9911796707
TMI Blog2023 (4) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income of Assessee 02. During the course of assessment processing, assessee has filed detailed note on business activities of the assessee company and said that it does not have any permanent establishment [PE] in India and therefore it has offered nil income. Accordingly, as per assessee, it has two streams of Income Advertising service income and Distribution service income and both these streams of income are not chargeable to tax in India. Assessment Proceedings 03. Ld. AO was of the view that past records and assessment shows that revenue has held that the assessee company has a permanent establishment and hence income attributable to the permanent establishment is chargeable to tax in India. 04. Assessee submitted that i. Coordinate bench for assessment year 2011 - 12 held that there is no permanent establishment in respect to distribution revenue and issue of the same with respect to advertisement revenue is kept open. ii. However, the payment to its associated enterprises is at arm's-length, nothing further should be attributable to the assessee that can be taxed in India. iii. There is no change in the facts and circumstances of the case compared to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other advertising sales agent. c. Taj India also conducted activity in India and on behalf of the assessee, which only a dependent agent could carry out or it's principal like facilitating arrangement with advertising agencies, sales representatives, conducting market studies, promoting awareness regarding channel and other services incidental to acting as dependent agent for booking of advertisement in India. d. In return for the above-mentioned services, Taj India only receives a commission of 10% of the advertisements in India. e. Clause 5 (a) of the agreement clearly mentions that the assessee and Taj India acknowledges that Taj India can enter into contracts with third parties, subject to prior approval by the assessee in its absolute discretion. f. Clause 10 of the agreement mentions that the assessee may assign or transfer without the prior written permission of Taj India, the whole or any part of its rights to any party in its absolute discretion. g. It can be seen that a major part of the risk in terms of market risk and technology risk are borne by the Taj India. Further measure of the revenue is from advertisement and subscription of the assessee comes thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would make principles of „force of attraction‟ inapplicable in India. iv. Accordingly, she held that it is amply clear that Taj India is acting wholly and exclusively for the assessee company as a dependent agent and is regularly selling the advertisement spots on behalf of the assessee. It is also clear that the Taj India is functionally and economically dependent on the assessee and takes risk on behalf of the assessee. It is therefore independent agent of the assessee within the meaning of Article 5 of the Indo Mauritius Double Taxation Avoidance Agreement. v. She further referred to the agreement and held that even allowing for the fact that assessee company is responsible for setting down the broad guidelines under which the contracts to be made, served, the importance of Taj India in concluding the contracts cannot be ignored. According to her it is the later [Taj India] that is responsible for all the negotiations in India and its activities in India are devoted exclusively on behalf of the assessee company. vi. Therefore, Taj India has authority to conclude contracts in the name of the assessee and the authority is exercised in India habitually and repea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er article 12 of the Indo US DTAA as recipient of income is US Resident. The learned AO further rejected the contention of the assessee that when there is a payment from one non-resident to another non-resident there is no liability for tax deduction at source under section 195 of the act the learned AO was of the view that liability to make tax deduction at source under section 195 is irrespective of the fact whether the person making payment is a resident or a non-resident or having a business connection in India or not. The learned AO further noted that coordinate bench has allowed a relief to the assessee on the issue of disallowance of non-deduction of tax for assessment year 2003 - 04 until assessment year 2011 - 12. Against these orders, the revenue has filed an appeal before the Honourable High Court, which is pending. However, each assessment proceedings for each year are separate and a principle of rest judicata does not apply. Accordingly, all these payments are disallowable under section 40 (a) (i) of the act. xi. Accordingly, She held that the total profit of the business is US$ 4,839,582 out of which disallowance of expenditure under section 40 (a) (i) of the act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. Assessee has also not filed details with respect to approvals taken from any government or statutory or regulatory authorities in India for the transfer and has not notified details of authorized bank signatories for the period relevant to the said transaction. xiv. The learned AO held that it is too simplistic an assertion that the transaction is an overseas transaction between two overseas companies. According to her, it is equally important to view the true nature and character of the transaction from the covenants of the contract in the light of surrounding circumstances. The AO noted that Zee entertainment enterprises Ltd [ ZEE] in its annual report for 2017 has categorically stated that its board has approved sale of sports broadcasting business comprising of assets and rights relating to Ten brand of sports channel held in Taj TV Limited Mauritius, a step down subsidiary of the company and sale of entire equity stake in the Indian subsidiary handling sports business viz. Taj Television (India) Private Limited [ Taj India] to Sony group at an aggregated all-cash consideration of US$ 385 million. ZEE in its annual reports of 2018 further noted that second phase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Sony pictures network India to step into the shoes of Taj TV and increase its presence in the sports TV channel viewership in India and other territories. xvi. Thereafter, the learned AO looked into The Business Purchase Agreement dated 31/8/2016 and reached at a conclusion that the definition of sports broadcasting business is all inclusive and pertained to broadcast, distribution and syndication of sports content along with the distribution of channels anywhere in the world (other than Pakistan). Therefore, according to her the business purchase agreement has transferred all assets, rights, title, and interest in and to the sports broadcasting business of the assessee to the purchaser. The „assets‟ means the assets of the seller relating to or used to operate the sports broadcasting business including all movable assets, all current assets, and all other assets, tangible or intangible of whatsoever nature and where so ever situated, each of which relates to all is used in sports broadcasting business. Assessee does not have any immovable property exclusively for conduct of its sports broadcasting business. Therefore, assessee has transferred all the rights and tit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shes the territorial nexus of the said agreement with India. xxi. Based on this: - a) the AO held that by the means of the business purchase agreement assessee has transferred all assets, rights, title and interest in and to the sports broadcasting business which is squarely covered by the definition of „property‟ and hence „capital asset‟ situated in India. b) The provisions of The Income Tax Act under section 50B dealing with income on sale of a business unit/undertaking/division via slump sale is required to be computed. c) The capital gain is required to be computed by deducting net worth of the undertaking as on the date of transfer. d) As the assessee has transferred assets, rights, title and interest in and to the sports broadcasting business by means of a Business Purchase