2017 (11) TMI 586

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.... revenue streams i.e. sale of air time with distribution business, advertisements, sale business, etc. The TPO was of the opinion that both sets of businesses were separate and distinct and could not have been clubbed. The assessee had urged that the clubbing of these transactions for Arm's Length Price (ALP) determination had been permitted in the past. It relied upon common features to contend that whereas in sale of airtime, it was bulk sale of the product/service to the concerned customer, i.e. the air time user, distribution too involves sale through a network. The TPO's rejection of the aggregation, for ALP determination was appealed against. 2. The CIT (A) was of the opinion that both segments were appropriately clubbed for the pu....

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....ng two audited separate business segment, i.e., distribution business segment and sale of air time advertisement sale segment. The ITAT rejected the Revenue's submissions. The findings of the ITAT pertinently are as follows: "20. ...... In the present case, it is noticed that activities of distribution of channels and advertisement air time inventory allotment are inter-related because higher the subscriber base of channel, the greater are chances of the aired advertisement being viewed by a large target audience because the advertisers want the widest possible coverage to their messages and both the activities i.e. subscription and advertisement air time drive towards the same end of promotion of channels. As regards to the objection of....

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....ting / distribution rights, it should also have the authority to conclude contracts on behalf of the channel for advertisements, subscription and programme content." 21. In view of the aforesaid guidelines, if the assessee decided to relinquish advertisement air time inventory rights on account of losses, it would also have to relinquish the subscription rights to the channel which have resulted in profits. Therefore, the assessee was required to aggregate both the activities i.e. channel subscription and air time sale segment. Accordingly, the assessee aggregated both the activities for the purpose of arm's length analysis. It is also noticed that the advertisement air time revenue earned by the assessee has a direct correlation with th....