9911796707
TMI Blog2021 (12) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, a resident company, is a wholly owned subsidiary of British Broadcasting Corporation (BBC), a company incorporated in United Kingdom. As stated by the Assessing Officer, the assessee is primarily engaged in the business of producing programme content for radio and website under contractual agreement with the parent and other group companies. The primary source of revenue by the assessee is derived from its parent and other group companies. Of course, the assessee earned marginal sales income from direct sales of program to FM radio stations in India and outside India under a revenue sharing arrangement. The Assessing Officer having noticed that the assessee had entered into international transaction with its overseas associate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n much more complex services are being remunerated at the margin of 10% in third party scenario, which was used as CUP by the assessee, the margin of 12.6% received by the assessee for similar services of a much simpler nature have to be considered to be at arm's length. Thus, accepting assessee's benchmarking under CUP method, learned Commissioner (Appeals) reversed the adjustment proposed by the TPO. 5. Having done so, learned Commissioner (Appeals) found that the assessee was also rendering services in respect of business support. Whereas, only the actual cost relating to such services was reimbursed without any mark-up. Therefore, he called upon the assessee to explain, as to why business support services provided to the AE should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter-company agreement on 5th February, 2009 which was later amended on 13th March, 2011. Drawing our attention to the said agreement, he submitted, remuneration clause, as per Schedule 1 of the original agreement provided for a compensation of only cost plus 10% mark-up on the direct cost, whereas, business support cost was recovered on actuals. He submitted, as per amended agreement, a compensation of cost plus 12% mark-up was provided on the entire cost base. Thus, he submitted, for the entire services rendered, including business support services, the assessee was compensated at cost plus 12% mark-up for the year under consideration. He submitted, without properly appreciating the facts on record, learned Commissioner (Appeals) has tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directly attributable to production of broadcasting material. Whereas, the second category speaks of business support cost which includes, staff and other cost incurred on business support and HR staff plus all indirect cost including office rent, repair and maintenance, legal and professional expenses, rates and taxes, office expenses and other expenses. For the second category representing business support cost, mark-up of 10% was provided for the period of 1st April, 2008 to 31st March, 2009 and 12% for the period from 1st April, 2009 to 31st March, 2010. Thus, this Schedule of service charges certainly gives an impression that there are two types of cost incurred by the assessee, one, directly relatable to the production of broadcasti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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