Transfer pricing benchmark for bundled broadcasting rights favours the other method over a strict CUP comparison.

In transfer pricing, the most appropriate method depends on the transaction's nature, data reliability, comparability and adjustment accuracy, so an assessee is not bound by the method first selected in the study report if another method better satisfies those statutory tests. For a bundled acquisition of sports broadcasting rights through novation and sub-licence, a strict comparable uncontrolled price comparison was found unreliable because the available price data reflected the controlled contractual structure and changing market conditions. The broader other method was therefore the better benchmark, and an adjustment based only on alleged defects in the valuation report could not be sustained.

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Issues: (i) Whether the assessee could resile from the most appropriate method selected in the transfer pricing study report; (ii) whether the comparable uncontrolled price method or the other method was the most appropriate method for benchmarking the purchase of bundle of sport broadcasting rights; and (iii) whether the transfer pricing adjustment made on the basis of alleged deficiencies in the valuation report was justified.

Issue (i): Whether the assessee could resile from the most appropriate method selected in the transfer pricing study report.

Analysis: The statutory scheme requires the arm's length price to be determined by the most appropriate method having regard to the nature of the transaction, the availability and reliability of data, the degree of comparability, and the need for accurate adjustment. A method selected earlier is not conclusive if it does not satisfy those requirements. The appellate authority may examine whether a different method better fits the transaction and the available data.

Conclusion: The assessee could resile from the method earlier selected, if the new method better satisfied the statutory tests.

Issue (ii): Whether the comparable uncontrolled price method or the other method was the most appropriate method for benchmarking the purchase of bundle of sport broadcasting rights.

Analysis: The transaction involved a bundled acquisition of designated broadcasting rights through novation and sub-licence, with the assessee stepping into the shoes of the transferor and assuming the underlying contractual obligations. Comparable uncontrolled price analysis required reliable uncontrolled price data for the same property under comparable circumstances at the relevant time. The contemporaneous data relied upon by the assessee reflected payments arising from the controlled contractual structure itself and did not provide a true uncontrolled benchmark. The valuation materials and expert opinions also showed that market conditions, contract structures, and the value of individual rights changed over time, making a strict CUP comparison unreliable. In these circumstances, the broader price-based other method better captured the relevant facts and circumstances of the transaction.

Conclusion: The other method was the most appropriate method and not the comparable uncontrolled price method.

Issue (iii): Whether the transfer pricing adjustment made on the basis of alleged deficiencies in the valuation report was justified.

Analysis: Once the transaction was benchmarked under the other method on the basis of the overall bundled arrangement, the transfer pricing adjustment could not be sustained merely by pointing to alleged deficiencies in the valuation report. The relevant question was whether the overall consideration for the bundled rights was at arm's length on the proper method of benchmarking. On that footing, the valuation report did not warrant rejection of the assessee's arm's length position.

Conclusion: The transfer pricing adjustment was not justified and was liable to be deleted.

Final Conclusion: The impugned adjustment failed on the proper benchmarking of the bundled rights transaction, and the assessee succeeded in the appeal on the substantive transfer pricing issue.

Ratio Decidendi: In transfer pricing, the most appropriate method is the one that best fits the transaction and yields the most reliable arm's length result on the available comparable data, and a bundled rights transaction with materially changing market conditions may require the other method rather than a strict CUP comparison.

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