Agreement dated 31/8/2016 and it has also been established that the said business has territorial nexus with India and that the said transfer is covered by the provision of The Income Tax Act, she invoking the provisions of section 9 (1) read with section 5, held that that any income accruing or arising in India ,directly or indirectly or from business connection in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is not functioning independently as a „separate legal entity‟. g) Assessee has not established how the funds realized after the sale by it for its business purposes and further it has also not submitted any valuation report. h) Thereafter, ld. AO looked at statement of segmental assets and liabilities as on 31 August 2016 of the assessee and found that the out of total net worth of global sports broadcasting division, US$ 7,893,917 is required to be deducted as cost of acquisition and improvement being net worth of the business as per accounts of the assessee. Accordingly, from sale consideration of US$ 33,84,00,000, the cost of acquisition of US$ 7,893,917 was deducted and long-term capital gain on sale of sports broadcasting business division of US$ 330,506,083 was worked out. The same was converted at exchange rate of SBI TT Buying rate of US dollar as on 31/8/2016 and capital gain chargeable to tax in India was worked out that Rs. 22,137,594,895/-. xxii. Thus, Draft Order u/s 144C of the Act was passed on 27/12/2019 where the ld. AO computed the income of the assessee as under :- Sr No Particulars INR 1 Business income from Broadcasting of channels from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain attributable to the permanent establishment in India of US$ 267,271,940 is chargeable to tax in India u/s 50 B of the act read with article 13 (2) of the DTAA. iii. With respect to objection number 3 and 4 it was held that as the revenue has been consistently holding that assessee has a permanent establishment in India which has also been confirmed by the learned CIT - A in earlier years, there is no change on the facts and circumstances of the case and therefore the action of the learned assessing officer was confirmed holding that Taj TV Ltd has income chargeable to tax in India in respect of advertisement and distribution revenue as it has a business connection and permanent establishment in India. iv. With respect to objection number 4 being an alternative submission that the permanent establishment has been compensated at arm‟s-length in respect of various services provided in India and therefore no further attribution can be made, the action of the learned assessing officer was upheld holding that without benchmarking of all functions of the permanent establishment for generating advertisement revenue it cannot be presumed that the payment made to the agent was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to justify taxability under the Treaty without appreciating that the provision of Article 13(2) is not applicable in the facts and circumstances of the present case as the Appellant neither has a Permanent Establishment in India nor can the instant transfer of sports broadcasting undertaking be equated as an alienation of movable property forming part of the business property of the alleged permanent establishment. c. The DRP / AO failed to appreciate that the gain on transfer of sports broadcasting business is not chargeable to tax in India in view of Article 13(4) of the Treaty. 2. The DRP erred in upholding the action of the AO in taxing profit on advertisement and distribution revenues collected from India computed at 102,03,35,861/- without appreciating fact that the Appellant neither has any business connection in India nor fixed place or agency permanent establishment in India and, therefore, the said revenues are neither chargeable to tax under the provisions of the Act or under the Treaty; 3. The DRP/AO failed to appreciate that even assuming without admitting that the Appellant has a permanent establishment in India, arm's length consideration paid to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the situs of the undertaking would be the situs of the owner where the company is Incorporated. Assessee company is resident of Mauritius and therefore the undertaking has corresponding situs in Mauritius and hence undertaking is situated in Mauritius and not India. Assessee strongly relied on the decision of the Honourable Delhi High Court in case of CUB Pty Ltd versus Union of India 71 taxmann.com 315. iii. Further submitted that even otherwise where the situs of the undertaking is located ought to be based upon where the „operations and activities‟ are carried on. Merely because the channels are viewable in India amongst other countries, it cannot be said that the undertaking is situated in India. Further it was also claimed if the channels are viewed in more than one country, it cannot be said that situs of the business is in multiple countries. iv. The assessee further claimed that assessee is a company Incorporated in Mauritius and is engaged in satellite television broadcasting business. The business process of the assessee‟s operations that are broadcasting, selling, up linking, management, finance and books of accounts are all undertaken outside I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation claimed in the profit and loss account is an apportionment of the expenses of assets used globally to earn revenue from India. xi. It also claims that the control and management of the assessee is situated in Mauritius and not in India. It was claimed that none of the directors of the assessee were resident of India during the year under consideration, all the board meetings of the Board of Directors were held outside India, the directors at those board meetings took the significant decisions and therefore 'head and brain‟ of the assessee also resides outside India. xii. It was also the claim of the assessee that all significant contracts were negotiated, finalized, and executed outside India. These facts were brought to the notice of the learned assessing officer as per letter dated 23/10/2019 and same are not disputed. xiii. With respect to the observation of the AO that most of the registered trademarks are registered in India, assessee submitted that because some of the trademarks registered in India, it would not mean that undertaking is situated in India. Specific reference was made to the decision of the Honourable Delhi High Court in case of CUB Pty L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mponents. Therefore, the taxability of transfer of undertaking is covered under Article 13 (4) of DTAA. According to that the alienation of any other property are taxable in the state of residence irrespective of where the assessee situated or whether there is a permanent establishment in India or not. Therefore, in the present case, since the assessee is a residence of Mauritius, the gains are taxable in Mauritius. Therefore even otherwise, assuming while denying, that the global sports broadcasting undertaking is situated in India, still, in view of article 13 (4) of DTAA, gains would be taxable only in Mauritius. xviii. With respect to the denial of treaty benefit in the present assessment year, alleging that assessee is a puppet, and run by its Parent ZEE, as assessee has not taken its decisions independently, it was submitted that all the decisions of the assessee have been taken independently in meeting. Mr. Anil is a non-resident and a director of ATL media Ltd, was authorized to enter into the necessary agreements for executing the sale of the global sports broadcasting undertaking. The involvement of ATL Ltd and ZEE is merely in terms of being a shareholder. The disclosu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g part of the business property of the permanent establishment of an enterprises. The provision applies either to (i) alienation of such property that was owned by the alienator or (ii) the alienation of permanent establishment itself. It was submitted that as assessee does not have any permanent establishment in India, there is no question of alienation of permanent establishment or any alienation of movable property of the alleged permanent establishment