2024 (3) TMI 110 - HC - Income Tax

Scope of Rectification u/s 254 - Power of ITAT - valuation of a bundle of sports rights purchased by the petitioner - As per assessee order dated 25th November 2021 of the Tribunal passed u/s 254(1) did not deal with issues such as terminal value, comparing actual figures with projections, availability of CUP method, department s own action of use of terminal value in another transaction during the AY 2009-10, etc. even after recording petitioner's submission, petitioner filed a rectification application - Tribunal held that it is not a mistake apparent from the record and non adjudication of various grounds would not justify the review - HELD THAT - As held by this Court, in Coca-Cola India (P.) Ltd. 2014 (11) TMI 798 - BOMBAY HIGH COURT and Sony Pictures Networks India Pvt Ltd. 2019 (1) TMI 606 - BOMBAY HIGH COURT , by not dealing with an issue which is otherwise ripe for consideration and instead remanding to the TPO, the Tribunal has ensured further litigation and continued uncertainty for both the revenue and petitioner. In addition, non-consideration of the above basic submissions made at the hearing as recorded, is clearly a mistake apparent from the record. The Tribunal ought to have allowed the rectification application dated 21st April 2022 and recalled the order dated 25th November 2021 in respect of issues raised in the rectification application for adjudication accordingly. Therefore, we allow the petition and also set aside the order under Section 254(1) of the Act by the Tribunal in respect of issues raised in the rectification application. The appeal is restored to the Tribunal for fresh disposal in accordance with law.

Summary

Issues Involved:
1. Impugning an order rejecting petitioner's application under Section 254 of the Income Tax Act 1961.
2. Valuation of a bundle of sports rights for a broadcasting business.
3. Tribunal's decision on adjustments made in the valuation.
4. Tribunal's failure to address various issues raised by the petitioner.
5. Rejection of rectification application under Section 254 of the Act by the Tribunal.
6. Tribunal's duty in dealing with issues and remanding cases.
7. Disagreement on remanding the case for a fresh valuation exercise for a subsequent assessment year.

Summary:

Issue 1:
The petition challenged an order rejecting the petitioner's application under Section 254 of the Income Tax Act 1961. The Tribunal ruled that it was not a mistake apparent from the record and that non-adjudication of various grounds would not justify a review.

Issue 2:
The petitioner, engaged in the business of general entertainment channels, purchased a bundle of sports rights for broadcasting purposes. The valuation of the bundle was disputed, with the Transfer Pricing Officer making adjustments primarily related to disregarding terminal value and comparing actual figures with projections.

Issue 3:
The petitioner contended that the adjustments made in the valuation were erroneous, supported by expert opinions and submissions. However, the Tribunal did not address these issues and instead remanded the matter to the Transfer Pricing Officer for a fresh valuation report.

Issue 4:
The Tribunal's rejection of the rectification application under Section 254 of the Act was based on the premise that it was not a mistake apparent from the record. The Tribunal did not consider the petitioner's submissions, including references to previous court decisions.

Issue 5:
The High Court cited previous cases to emphasize the Tribunal's duty to address issues raised and not unnecessarily remand cases. The Court held that the Tribunal's failure to consider the petitioner's submissions was a mistake apparent from the record, allowing the petition and setting aside the Tribunal's order for fresh disposal.

Issue 6:
For a subsequent assessment year, the Tribunal disagreed on remanding the case for a fresh valuation exercise, indicating that the matter should be decided on merits by the Tribunal itself. The case was referred to a Special Bench for further consideration.