TaxTMI 
TaxTMI 
2026 (8) TMI 1555
X X X X Extracts X X X X
X X X X Extracts X X X X
....lusively market and distribute the channels to users; B. Exclusively market and sell commercial airtime on the channel to third-party advertisers in India; and C. Providing services in relation to sourcing or production of program contents in India. 3. The return of income was filed on 30.11.2013 at an income of INR 17,61,46,710/-. The case of the assessee company was selected for scrutiny under CASS and as the assessee was having following international transactions with its AEs, a reference was made to the TPO for determination of Arm Length Proce (ALP) of the such transactions. S. No. International Transaction AE Amount (INR) Method Adopted 1. Agency Commission on Subscription revenue and advertisement sale DALLC 64,08,54,603/- TNMM APLLC 10,39,06,053/- TNMM 2. Marketing Service Fee DALLC 17,93,72,537/- TNMM 3. Program Sourcing Fee DALLC 25,24,97,446/- TNMM 4. The assessee has benchmarked the transactions by taking Transaction Net Margin Method (TNMM) as Most Appropriate method (MAM). As per the Transfer Pricing Study report (TPSR) of the assessee, under the distribution of channel sale ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order, the assessee is in appeal before the Tribunal by taking various Grounds of appeal as per the appeal memo. 8. Ground of appeal Nos. 1 to 1.12 raised by the assessee are with respect to adjustment made on account of AMP expenditure of IRN 43,66,56,818/- and Ground of appeal Nos. 1.13 to 1.15 are with respect to the adjustment made on protective basis of INR 43,32,16,742/- by applying BLT approach. 9. Before us, ld.AR for the assessee submits that assessee has considered AMP expenses while benchmarking international transactions with respect to the agency commission on subscription revenue and advertising sales and marketing service fee where the assessee has adopted TNMM and operating cost includes AMP expenses. Ld. AR submits that TPO has accepted the ALP of the assessee for these transactions and no adjustment was made on this account. However, by treating the AMP expenses as separate international transactions, has made further adjustment. As per Ld. AR once AMP expenses have been included in total cost and said transactions were found to be at ALP and no further adjustment could be made by benchmarking AMP expenses as separate international transaction. For this, rel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee claimed that while computing the OP/OC, it had already included the AMP expenses and since the AO/TPO has not doubted the ALP declared by the assessee for the international transactions with its AEs on account of agency commission subscription revenue, advertising sales and marketing services, the marketing expenses cannot be separately benchmarked. This issue has been settled by Hon'ble Jurisdictional High court in the case of Sony Ericson Mobile Communications India (P.) Ltd. (supra) wherein Hon'ble High Court in para 101 has made following observations:- 101. "However, once the Assessing Officer/TPO accepts and adopts TNM Method, but then chooses to treat a particular expenditure like AMP as a separate international transaction without bifurcation/segregation, it would as noticed above, lead to unusual and incongruous results as AMP expenses is the cost or expense and is not diverse. It is factored in the net profit of the inter-linked transaction. This would be also in consonance with Rule 10B(1)(e), which mandates only arriving at the net profit margin by comparing the profits and loss account of the tested party with the comparable. The TNM Method proceeds on th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the assessee with its AEs with respect to the agency commission, advertising sales and marketing services at ALP where the AMP expenses had been considered under TNMM therefore, no separate benchmarking of AMP expenses is required to be made. Accordingly, the entire exercise done by the lower authorities to compute the ALP of the AMP expenses on substantive basis as well as protective basis is futile and the additions made are hereby, deleted. This will also cover assessee's Grounds of appeal Nos. 1 to 1.12. 15. Grounds of appeal No.2 to 2.2 of the assessee are with respect to the adjustment made on account of interest on outstanding receivables. The appellant while benchmarking the transactions has duly accounted for working capital adjustment for computing the margins of comparables and TPO has not doubted the ALP declared under both the segments of income declared by the assessee however, has separately made the adjustment on account of interest on outstanding receivables ignoring the fact that the assessee has already factored the working capital adjustment. 16. Heard the contentions of both the parties at length and perused the material on record. It was the claim of t....