forming part of the business property. xxii. With Respect to PE , assessee submitted that that there is a „subscription agreement‟ and „advertisement agreement‟ with Taj India. The Honourable Bombay High Court in assessee‟s own case for assessment year 2004 - 05 and 2005 - 06 has held that Taj India was acting independently, its distribution rights and the entire agreement was on „principal to principal‟ basis and therefore it does not constitute a permanent establishment of the assessee with respect to subscription agreement/ revenue. xxiii. With respect to the advertisement agreement, it was submitted that Taj India would constitute a permanent establishment only if (1) it has the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. It was the claim of the assessee that it does not have any employee in India and none of the employees of the assessee travelled to India during the year. Hence, the allegation of service permanent establishment also does not arise. xxviii. With respect to the LinkedIn profile of Mr. Rajesh Shetty and Mr. Vijay Parab , assessee submitted that Mr. Rajesh is CEO of Taj India, which was engaged as a distributor and Mr. Vijay was an employee of ZEE engaged as a production executive. The services provided by these individuals were in connection to the services provided by their employer entities to the assessee and they were under the control and management of their respective employers. Therefore, the reliance on the LinkedIn profile is misplaced. xxix. Even otherwise it was submitted that the revenue‟s claim was with respect to the applicability of article 13 (2) is with respect to Taj India as a permanent establishment of the assessee in India and not with reference to the Zee entertainment Ltd., xxx. The assessee submitted that even if the allegation of the revenue of Taj India constituting a dependent agent permanent establishment is presumed to be correct, still th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present case, the alleged fixed permanent establishment Zee Ltd has not alienated any assets. Even the play out facilities continues to be owned by that company and has not been alienated. Therefore, the article 13 (2) does not apply. xxxv. In the end assessee submitted that burden is on the revenue to establish that any income or gain arising on sale of sports broadcasting business is taxable under the Treaty in view of the decision of Motorola incorporation (special bench) and Right florist private limited. xxxvi. The revenue other than by making a bald assertion on surmises and conjunctures has not established the same. 011. In view of this, the assessee submitted that that global sports business sold by the assessee, capital gain arising therefrom is not chargeable to tax in India. 012. With respect to the ground number 2 regarding taxing advertisement and subscription income to the extent of Rs. 1,020,334,861/- the learned authorized representative submitted that assessee does not have a permanent establishment in India. The said issue is recurring issue and has been decided in favour of the assessee in the earlier years. The learned authorized representative submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in case of director of international taxation versus New Skies satellite BV 382 ITR 114 and further the decision of the coordinate bench in assessee‟s own case for last several years wherein it has been held that the payment of up linking and transponder fees does not amount to royalty and further in absence of any permanent establishment or business connection in India it is not taxable in India. Submission of revenue 018. The learned special counsel first referred to the background of the assessee that assessee is a company engaged in the business of telecasting of TV channels, which are owned by it. It is wholly owned subsidiary of ATL media Ltd Mauritius [ATL] that in turn is a wholly owned subsidiary of ZEE entertainment Enterprises Ltd [ ZEE] an Indian company. i. The assessee was Incorporated in the British Virgin Islands on 21/6/2000 and thereafter assessee got itself registered by continuation in Mauritius and obtained a Global Business License - 1 in terms of The Financial Services Commission Act 2007. The learned counsel further submitted that as assessee is a registered Mauritian company and at the time of its registration in Mauritius, it was governed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marketing and distribution rights for the channels and is acting as an agent of the assessee in terms of those policy guidelines. iii. Assessee has entered into an advertisement sales agency agreement dated 4/5/2002 with its non-exclusive agent i.e. Taj India for soliciting orders for placement of advertisements on the channel and forwarding them, collecting advertisement revenue and behalf of Taj among other things. According to clause 5 (a) of the advertisement agreement, Taj India has denied any right authority to assume or create in writing or otherwise any obligation of any kind, express or implied in the name of on behalf of the assessee unless expressly authorized by Taj. However in addendum dated 27/4/2006 the above 5 (a) is turned on its head entirely and the Taj India is provided with the right and authority to creating writing or otherwise an obligation of any kind, express or implied in the name of an on behalf of the assessee relating to activities undertaken in India. It was further stated that clause 5 (b) of the advertisement agency agreement provided that Taj India agrees to submit all proposed agreements and contracts in respect of services and periodic budget o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nued to violate the Telecom regulatory authority of India's guidelines and secondly there is no material to support the plea which the appellant is seeking to advances this stage to wriggle out of the situation. vi. With respect to the applicability of article 13 (2) or article 13 (4) of The Double Taxation Avoidance Agreement, the learned departmental representative submitted that the case of the learned AO is that gain derived by the assessee are covered under article 13 (2) of the Double Taxation Avoidance Agreement In which case the applicability of article 13 (4) becomes fully irrelevant. vii. He submitted that according to article 13 (2) of the Double Taxation Avoidance Agreement provides that if there is a permanent establishment in India and there is an alienation of permanent establishment itself, then in such case the gain arising therefrom are liable to be taxed in India. It was submitted that assessee during the course of hearing submitted that the permanent establishment in the context of article 13 (2) means only fixed place permanent establishment. This argument may be true to a certain extent, but it cannot be suggested that if an entity is operating through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itories which once again establishes the territorial nexus of the transaction with India. xi. Further, the agreement itself is subject to the governing laws of India. xii. Therefore, according to the learned special counsel, the transfer of the sports broadcasting business has territorial nexus with India. xiii. It was also the claim of the learned departmental representative that clause 9 of schedule 6 extracted that the assessee has obtained permission from its affiliates to use its premises from where it is operating. Further, no written agreement has been entered into in this regard. He further submits that according to clause 19 of schedule 6 of the agreement clearly states that the play out is done from Noida only and from no other place in the world. He further referred to clause 12.1 of schedule 6 read with schedule 9 saying that it implies that the robust IT system is in place in Noida, which is being transferred under the business purchase agreement. Therefore, according to him the assessee operates from India. xiv. He submitted that the overall implication of the sale of broadcasting business in India has to be seen in light of what is stated in the clause 2, sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production facility, it employs fixed assets, tangible and intangible assets, and however there is no