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2014 (2) TMI 233 - AT - Income TaxDetermination of Arm's Length Price - Marketing agent arrangement – Transfer pricing adjustment – Held that:- The findings of the CIT(A) confirmed that carrying out advertising to increase the viewership is not the part of normal job profile of independent marketing agents (for telecast companies) - It has rightly been observed by TPO as confirmed by CIT(A) that advertising and publicity targeted towards viewers is done under the ambit of distribution activity and not under the advertisement sales activity - The distribution activity involves expansion of subscriber base leading to higher subscriber fees and add sales activity involves attracting potential clients and add agency through specific sales pitch - it was not the normal entrepreneur activity - Such an activity is not performed by a prudent businessman free of cost and without any markup - it was not a mere case of reimbursement of advertisement expenses but a markup was also required to be added as assessee was rendering specific service in this regard - cost of funds had to be separately charged over and above the reimbursement which was also covered under the markup – thus, TPO was right in adding a markup as not independent and prudent entrepreneur will provide any service free of cost – Decided against Assessee. Disallowance u/s 14A of the Act – Expenses incurred for earning dividend income – Held that:- The decision in Maxopp Investment Ltd. v. CIT [2011 (11) TMI 267 - Delhi High Court ] followed - the Rule 8D is applicable w.e.f. 1st April, 2007 and, therefore, the computation made by CIT(A) by applying Rule 8D for AY 2002-03 was not justified – order of the CIT(A) set aside – Decided in favour of Assessee.
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