Since we have already deleted the additions by above reasoned order, therefore there is no need to adjudicate other grounds on merits in view of our above findings as the same become infructous." Nothing has been brought on record to establish that the aforesaid ruling is not applicable to the facts of the present case before us. Facts and circumstances being pari-materia the same, respectfully following the binding judicial precedent, we direct for deletion of impugned TP adjustment. Ground No. 1 stands allowed which makes other Grounds II to IV infructuous. 5.1 The second disallowance u/s 14A stem from the fact that the assessee earned exempt dividend income of Rs. 9.16 Lacs during the impugned AY and held investment of Rs. 668.69 Lacs. Since no disallowance was offered by the assessee against the same, Ld. AO compute expens ..... X X X X Extracts X X X X X X X X Extracts X X X X
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