indication that these assets are located out of India. He submitted that on the other hand, the title of the transfer pricing study report refers to India operation and therefore transfer pricing study report is dealing with only those assets, which are employed in India. Thus, Assessee has assets in India is clearly inferred. xx. The learned special counsel further referred to the audited financial statements and submitted that the depreciation and employees‟ cost has been charged to the India operation and therefore it cannot be believed that the assessee does not have any asset in India , now it cannot be said that those assets have not been used for operation in India. If that is so than how assessee claimed depreciation on account of the India operation and further it is nowhere stated as to where the employees are located, if not in India. xxi. He further referred to the claim of the assessee that the play out facility belong to ZEE entertainment Ltd and it was outsourced to that company for a consideration and therefore ZEE entertainment Ltd could not be regarded a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of permanent establishment in India. xxiii. He further submitted that article 13 (2) does not provide any exception when it comes to alienation of movable assets of the permanent establishment or of the permanent establishment itself. If the intent was to restrict its application to only fixed place permanent establishment, the Double Taxation Avoidance Agreement would certainly say so, more so because the Double Taxation Avoidance Agreement itself contains a wider definition of permanent establishment. xxiv. He further referred to the clause 9 and 19 of schedule 6 of the business purchase agreement with respect to properties and technical arrangements and submitted that the appellant does not have any immovable property of its own in Noida, but it has got permission from its affiliates to use the premises and this clearly shows that there is a fixed place which is being used by the assessee. It clearly shows that wherefrom the assessee is operating. Accordingly, he submitted that the business operations are being carried on from this premises, which belongs to the affiliates but is made available to the appellant for its business operation. No payments are made for the use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xation Avoidance Agreement is untenable. He further submitted that the reliance by the assessee on the decision of Honourable Supreme Court in case of Director Of Income Tax (International Taxation) Mumbai Versus Morgan Stanley And Company Incorporation (2007) 7SCC 1 is inappropriate for the reason that there is a fundamental difference between the Double Taxation Avoidance Agreement Between India and the United States and the DTAA between India and Mauritius. According to him, the paragraph number 5 of article 5 of the Indo US DTAA contemplates that the agency would not emerge if the agent is paid at arm's-length basis. Thus if the enterprises is not paid at arm's-length, he shall not be considered as an agent of independent status. Then he referred to the paragraph number 5 of article 5 of the India Mauritius Double Taxation Avoidance Agreement stating that it is differently worded and whether or not the payment is made on arm's-length basis, if the activities of the agents are devoted exclusively or almost exclusively on behalf of that enterprises, sale agent would not be considered as an agent of the independent status and would constitute agency permanent establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore it is a case of transfer of permanent establishment itself in accordance with the second limb of article 13 (2) of the Double Taxation Avoidance Agreement. xxxi. He further submitted that the assessee has fairly conceded during the hearing that in the event of transfer of permanent establishment itself, article 13 (2) of the Double Taxation Avoidance Agreement gets attracted. Therefore according to him the appellant's permanent establishment exists in India in no uncertain terms and thus article 13 (2) gets attracted on account of transfer of permanent establishment of the assessee to Sony. He submitted that it is so because the transfer of Taj India by the parent company as an integral part of the main transaction supports the proposition of the revenue. xxxii. He further referred to the several decisions of the coordinate bench which is rendered in case of the assessee holding that assessee does not have a permanent establishment in India, he submitted that the facts as brought out on record for this assessment year are totally different from those in earlier years and therefore the decisions rendered by the coordinate bench would not be applicable for the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission done from the Noida was not a business operation of the assessee even in earlier years. f) He submitted that the policy guidelines of Telecom regulatory authority for up linking and down linking of channels was never placed before the bench. g) The earlier year orders of the coordinate bench have gone by the streams of revenue for determining the status of the permanent establishment. He submitted that permanent establishment and its determination is dependent on functions and mainly the business operations that are done from a place either through the enterprises owned employees all through other persons or through the agent etc. The determining factor for permanent establishment is the place, the business operations, and the functions but can never be dependent upon the streams of the income. He therefore submitted that the orders of the coordinate bench, which has referred only the income streams of the agent to determine the status of the permanent establishment, is not correct. h) The issue of the capital gain is arising for the first time in this year and therefore the fresh examination of the facts needs to be done for this year. For the earlier years, facts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that assessee closed it Dubai office and relocated to India by mid-September. Mr. Rajesh further stated that it is consolidating its operation into its facility in Noida. Therefore, it is clear that the assessee shifted its operations from Dubai long back and now it operates from Noida for carrying out its functions. He submitted that it is also evident by reading the clause 19 of schedule 6 of the business purchase agreement. xli. He categorically submitted that that the operation of the assessee is not situated in any other place outside India. For this proposition he submitted that the assessee even after repeated queries has not been able to indicate from where, if not in India, the operations of the assessee is being carried out. Mere stating that assessee is still maintaining some properties in Dubai and rent agreement was filed in support of this contention cannot help the case of the assessee. Assessee need to show that wherefrom the business operations are being carried on. Therefore, in absence of any material to even remotely suggest that broadcasting of the channel is being done from Dubai or any other place except Noida is established. He therefore submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee simply noted and followed the decision which has already been taken behind its back by its parent ZEE entertainment Ltd. He submits that the assessee's board approved the sale consideration as notified to it by the parent. There is no discussion on valuation report or any independent decisions taken by the board of the assessee. Therefore, he submits that the assessee acted as a „puppet‟ in the hands of its parent and did not have any involvement in the decision-making process or in deciding the nature and quantum of sale consideration. Therefore, there is not an iota of evidence, which even remotely suggest that the assessee was involved in negotiations at any stage. He further referred to the minutes of the meeting of ZEE entertainment Ltd stating that it was held on the same date on which the business purchase agreement was signed and therefore it establishes that the decision to sale the broadcasting business was communicated to assessee by