No India Presence, No Tax (ESPN Star Sports Mauritius Vs DCIT)
Facts of the case:
The assessee is a partnership firm established under the laws of Mauritius on March 29, 2002. The assessee is engaged in the business of acquiring and allotting advertisement time (‘Airtime’) and programme sponsorship in connection with programming via non-standard television from Mauritius on ESPN, Star Sports and Star Cricket Programming services.
The assessee had entered into agreement with ESPN Software India (P) Ltd., incorporated under the laws of India which was engaged in the business of acquiring the airtime from assessee and allotting it to various Indian advertisers and advertising agencies. The sale of airtime by the assessee to ESPN India is outside India. Further, the assessee has no office in India and/or any operations in India.
The Assessing Officer relying upon the orders of Assessment Years 2003-04 and 2004- 05 held the transaction to be principal to agent and not on Principal-to-Principal basis. Further, ESPN India was constituted to be dependent agent as per Article- 5(4) and not an independent agent as defined by Article 5(5) of the India Mauritius DTAA. AO proceeded by attribution of profit to PE and attributed 30% of the gross advertisingrevenue and made attribution of INR 103,32,02,031/.
Decision of ITAT:
Considering the past history of the assessee in light of the decision of this Tribunal read with the decision of the Hon’ble Supreme Court in the case of E-funds IT Solutions Inc., It was held that the assessee has no business connection in India in terms of section 9(1) of the Act and has no PE under Article 5(2), 5(4) and 5(5) of India Mauritius DTAA.
Since it was held that there is no PE, there was a considered view that there cannot be any attribution of profit as held by this Tribunal in assessee’s own case in AYs 2009-10 and 2011-12.
For the sake of completeness of the adjudication, and as mentioned elsewhere, the TPO (Transfer Pricing Officer) has accepted the international transactions at Arm’s length and no adverse inference was drawn. We have also gone through the TP assessment order and find no adjustment.
