TaxTMI 
TaxTMI 
2013 (5) TMI 494
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....der passed by the learned TPO under Section 92CA(3) of the Act, and thereby confirming the adjustment of Rs. 82,78,760/- made by the learned TPO without any further enquiries to satisfy whether the said adjustment was warranted in law and on the facts of the case, in light of the provisions of Section 92C(4) of the Act read with Section 92C(3) of the Act. 3. Conditions and circumstances under which adjustments under Section 92C(3) of the Act is permissible:- On the facts and in the circumstances of the case and in law, the learned AO and the learned TPO have erred in proposing and the Hon'ble DRP has erred in not appreciating that in respect of the international transactions, none of the conditions set out in Section 92C(3) of the Act are satisfied and therefore, as per the appellant it is incorrect to disregard the transfer pricing analysis carried out by the Appellant and to re-determine the arm's length price. 4. The appellant contends that the Ld. TPO had not applied a consistent yardstick while proposing the impugned transfer pricing adjustment and in determining the arm's length price of the transaction. Further such an approach is repugnant to Rule 1OB(1)(a) of the ....
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....ate enterprises: Name of the Associated Enterprise Nature of Transaction Value of Intl' Transaction (INR) Star Television Production Limited (Country of Residence - British Virgin Island) Royalty Payments for use of Brand name STAR 8,925,006 Satellite Television Asian Region Limited (Country of Residence - Hong Kong) Service availed -Optical fiber link services and digital services 1,601,212 Advertisement Services availed - Ad-space purchased on Star Plus Channel 100,022,760 Asian Broadcasting FZLLC (Country of Residence - Dubai) Services provided - Television Content Syndication 24,537,639 2.2. Benchmarking of International Transaction - Advertisement Services Availed: 2.2.1. Assessee Company purchased ad-space on the Star Plus Channel through an agreement dated September 19, 2003 entered into with Star India Pvt. Ltd. being the marketing and collection agent for Satellite Television Asian Region (AE) in relation to advertisement sales for the satellite televisions broadcasted by AE in India. 2.2.2. Assessee Company was desirous on incurring routine advertisement and publicity expenditure to promote the programs that are aired on ....
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....ith AE. is Rs. 122,374,000. Since the price paid by the assessee is less than the arm's length price, the transaction entered into with AE for purchase of ad-space meets the arm's length test under CUP method." 4. On the above facts, the AO referred the case to TPO, who after deliberation observed, "During the F.Y. 2005-06 assessee has purchased "ad-space" for advertising and promoting the Star News Channel on the Star Plus Channel in pursuance to the agreement dated 19.09.2003 entered into with M/s. Star India Private Limited (Country of residence: India) for a period of 10 years. M/s. Star India Private Limited acts as a marketing and collection agent for A.E. M/s. Satellite Television Asian Region Limited. According the assessee has paid Rs. 10,00,22,760/- to its AE towards the purchase of "ad-space" for advertisement. Assessee has adopted CUP method for determining the ALP of the above transaction and AE has been considered as tested party for the purpose of this transaction. The assessee, vide its letter dated 14.10.2009, had submitted the details of advertisement services changed by the AE to the assessee and to third party, as under:- S. No. Slot No. of 30 sec....
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....t. He submitted that the area of dispute in the adjustment made is on the non prime time advertisement revenue. 8. From the detail extracted by the TPO in the order shown that the assessee in paying much higher amount for ad space, compared to the third party payment, which were at Rs. 35,115/-. The AR, on the query from the Bench as to why the higher payments at non prime time, the AR replied that the assessee is paying for the ad space which are targeted by Star TV at Rs. 15,10,22,365/-. The assessee to reach the target had to pay more at the non-prime time. The AR submitted that in any case the assessee had paid much less then third party payments, which in aggregate were at Rs. 12,23,74,000/- as against Rs. 10,00,22,000/- paid by the assessee. The AR, therefore, submitted that since the overall outgoing is less, no adjustment is called for. 9. The AR placed reliance on the decision of Atul Ltd. vs ACIT, reported in 80 DTR 210 (Ahm) (copy placed on record), wherein the coordinate Bench at Para 5.20 observed, "There are certain situations, where it is almost impracticable to determine the price of each individual product or an independent transaction. There is a situation, ....
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....mined having regard to the arm's length price. Section 92C (1) The arm's length price in relation to an international transaction or specified domestic transaction shall be determined by any of the following methods, being the most appropriate method, having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as the Board may prescribe, namely :-- (a) comparable uncontrolled price method; (b) resale price method; (c) cost plus method; (d) profit split method; (e) transactional net margin method; (f) such other method as may be prescribed by the Board. Rule 10A. For the purposes of this rule and rules 10B to 10E,-- (a) ... (b) ... (c) ...; (d) "transaction" includes a number of closely linked transactions. Rule 10B(1): For the purpose of sub-section (2) of section 92C, the arm's length price in relation to an international transaction shall be determined by any of the following methods, being the most appropriate method, in the following manner, namely":- 15. The DR pointed out that the assessee is paying for different time slots and hence are different p....