its parent only. He further referred to the income tax return filed by the assessee showing the names of the directors of the assessee company. He submits that though assessee has 4 directors, however the agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Zee Entertainment Ltd selling its Sports broadcasting business for India and some other territories to Sony is a colourable device, which has been frowned upon by the Honourable Supreme Court even in the case of Azadi Bachao Andolan. Therefore, according to him, the learned assessing officer is justified in taking note of the non-existence of the corporate veil, which has not been torn out by the revenue, but the assessee itself, its ultimate parent and making the assessee company disentitled for any treaty benefits. He submits that once the corporate structure is derecognized, the income becomes chargeable to tax in India, as the benefit of the treaty would no longer be available. Therefore, income attributable to the Indian territory is chargeable to tax in India even though the arrangement/transaction has been so arranged to acquire a legal form that allows it to evade taxes on the said income. xliv. Accordingly he concluded his submission on ground number 1 stating that that capital gain arising on the slump sale of global business sports of the assessee is chargeable to tax in India as per the Income Tax Act as well as per DTAA despite the fact that agent of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in India of the assessee is incorrect. It was also stated that the allegation of the learned departmental representative that the critical functions of the undertaking are functioning from India and therefore undertaking is situated in India and the premises of Zee entertainment Ltd constitute fixed place of permanent establishment. It was further stated that the learned departmental representative has specifically referred to the slump sale agreement to allege that the assessee is owner of the various assets and the same are located in India that the assessee is the owner of various information technology assets and the same are located in India. It was further stated that the transfer pricing study report shows that the assessee's production and transmission facility are situated at Noida. It was also the claim of the learned departmental representative that an offshore company like assessee, cannot hold any immovable property in Mauritius and therefore the assessee has an immovable property in India. 021. In rebuttal of the same learned authorized representative submitted that i. assessee is engaged in the business of satellite television broadcasting of sports events t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate from play out services availed from Zee entertainment Enterprises Ltd. Production has always been outside India while the play out facility for quality maintenance is availed from the ZEE entertainment Enterprises Ltd. The agreement does not contemplate to have Zee entertainment Enterprises Ltd as establishment of any permanent or enduring nature in India at the disposal of the appellant. Therefore, it cannot be said to be a permanent establishment in India merely because it provides the services to the assessee. ix. Transmission services have been availed from third party service providers like Intelsat Corporation and that the transmission happens outside India and not at the facility of the Zee enterprises entertainment Ltd. x. With respect to the applicability of MAURITIUS OFFSHORE BUSINESS ACT (MOBA), learned authorized representative submitted that the appellant is registered under The Financial Services Development Act, 2001 and the provisions of Mauritius Offshore Business Act do not apply to it. It was further stated that MOBA applies to activities approved in section 34 of the act and not the activities of the assessee. It was even otherwise submitted that tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aj India does not constitute a permanent establishment in India. xiii. It was submitted that the Honourable Bombay High Court in assessee's own case for the assessment year 2004 - 05 and 2005 - 06 has categorically held that Taj India was acting independently for its distribution rights and entire agreement was on principal-to-principal basis and therefore there was not a permanent establishment of the assessee. Therefore, reference to schedule 7 of the share purchase agreement is irrelevant. xiv. It was further stated that Taj India has entered into contract for distribution of channels in India but the same was on principal-to-principal basis. xv. It was further stated that the revenue failed to appreciate that the argument of the assessee that Taj India has not concluded contracts was with respect to the advertisement revenue and hence Taj India does not constitute a permanent establishment for advertisement revenue segment as well. xvi. It was further submitted that whether the Taj India constitutes a permanent establishment of the assessee for distribution (subscription income) has been settled by the Honourable Bombay High Court in favour of the assessee and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails of authorized bank signatories for the period relevant to the transaction. It was submitted that the assessee as per letter dated 27/12/2019 had submitted point -wise reply wherein in point number 1 it has categorically mentioned that the assessee has not obtained any valuation report for the purposes of sale of its global sports broadcasting undertaking and nor any valuations are required under the Indian foreign exchange regulations or any other statute. This is a transaction between two unrelated parties. Those parties are competitors and the consideration has been determined based on the negotiation entered into between the parties that are concluded. Therefore, the question of filing any valuation report does not arise. It was categorically mentioned that assessee has not obtained any valuation report. If the assessee has not taken any such report, there is no question of filing of such valuation report. With respect to the submission of the audited financial data of India operation along with the segmental accounts of the company relevant for computation of income was submitted to the learned assessing officer on 3/12/2019 as per submission dated 19/12/2019. He specifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's paper book it was submitted together with the copies of the board resolution which are taken on record and also referred in the draft assessment order. According to that it is evident that Mr. Anil Maurya is a tax resident of Mauritius who is a director of ATL Mauritius, holding company of the assessee and he is jointly authorized to operate along with the other directors of Taj Ltd since 30/11/2015. He specifically referred to that letter and submitted that there are two classes of the signatory jointly operate the bank account. One is Mr. Anil Murya and another one is any of the four persons including two directors of the assessee company. He submitted that even otherwise it does not make any adverse reference that a person of the holding company is made the joint signatory to the banking operation of the assessee. Therefore, it was submitted that the learned assessing officer has proceeded on the factual incorrect basis to make the above allegations. xxiv. With respect to the orders of the coordinate bench in earlier years, the learned authorized this representative submitted that there is no misrepresentation of facts from the side of the assessee. The coordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business bringing to the Indian sub continents and Middle East the best in sports programming and production. The assessee is having a Tax Residency Certificate [ TRC] issued by the Director-General, Mauritius Revenue Authority having a validity period from 25 March 2016 - 24 March 2017 stating that the assessee is registered in Mauritius on 12 July 2002, is a company resident in Mauritius for income tax purposes under the income tax act. Its certificate of Registration By Continuation was issued to the assessee on 12 July 2002 by The Registrar Of Companies, Mauritius. Assessee has also Global Business License Category 1 issued on 15 July 2002 for a validity period of 15 July 2002 - 14 July 2003 under section 20 (5) of The Financial Services Development Act 2001. According to that, the company was entitled to conduct such business or activities as a set out in the application and supplementary document submitted. 