Transfer pricing aggregation upheld where channel subscription and advertisement airtime sales were found inter-related and mutually reinforcing.

Transactions relating to channel subscription and advertisement airtime sale were treated as inter-related for arm's length price determination because subscriber base and advertisement revenue moved together, both supported the same business objective, and the authorities relied on common use of assets, a changed business model and relevant regulatory guidelines. The HC held that segregation or aggregation in transfer pricing is a fact-specific exercise, and found the lower authorities' reasons reasonable. The aggregation for arm's length analysis was upheld and the Revenue's challenge failed.

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Issues: Whether the assessee's transactions relating to channel subscription and advertisement airtime sale could be aggregated for arm's length price determination.

Analysis: The transactions were found to be inter-related and mutually reinforcing, since subscriber base and advertisement revenues moved together and both activities supported the same business objective. The authorities below also relied on the common use of assets, the change in business model, and the relevant regulatory guidelines, which supported treating the two streams together for transfer pricing analysis. The Court held that the decision whether to segregate or aggregate such transactions is a fact-specific exercise and that the reasons adopted by the lower authorities were reasonable.

Conclusion: The aggregation for arm's length analysis was upheld and the Revenue's challenge failed.

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