Income Tax Appellate Tribunal Delhi Espn Software India (P) Ltd., Gurgaon vs Dcit (Ltu), New Delhi on 8 February, 2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'I1', NEW DELHI Before Sh. N. K. Saini, AM and Smt. Beena Pillai, JM ITA No. 2059/Del/2012 : Asstt. Year : 200506 Asstt. Commissioner of Income Vs M/s ESPN Software India Ltd., Tax (LTU), 7th Floor, TowerC, Infinity New Delhi110017 Tower, DLF, PhaseII, Gurgaon, Haryana (APPELLANT) (RESPONDENT) PAN No. AAACE2334C ITA No. 3457/Del/2013 : Asstt. Year : 200607 M/s ESPN Software India Ltd., Vs Deputy Commissioner of Income th 7 Floor, TowerC, Infinity Tower, Tax (LTU), DLF, PhaseII, New Delhi110017 Gurgaon, Haryana (APPELLANT) (RESPONDENT) PAN No. AAACE2334C Assessee by : Sh. Kanchan Kaushal, CA Sh. Ravi Sharma, Adv. Revenue by : Sh. S. K. Jain, Sr. DR Date of Hearing : 11.11.2017 Date of Pronouncement : 08.02.2017 ORDER Per N. K. Saini, AM: The appeal by the department for the assessment year 200506 is directed against the order dated 24.02.2012 of the ld. CIT(A)20, New Delhi and the appeal by the assessee for the assessment year 200607 is directed against the order dated 2 ITA No. 2059/Del/2012 ITA No. 3457/Del/2013 ESPN Software India Ltd. 30.04.2013 passed by the AO u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as the Act). 2. At the first instance we will deal with the appeal of the department in ITA No. 2059/Del/2012 for the assessment year 200506. Following grounds have been raised in this appeal: "1. On the facts and the circumstances of the case and in law, the Ld CIT (A) has erred in deleting the addition of Rs.19,14,48,497/ being the Transfer Pricing adjustment made by the TPO as per his order u/s 92 CA (3) dated 30.10.2008. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred considering the operating margin of the assessee company by clubbing together the segments of distribution of channels and sale of air time advertisements, when the amount of international transactions relating to the two activities was almost at par, and, when the operating margins in the three cases considered by the CIT(A) himself as comparable cases related only to the segment of sale of air time advertisement. 3.On the facts in the circumstances of the case, the Ld CIT (A) has erred in holding that Sun TV Network India Ltd. is not a comparable case, when the TPO had compared the operating margins in the same segment, i.e. sale of air time advertisement. 4.The appellant craves leave to add to, alter, errand or vary from the above grounds of appeal at or before the time of hearing." 3 ITA No. 2059/Del/2012 ITA No. 3457/Del/2013 ESPN Software India Ltd. 3. From the above grounds, it is gathered that the main grievance of the department relates to the deletion of addition of Rs.19,14,48,497/ made by the AO on account of Transfer Pricing Adjustment. 4. Facts of the case in brief are that the assessee filed the return of income on 30.10.2005 declaring an income of Rs.32,78,57,120/. Later on, the case was selected for scrutiny. The AO referred the matter to the Transfer Pricing Officer (TPO) for determination of the Arm's Length Price (ALP) u/s 92CA(3) of the Act in respect of the international transaction entered into by the assessee during the financial year 2004 05 relevant to the assessment year under consideration. The TPO vide order dated 30.10.2008 passed u/s 92CA(3) of the Act recommended that the income of the assessee be enhanced by Rs.19,14,48,497/. The TPO noted from the TP study and the audited account that the assessee was maintaining separate audited segmental accounts for subscription/distribution business, advertisement sale business, production revenue business and set out segmental profitability based on such division. However, for transfer pricing purposes, the assessee had aggregated financials of both the distribution business and advertisement sale business leaving financial of third division relating to production business as it is. He also observed that the assessee had selected TNMM as the most appropriate method with OP/TC as a P