024. It has appointed an another entity Taj Television India Private Limited (Taj TV), a closely held Indian company which is engaged in the commissioning and marketing of sports programs events and distribution and dissemination of TV channels, as its advertising sales a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to its income is not liable to tax in India the company showed its indicated taxable income from its Indian operations stating that net profit before tax as per the profit and loss account is Rs. 4,620,563/-, to which it considered several items not allowable as deduction of Rs. 340,136 and reduced the allowable items of expenses allowable on payment basis of Rs. 121,117/- resulting into gross business income of Rs. 313,791,751 which was reduced by forward business losses of assessment year 2011 - 12 of the same amount. Even from income from other sources, unabsorbed depreciation of earlier years was claimed and net taxable income of only Rs. 48,015,879/- was shown. Along with the return of income balance sheet of India operations of the assessee for the year ended on 31st of March 2017 was drawn wherein in the balance sheet in the current assets only trade and other receivables amounting to US$ 19,593,547, trade and other creditors of US$ 15,797,564. No other assets and liabilities were shown. The share of net profit and loss are allocated to India operation of US$ 4620,563 was shown. With respect to the breakup of the above amount of profit, as per note number 3 details of rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... linear feeds of the channels and all ancillary activities associated with the broadcast, play out and distribution of linear channel in the territory (other than in Pakistan) and (B) distribution of the channels across all media platforms capable of carrying and distribution in a linear feed of a television channel in the territory (other than in Pakistan) and (C) syndicated sports content to 3rd parties across all media platforms in the territory (other than in Pakistan). Other than the business of sports broadcasting business, all other businesses were categorized as a retained business and were not part of this agreement. Pakistan business was also not part of this agreement. The channels undertaking means all undertakings of the seller pertaining to or used in connection with the sports broadcasting business and existing as on the closing date includes all the assets, contracts, permits and licenses, intellectual property, all employees, the records, the insurance policies, claims and rights, all goodwill and other intangibles as well as all information technology systems to the extent those are used solely by the sports broadcasting business and is transferable. The business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered in the name of the assessee registered in various jurisdictions including India. Out of this, 158 trademarks are registered in India. Other specific indemnities between the parties and five employees which are directly employed by the seller in relation to the sports broadcasting business and who are associated with the sports broadcasting business were listed. These 5 employees are based at Mauritius. Others are various general warranties between the parties. According to clause 8 and 9, it is stated that the sports broadcasting business is the sole and exclusive property of the seller and other than the seller no other person has any right or interest in the sports broadcasting business. The seller owns all of the assets necessary to conduct the business of sports broadcasting business and there are no arrangements with any other person that creates any encumbrance or the right to acquire any other rights in relation to any part of the assets. The properties were also not leased out or licensed to others but the seller has obtained the necessary permission from its affiliates to use the premises from where it is operating. No written agreement has been entered into by p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises Ltd as the seller and Sony pictures network India private limited as the purchaser titled as The Share Sale And Purchase Agreement where the seller holding 100 % of the outstanding share capital of Taj Television (India) Private Limited were sold for USD 76 Lacs. 034. On 1 March 2017, assessee confirmed to the buyer about the closing of the transaction. According to that closing date purchase consideration amounts to US$ 322.7 million received by the assessee and purchase of sports broadcasting business by Aqua holdings investments private limited is complete and now the buyer is the lawful owner of the sports broadcasting business. 035. Assessee has entered into an advertising sales agency agreement on 4 May 2002 by which assessee appointed Taj Television ( India) Private Limited as its advertising sales agent. The details of the agreement as well as the subsequent addendum thereto are as under:- i. The assessee has an agreement with Taj television India private limited titled as advertising sales agency agreement dated 4 May 2002. According to that assessee appointed Taj India private limited its non-exclusive advertising sales agent for:- a) soliciting orders for plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j approval which approval shall be granted or rejected by Taj within a reasonable time after such submission. However, if Taj does not grant or rejected approval within a reasonable period of time, and decides to keep its approval on hold, it will intimate Taj India accordingly. Taj (and not Taj India) shall be responsible for confirming all agreements relating to the services and the sale of advertising time for the channel and for directly booking advertising time for exit addition on the channel. Taj shall confirm all advertising time and book all advertising time agreements within a reasonable time of its receipt thereof from Taj India. iii. On 27 April 2006, an addendum to the advertising sales agency agreement entered into between assessee and Taj television India private limited was entered into. According to that clause 5 (a) of the agreement was replaced with effect from 1 April 2006 as under:- "in providing the services pursuant to this agreement, Taj India shall have the right and authority to assume or create, in writing or otherwise, and obligation of any kind express or implied, in the name of and on behalf of Taj, relating to activities undertaken in India. Subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench holding as under:- "24. The Tribunal noted that the first appellate authority, after due deliberation, had returned a finding of fact that Taj India was not acting as agent of the assessee but it had obtained the right of distribution of the channel for itself and subsequently, it had entered into contracts with other parties in its own name in which the assessee was not a party. The distribution of the revenue between the assessee and Taj India was in the ratio of 60 : 40 and the entire relationship was on principal-to-principal basis. The Tribunal noted that this finding by the first appellate authority is corroborated by the terms and conditions of the distribution agreement as well as the sub- distributor agreement. After examining the requirement of article 5 of the Double Taxation Avoidance Agreement to constitute agency permanent establishment, the Tribunal actually held that none of the conditions as stipulated in article 5(4) was applicable because Taj India was acting independently qua its distribution rights and the entire agreement was on principal-to-principal basis. Therefore, it was held that the distribution income earned by the assessee cannot be taxed in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in article 5 (5) as under:- "5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and the transactions between the agent and the enterprise are not made