Tribunal adjusts transfer pricing methods, emphasizes adherence to principles, and rectifies tax credit computation.

The tribunal partly allowed the appeals, directing the AO to reconsider certain comparables, include non-AE transactions in the Profit Split Method, and rectify tax credits and interest computations. The tribunal emphasized adherence to transfer pricing principles and avoidance of double taxation.

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Issues Involved:
1. Determination of taxable income.
2. Non-compliance with DRP directions.
3. Application of transfer pricing provisions after Profit Split Method (PSM).
4. Determination of arm's length profitability rate (ALP rate).
5. Rejection of comparable companies.
6. Usage of multiple year data for determination of ALP.
7. Applicability of PSM to non-AE transactions.
8. Arbitrary profitability rate on non-AE advertisement revenues.
9. Jurisdiction of TPO in re-determining ALP.
10. Apportionment of business profits between the appellant and STAR Ltd.
11. Double taxation of India sourced revenues.
12. Short credit of taxes deducted at source.
13. Short credit of advance tax.
14. Short credit of self-assessment tax.
15. Levy of interest under Section 234C.
16. Levy of interest under Section 234D.
17. Initiation of penalty proceedings under Section 271(1)(c).

Detailed Analysis:
1. Determination of Taxable Income:
The appellant contested the determination of taxable income at INR 8,96,44,590 instead of a loss of INR 19,78,03,073 as per the revised return. The tribunal noted the AO's reliance on the TPO's order and the DRP's directions, which led to the adjustments in the appellant's income.

2. Non-compliance with DRP Directions:
The appellant argued that the AO did not give effect to the DRP's binding directions. The tribunal found that the AO had followed the DRP's instructions, particularly regarding the inclusion of IBN18 Broadcast Ltd. as a comparable if it was profitable.

3. Application of Transfer Pricing Provisions after PSM:
The appellant claimed that the AO erred in applying transfer pricing provisions to profits arrived at after PSM, which represents profits from third-party transactions. The tribunal upheld the use of PSM, noting its appropriateness for complex, interrelated transactions involving unique intangibles.

4. Determination of ALP Rate:
The AO determined an ALP rate of 21.26% against the appellant’s computed rate of 15.81%. The tribunal reviewed the comparables used and found that the AO's selection was consistent with the principles of transfer pricing.

5. Rejection of Comparable Companies:
The appellant objected to the rejection of certain comparables. The tribunal directed the AO to reconsider IBN18 Broadcast Ltd. and Raj Television Ltd. after adjustments for exceptional items, noting that exclusion should be based on consistent, abnormal losses or extraordinary circumstances.

6. Usage of Multiple Year Data:
The appellant argued for the use of multiple-year data. The tribunal upheld the AO's use of single-year data as per Rule 10B(4), emphasizing that multiple-year data should only be used if it significantly impacts the relevant financial year's profits.

7. Applicability of PSM to Non-AE Transactions:
The appellant contended that PSM should apply to both AE and non-AE transactions. The tribunal agreed, citing previous decisions that all interrelated international transactions should be included under PSM, rejecting the AO's separate computation for non-AE transactions.

8. Arbitrary Profitability Rate on Non-AE Advertisement Revenues:
The appellant challenged the 28% profitability rate applied to non-AE advertisement revenues. The tribunal found this approach inconsistent with the principles of PSM and directed the AO to include non-AE transactions within the combined net profit calculation.

9. Jurisdiction of TPO in Re-determining ALP:
The appellant argued that the TPO exceeded its jurisdiction in re-determining ALP. The tribunal noted that the TPO's role is to ensure transactions are at arm's length, and any adjustments must be within the scope of the law.

10. Apportionment of Business Profits:
The appellant contested the apportionment of 50% of business profits to STAR Ltd. The tribunal upheld the TPO's analysis based on Functions, Assets, and Risks (FAR), which justified the profit split.

11. Double Taxation of India Sourced Revenues:
The appellant claimed double taxation of India sourced revenues. The tribunal directed the AO to ensure no double taxation occurs, adhering to the principles of transfer pricing and international tax law.

12-14. Short Credit of Taxes:
The appellant highlighted short credits of taxes deducted at source, advance tax, and self-assessment tax. The tribunal directed the AO to verify and rectify any discrepancies in tax credits.

15-16. Levy of Interest:
The appellant objected to the levy of interest under Sections 234C and 234D. The tribunal directed the AO to recompute interest based on the revised taxable income.

17. Penalty Proceedings:
The appellant contested the initiation of penalty proceedings under Section 271(1)(c). The tribunal noted that penalties should only be imposed if there is evidence of concealment or inaccurate particulars of income.

Conclusion:
The tribunal partly allowed the appeals, directing the AO to reconsider certain comparables, include non-AE transactions in the PSM, and rectify tax credits and interest computations. The tribunal emphasized adherence to transfer pricing principles and avoidance of double taxation.

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