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Showing contexts for: backdated agreements in Star India P. Ltd, Mumbai vs Asst Cit 16(1), Thane on 1 August, 2019Matching Fragments
54. Ld CIT DR on the other hand, argued that it is to be kept in view that the registered owner of the Brand or the Star Mark is STPL, and not Star Ltd. The assessee has claimed to make payment to Star Ltd only. This makes the payment an internal and mutually benefitting exercise only. Secondly the agreement has been backdated. It was entered into on 30.03.2011 and made effective from 01.06.2010 which is irregular. Thirdly, STPL can still use the Star Mark without breaching the agreement between the assessee and Star Ltd, which proves that the claim of exclusivity is bogus. Fourthly, STPL is not even required to take anybody's consent before using the brand. Fifthly the TPO has given detailed reasons as to why the valuer's report has no basis (see page 78) 48 | P a g e I T A N o . 1 0 4 8 / Mu m / 2 0 1 7 ITAs No. 1724 & 1901/Mum/2016 of the TPO Order. Sixthly the assessee had been in business since long and had been performing the same services as a sub-agent and it was never required to pay any such amounts. Therefore, the ploy of brand license fee is only a means to get funds out to the AE. The TPO has also gone into the business practices and has observed that the viewers are more careful about the content and not the brand. Seventhly, the TV channel market is ever growing and new entrants come on the basis of their strength of content and not for brand. A case in point is the manner in which the Republic TV has captured a significant market in last year. Eighthly the AR has stressed a lot upon the incomes and turnovers of later years to justify the agreement but what is of concern is whether at the time of entering into the agreement the same considerations were available or not. Later events cannot be used to justify a past irregularity. It is simply fortuitous. Ninthly the assessee was made responsible for promoting the brand which goes against the rationale of making the payment in the first place. The DRP has also rejected the arguments of the assessee at pages 30-31 of its Order, which is also relied on.