under arm's length conditions, he shall not be considered an agent of independent status within the meaning of this paragraph." Whereas in the India Mauritius double taxation avoidance agreement there is no such condition, article 5 (5) provides as under:- "5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. However, when the activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not. For assessment year 2003 - 04 to 2005 - 06 coordinate bench in Additional Director Of Income Tax Versus Taj Tv Limited 161 ITD 339 (Mumbai) dated 5/7/2016 has decided the issue that the distribution revenue in terms of distribution agreement has been allocated in the ratio of 60: 40 and the entire relationship is principal-to-principal basis. There is no evidence to show that Taj India was acting as an agent of the assessee for the distribution business in any manner. This finding has been arrived after considering the terms and conditions of the distribution agreement as well as sub distributor agreement, in absence of any contrary material, the coordinate bench held that there is no agency permanent establishment of the assessee in India. Accordingly, distribution income of the assessee was held not to be taxable in India because Taj India does not constitute an agency PE under article 5 (4) of the Double Taxation Avoidance Agreement. This was held by the coordinate bench in paragraph number 17 of the decision. This decision was challenged by revenue before the Honourable High Court and Honourable High Court in (2020) 425 ITR 141 dated 6/2/2020 has upheld the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at paragraph number 11 there was a specific reference made by the learned departmental representative with respect to the addendum in distribution agreement where Taj India had been granted an authority to enter into an agreement with third parties on behalf of the assessee. In paragraph number 12 onwards coordinate bench considered those addendum and thereafter held that with respect to the distribution income there does not exist any permanent establishment as the twin conditions as per article 5 (4) (i) i.e., (a )person has concluded the contract and (b) person habitually exercises the authority to conclude the contract needs to be satisfied, revenue except merely showing the clause did not bring any material on record either at the assessment stage or at the ITAT stage that Taj India had a PE which habitually exercised the authority to conclude the contract on behalf of the assessee. Coordinate bench also referred to the decision of special bench in case of Motorola incorporation versus DCIT (2005) 95 ITD 269 holding that the burden is first on the revenue to show that the assessee had a taxable income under the Double Taxation Avoidance Agreement and then the burden is on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 was never disclosed to the ITAT or the revenue authorities below. Further, it was also not stated that that a share purchase agreement has been entered into with Sony where Sony was stepping into the shoes of ZEE. We find that, this issue of fixed place permanent establishment was never raised in earlier years. This has come into contention for this year itself. Business purchase agreement was entered into on 31/8/2016. In earlier years, only dispute was with respect to the dependent agent permanent establishment. When the share purchase agreement was entered into on 31/8/2016, relevant to this assessment year, how the assessee could have submitted before the lower authorities that Sony has entered into shoes of Zee. Therefore, on this account, we do not agree that there is any misrepresentation of fact or concealment by the assessee at the time of rendering of those decisions. 047. The next challenges with respect to the addendum entered into with respect to the advertisement agreement. We find that at page number 68 of the paper book the original agreement was executed on 4 May 2002, firstly amended on 27 April 2006, then on 28 December 2007, further on 23 January 2008, on Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer and the learned departmental representative, he could have asked the reasons for the amendments to the agreement. Failure of learned AO to make necessary enquiries cannot be used against assessee to state that assessee has failed to produce government policies and circulars before the AO. 049. However, we do not agree with the arguments of the ld AR that, ld special counsel is improving up on the arguments / findings of the ld AO or ld DRP. Ld AR has only argued the facts that emerges from the assessment order, directions of Ld DRP or based on record produced before lower authorities. 050. The learned special counsel has stated that Transfer Pricing Study Report of ZEE Ltd and assessee as well as of the India operations shows many functions, which could not be performed without the presence of the assessee in India through either itself or personnel or agents. As this information was never disclosed by the assessee, the orders of the coordinate bench should not be followed as they have been obtained by misrepresentation of facts for concealment of the item particulars. We find that transfer pricing study report is for a particular year. Further, it is not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its associated enterprises ZEEL and it is duly reported in its transfer pricing study report for assessment year 2017 - 18. This is further corroborated by LinkedIn profiles of some senior personal involved in the process which again confirmed that the assessee indeed had a fixed place of business in India during the year under consideration (as discussed in Para 3 above). Referring to play out fees details as per the transfer pricing study report:- 4.2.6 play out cost During the year, ZEEL has provided broadcasting operations and engineering facility to Taj/work of channels. The facilities provided by ZEEL covers play out for each channel, encoding and up linking incidental functions. During the FY 2016 - 17, Taj has paid US$ 1,048,289 for play out cost, encoding and up linking incidental functions . As per the agreement, ZEEL provides following services to Taj:- Maintaining agreed technical specification in providing the broadcasting operations and engineering facilities to each of the channel of TTL Provide quality support relating to latest broadcast features viz multiformat play out facility, automation features, we deal storage server capacity -wise, logo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rprise illegally occupied a certain location where it carried on its business." In a recent Supreme Court ruling in the case of Formula One Word Championship Ltd versus CIT(394 ITR 80 (SC)) held that with the international circuit though on by the Jaypee is the permanent establishment of the non-resident since it was at its disposal, (even though not owned). There is no doubt that play out centers are at the disposal of the applicant. Further reliance is placed on German Swiss case quoted in Delhi High Court order in the case of Formula One world championship Ltd versus CIT (2016) 76 taxmann 6 (Delhi High Court) . The learned AO further placed reliance on the decisions mentioned in Taxman's Law & Practice Relation To Permanent Establishment written by Shri Ashish Kurundia page number 56 and 57 of the book. From the above cases, it can be clearly seen that equipment similar to those used for play out for Channel has been held to be a permanent establishment if the business of the non-resident enterprises carried out through it. Further, in Swiss server case and Sweden data center case, it was held that there is no requirement that the employees of the German/overseas Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed place with a certain degree of permanence available to it for running its play out activities related to its channels in India. The third condition for a fixed PE is that such place of business should be at the disposal of the foreign entity. As noted above, the assessee was running play out of its channel through a premise in India. The said premises were at its disposal. In addition, to run its business activities, the assessee had access to the said premises. 