TMI Blog2015 (3) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... t of adslots and aggregate the same for achieving the target. We cannot accept the submissions of the AR that the aggregation could be allowed because, the payments were being made for same channel and same functions, i.e. ad-space, the difference between them only being prime time slot and non prime time slot. Since there was no justification for higher payment made by the assessee as compared to the third party payments, the adjustment as suggested by the TPO and sustained by the DRP, according to us is fair and reasonable and does not call for any disturbance, which we sustain. - Decided against the assessee. - ITA Nos.7170 and 7171/Mum/2012 - - - Dated:- 21-1-2015 - Shri Joginder Singh And Shri Sanjay Arora, JJ. For The Assessee : Shri Sanjay R. Parikh For The Revenue : Shri N.Padmanaban ORDER PER BENCH: Both these appeals are by the assessee against the impugned order dated 24/09/2012 of the ld. First Appellate Authority, Mumbai, on the ground that the ld. Commissioner of Income tax (Appeals) erred in making adjustment to the arm s length price of the advertisement services received from the associated enterprise being M/s Satellite Asian Region L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 redetermine 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 Rules. The appellant further contends that the Ld. TPO has made the comparability by being guided by bare figures without appreciating underlying economics of the transaction. 5. The Appellant based on above grounds, respectfully submits that the transfer pricing disallowance of ₹ 82,78,760/- is erroneous, wrong and therefore be set aside. 6. The appellant further craves, to consider each of the above grounds of appeal without prejudice to each other and to add, alter, amend, delete or withdraw all or any of the Grounds of Appeal herein and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 2. The solitary i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,760 Asian Broadcasting FZ- LLC (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 its newly launched STAR NEWS channel. For this purpose the assessee was willing to spend a target amount over period of time. Accordingly the assessee selected STAR PLUS channel for its promotional activity and entered into advertisement agreement with SIPL for a term of 10 years. As per the agreement, assessee was to pay the aggregate of the target amounts as set out therein for each year during the term of the agreement. Further as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the above transaction with AE. is ₹ 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 ₹ 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,00,22,760/-) and computed the adjustment of ₹ 82,78,760/- (Rs. 10,00,22,760 - ₹ 9,17,44,000). 5. The assessee approached the DRP, who vide order u/s 144C(5) sustained the adjustment made by the TPO u/s 92CA(3). 6. The assessee is now aggrieved by the order of the DRP in before the ITAT. 7. The AR, explaining the case of the assessee pointed out that the assessee had purchased additional space in the Star News Channel being telecast by Star TV Network. He submitted that there are two time slots being called as prime time and non prime time slots. Non prime time slot is from 12 midnight to 7.59 p.m. and prime time slot is from 8 p.m. to 11.59 p.m. Accordingly, the rates for per 30 second ad time are ₹ 180,000/- at prime time duration and ₹ 60,000/- at non prime time slot. 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 ₹ 35,115/-. The AR, on the query from the Bench as to why the higher payments at non prime time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the assessee failed to utilize. The DR, therefore, submitted that there cannot be any reason which could lead to the unreasonability of the order. 13. On the facts, the DR pointed out that, as referred to by the AR, the agreement refer to the rate card, which supports two types of slots, i.e. prime time slot and non prime time slot. Hence, on the very basis, the issue in question pertains to two different products, i.e. prime time and non prime time. Hence, they could not be clubbed. To substantiate that different time slots were in fact different products, the DR then referred to the expressions used in the relevant sections, i.e., 92(1) and 92C(1) and Rules 10A(d) and 10B(1), which reads as under: Section 92(1) Any income arising from an international transaction shall be computed having regard to the arm's length price. Explanation.-For the removal of doubts, it is hereby clarified that the allowance for any expense or interest arising from an international transaction shall also be determined 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous purchases were a part of pre-arranged scheme or agreement so as to constitute a part of the indivisible transactions of purchase. Accordingly, it is held that the AO was within his right to evaluate each transaction separately. In the light of the above discussion and respectfully following the precedents cited, we hereby reject the pleading of learned Authorised Representative through which it was demanded to aggregate the entire transactions with the AE for the whole year. 17. The DR, thereafter, responding to the application of FAR concept, submitted that it is applicable on TNMM and other basis, but not on CUP basis, which has been based by the assessee. The DR, therefore, submitted that FAR analysis has no relevance in the given set of circumstances. 18. The DR, concluding the arguments submitted that on facts, the agreement does not make any mention for off-set in the price paid to the other products and hence the orders of the TPO and DRP does not indicate any infirmity. 19. The AR in the rejoinder, reiterated his submissions. 20. We have heard the arguments in detail and perused the material placed on record. We do not find anywhere either in the agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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