TMI Blog2017 (11) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... faulted. The rejection of the RBI guidelines and the TPO’s omission given due weight to the down linking guidelines were a relevant factor, which in our opinion, the CIT(A) and the ITAT correctly noted to reverse the original findings. It is a settled proposition that whether to segregate or not segregate two transactions, is entirely a fact dependent exercise that cannot per se be treated as a question of law. In the present case, the reasons which impelled the lower authorities i.e. the CIT (A) and the ITAT to uphold the assessee’s plea with regard to aggregation for ALP purposes, are reasonable and cannot be interfered with. - Decided against revenue - ITA 882/2017 & ITA 890/2017 & CM No.37958/2017, ITA 891/2017 - - - Dated:- 7-11-2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e advertisement sale would correspondingly be impacted adversely. The second element which persuaded the CIT (A) to accept the assessee s contention was that both segments employed the same set of assets and that separately benchmarking them would take it away from reality. Furthermore, the ITAT felt that it was not possible to merge comparables for profits having regard to these practical considerations, the CIT upheld the assessee s decision to aggregation of the sets of transactions for the purpose of ALP determination and worked out an operating profit margin of 7.82%. 3. In appeal, the Revenue emphasized that in earlier years the advertisement sales segment had reflected a profit but that in the year under consideration the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for that purpose the assessee was getting a fixed percentage of commission while for the year under consideration and in the succeeding years, the assessee shifted to the distribution model in pursuant to the change in the foreign exchange regulations of the RBI vide Circular No. 76 which relaxed the condition of export earnings by advertisers in Foreign Television Channels and the assessee, without prior approval from RBI, could have brought air time on a bulk basis and allot the same directly to third parties i.e. advertisement agencies etc. It is also noticed that Ministry of Information and Broadcasting formulated several guidelines vide Downlinking Guidelines Number 13/2/2002-BP L/BC-IV dated 11.11.2005. The said guidelines were as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he FY 2004-05 when the cricket events were less. In the present case, by changing the business model, the assessee was getting more control over the distribution of function and it was a part of the business strategy of the assessee. It is also noticed that OECD guidelines clearly states that closely linked transaction should have been aggregated and evaluated together in this regard. It is relevant to refer OECD guidelines which read as under: Ideally, in order to arrive at the most precise approximation of arm s length conditions, the arm s length principle should be applied on a transaction-by-transaction basis. However, there are often situations where separate transactions are so closely linked or continuous that they cannot be e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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