5.3.4 As per article 5 (1) of the India Mauritius DTAA, a permanent establishment means a fixed place of business through which the business of the enterprises is only or partly carried on. Hence, even part of the business activities of the assessee are carried out through a fixed place in India, the assessee would be deemed to have a permanent establishment in India. 5.3.5 In view of the above, it is held that the assessee has a fixed place permanent establishment in India during the year under consideration." 052. Based on above findings, the learned AO held that the assessee has a fixed place permanent establishment in India in the form of play out stations. 053. According to Article 5 (1) of DTAA "For the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned direction on fixed place permanent establishment of the assessee. 058. The learned departmental representative has challenged the fact that ZEE Entertainment enterprises limited is not a service provider to the appellant assessee. The main reason being that the play out agreement dated 19/4/2017 is entered more than eight months after the acquisition of the sports broadcasting business by Sony. Further, the play out agreement came into effect retrospectively from April 2016 and would be valid only until 28/2/2017 for a consideration of US$ 1,048,290. He further referred to the financial statement of ZEEL for the year ended on 31st of March 2017 and stated that for that year 71 million was charged by that company however, no amount was charged for transmission from the assessee in the financial year March 16 under the head transmission income. Thus, there is no play out agreement for earlier years. According to him now, it is not open for the assessee to argue that assessee was getting the services of that company as a service provider. Therefore, according to him if at all ZEEL was rendering play out functions for the channels owned by the assessee, it was in operation done f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... play out facilities. No doubt, the agreement was made on 19/4/2017, which is given effect to from April 2016 till 28th of February 2017 at total consideration of US$ 1,048,290. The claim rose before us is that this is merely an afterthought. However, this is not the finding of the learned assessing officer. Ld AO has accepted that there is an agreement during the year for play out facilities. If for the earlier years, such facilities were not remunerated to the ZEEl, that does not make the service provider a fixed place permanent establishment of the assessee for this year, especially when, for this year, there is an agreement and remuneration for using such facilities are paid. For this year, facts clearly show that ZEEL is a service provider to the assessee. Non-payment, subsistence of any agreement for this facility in earlier years, is also not the case of the LD AO or the learned Dispute Resolution Panel. We may refer to the Model Tax Convention On Income And Capital (OECD) (2017) Wherein paragraph number 8 of the commentary deals with such an issue saying that clearly, whether or not a permanent establishment exists in the state during a given period must be determined on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndoubtedly, the play out are the place of business. However, can it be said that that through that play out, business of the assessee is carried out or the business of Zee Entertainment Enterprises Ltd. Although, a fixed place of business (play out) exist, but there has to be necessarily a connection between the business activity of the assessee and the actual place of business. If through the play out, the business activity of the assessee is carried out, there is no doubt that fixed place permanent establishment of the assessee exist. In this case, the core activity of the assessee is broadcasting of a sports event. "The moot question whether the business is being carried on must depend in each case on its own facts and not on any general theory of law. Thus, the use of the place of business for the activity of the enterprises is a question of fact and need to be established." [Page numbers 181 - 183 Chapter 7 - connection between place of business Law And Practice Relating To Permanent Establishment Ashish Karundia]. On the facts, assessee has clearly stated that play out activities are minuscule part of operation of the sports broadcasting business of the assessee which is assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on the same is also rejected for the same reason that it is not the business of the assessee that is being carried out from play out facilities but of the service provider ZEEL. In view of this, in our opinion assessee does not have a fixed place permanent establishment in India. 063. We do not find that several connecting facts such as registration of trademarks in India, standalone capability of Business Purchase agreement coupled with share sale agreements of Taj TV India Pvt Ltd etc do have any impact on determination of Fixed Place permanent Establishment. 064. With respect to the permanent establishment in respect of advertisement and distribution revenue, the learned dispute resolution has dealt with at paragraph number 16 wherein the learned DRP confirmed so only because of the reason that the revenue has been continuously holding that the applicant has a permanent establishment in India. However, with respect to the subscription agreement is the honourable Bombay High Court in assessee's own case for assessment year 2004 - 05 and 2005 - 06 has held that Taj India was acting independently, its distribution rights and entire agreement was on principal-to-principal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee is only for the reason to bring the taxation of capital gains in India. The operation of the bank account of the assessee was also jointly, where the directors of the assessee company were one of the signatories. Merely because one Mr. Anil Maurya was authorized to sign the agreement cannot lead to the conclusion that business is run by the parent of the assessee, especially when, that person is a director of ATL media Ltd and properly authorized by the assessee to carry out the necessary agreements. It is also a fact that assessee is denied treaty benefit for the purpose of taxation of the capital gain on sale of an undertaking however on other issues of advertisement and subscription revenue are held to be taxable, Treaty provisions are applied. Even otherwise the learned dispute resolution panel has accepted the applicability of the Treaty provisions to the transaction of the sale of undertaking holding that it is covered by article 13 (2) of the Double Taxation Avoidance Agreement. Therefore, we reject the contentions of the AO that assessee should be denied the treaty benefit. 068. Now the issue arises that whether the provisions of article 13 (2) of the treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnels are carried out from outside India. The assessee has received services from Taj India in respect of advertisement and distribution as well as for play out services from Zee entertainment Enterprises Ltd. As we have already held that assessee does not have a permanent establishment in India, the article 7 of the treaty will trigger only if such profits are attributable to a permanent establishment in India. This issue has already been decided by the honourable Bombay High Court in assessee's own case for assessment year 2004 - 05 and 2005 - 06 in 425 ITR 141. Further starting from assessment year 2003 - 04 till 2016 - 17 this issue has been decided in favour of the assessee. We do not find any reason to hold that about decisions are obtained by any misrepresentation of fact or withholding any vital facts. Further, there is no change in the facts and circumstances of the case, therefore respectfully following the decisions of the coordinate bench, which is upheld by the honourable High Court, we hold that the advertisement and subscription income is not chargeable to tax in India. 076. With respect to the plea that if the assessee even if has a permanent establishment in I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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