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ITAT held that, for benchmarking the assessee's distribution...
Functional comparability under TNMM: broadcasters excluded, software distributors included, and no separate interest on receivables after working capital adjustment.
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ITAT held that, for benchmarking the assessee's distribution segment under TNMM, full-fledged channel owners and broadcasters were not functionally comparable because content creation and ownership activities could not be mixed with pure distribution activity. Following the binding view in the assessee's own case, the Tribunal directed exclusion of the TPO's selected broadcaster comparables and inclusion of software distribution companies as appropriate comparables for arm's length price determination. On outstanding receivables, it held that where working capital adjustment is already granted, the effect of receivables and payables is subsumed and no separate notional interest adjustment is warranted. The receivables adjustment was deleted and the appeal was allowed.
ITAT held that, for benchmarking the assessee's distribution segment under TNMM, full-fledged channel owners and broadcasters were not functionally comparable because content creation and ownership activities could not be mixed with pure distribution activity. Following the binding view in the assessee's own case, the Tribunal directed exclusion of the TPO's selected broadcaster comparables and inclusion of software distribution companies as appropriate comparables for arm's length price determination. On outstanding receivables, it held that where working capital adjustment is already granted, the effect of receivables and payables is subsumed and no separate notional interest adjustment is warranted. The receivables adjustment was deleted and the appeal was allowed.
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