Income Tax Appellate Tribunal Mumbai Ngc Network India P. Ltd, Mumbai vs Asst Cit Cir 16(1), Mumbai on 30 April, 2019 IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA no.2223/Mum./2017 (Assessment Year : 201213) NGC Network (India) Pvt. Ltd. Star House, Urmi Estate 95, Ganpatrao Kadam Marg ................ Appellant Lower Parel (W), Mumbai 400 013 PAN AABCN1401A v/s Asstt. Commissioner of Income Tax ................ Respondent Central Circle16(1), Mumbai Revenue by : Shri Manish Kumar Singh Assessee by : Shri Porus Kaka Date of Hearing 18.03.2019 Date of Order 30.04.2019 ORDER PER SAKTIJIT DEY. J.M. This is an appeal by the assessee against the order passed under section 143(3) r/w section 144C(13) of the Incometax Act, 1961 (for short "the Act") for the assessment year 201213 in pursuance to the directions of the Dispute Resolution Panel2 (DRP), Mumbai. 2 NGC Network (India) Pvt. Ltd. 2. Ground no.1, being general in nature does not require adjudication. 3. In grounds no.2 to 17, the assessee has raised the issue relating to transfer pricing adjustment. 4. At the outset, Shri Porus Kaka, learned Sr. Counsel for the assessee submitted, if ground no.12, relating to comparability of Apitco Ltd., is decided in favour of the assessee, assessee's margin would be within the arm's length price, hence, the other grounds relating to transfer pricing issues would become redundant. 5. The learned Departmental Representative has also agreed with the aforesaid submission of the learned Sr. Counsel for the assessee. 6. In view of the aforesaid, we deem it appropriate to decide ground no.12, at the very outset. 7. Brief facts are, the assessee, an Indian company, is basically engaged in distribution of various channels belonging to its overseas Associated Enterprises (AE) and other related activities including business support service. The dispute in the present appeal is confined to the adjustment made to the arm's length price of business support service. It is stated that in the course of broadcasting of the channels of the AE, the assessee adds some small promos for which it receives 3 NGC Network (India) Pvt. Ltd. fee from the AE. The assessee benchmarked such transaction by applying Transactional Net Margin Method (TNMM) as the most appropriate method and the margin shown by the assessee at 9.94% was found to be at arm's length in comparison to the arithmetic mean of six comparable companies at 5.39%. The Transfer Pricing Officer did not accept the benchmarking of the assessee. The Transfer Pricing Officer observed, most of the comparables selected by the assessee are not comparable. Therefore, the Transfer Pricing Officer proposed a set of five new comparables with arithmetic mean of 15.66% and ultimately included them in the final set of comparables. The margin shown by the assessee at 8.94% since did not fall within the acceptable range of the arithmetic mean of the comparables selected, the Transfer Pricing Officer proposed upward adjustment to the arm's length price of the international transaction relating to business support services. 8. Learned DRP also upheld the decision of the Transfer Pricing Officer. 9. Before us, learned Sr. Counsel for the assessee has restricted his argument to selection of Apitco Ltd., as a comparable. In this regard, the specific contention of the learned Sr. Counsel for the assessee is, the company being a Government company cannot be treated as comparable. To emphasize this fact, learned Sr. Counsel drew our 4 NGC Network (India) Pvt. Ltd. attention to the functional profile of this company as contained in the annual report and submitted that while the assessee is rendering small support services to the AE, this comparable is an entrepreneur. Further, he submitted, the segmental details of various segments are not available in the annual report. Further, drawing our attention to the annual report, learned Sr. Counsel submitted, this company receives subsidy from the Government. Therefore, the business model of the company