Case Law Details
Hathway Cable and Datacom Ltd. Vs DCIT (ITAT Mumbai)
DRP at para 4.8 has held that by way of this transaction, the assessee was given an authority by the RPs to negotiate with the broadcasters for the placement charges for the entire group. The DRP acknowledges the fact that clubbing of such rights with one person ensured better charges for the entire group. And that the assessee itself has been benefitted from such pooling. Furthermore, the DRP has not categorically held that other than giving such rights of negotiation to the assessee, no other risks are transferred to the assessee nor there is any deployment of capital on behalf of the RPs. Moreover, the DRP at para 4.8 has held that it is a transaction of rendering of services of marketing of the channel placement rights with the broadcasters and arms length consideration is to be received by the assessee with respect of functions performed in rendering these services,. After giving all these findings by the DRP, there is no justification for upholding any ad hoc addition of 10%. From the record we further found that the adjustment of 10% so upheld by the DRP was without following any of the prescribed methods U/s 92C(1) of the Act nor has any benchmarking been adopted in determination of the ALP. The Hon’ble Jurisdictional High Court in the case of CIT Vs Lever India Exports Limited in ITA No. 1306/1307/1349 of 2014 have held that the ad hoc determination of ALP de-hors Section 92C of the Act cannot be sustained, rendering the entire transfer pricing adjustment unsustainable in law.
In view of the above discussion, we do not find any merit in the action of the DRP for upholding ad hoc addition of 10% under transfer pricing adjustment.
FULL TEXT OF THE ITAT JUDGEMENT
This is the appeal filed by the assessee against the direction of the Dispute Resolution Panel-1(WZ) (DRP), Mumbai dated 27/08/2018 U/s 144C (5) of the Income Tax Act, 1961 (in short, the Act) for the A.Y. 2014-15, which was given effect by the A.O. passing order U/s 144C(13) of the Act dated 22/09/2018. In this appeal, the assessee has raised following grounds:
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