INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Determination of ALP - Selection of comparables - Distributor of sattelite channels vis-a-vis software distribution company

Assessee engaged in distribution of channels to Local Cable Operators ('LCOs'), Multi System Operators ('MSOs') and Direct to Home ('DTH') reported international transaction with its (AE) of license fee paid/payable for distribution of Television Channels. It selected software distributor i.e. company engaged in selling intangible products such as Avance Technologies Limited, Integra Telecommunication,Sonata Information, Technology Limited and Trijel Industries Ltd. as comparables and claimed that its margin of 2.90% from distribution of AE Channel was higher than arithmetical means of 0.50% earned by comparable company and hence its transaction with its AE was at arm's length. TPO rejected all the comparable of assessee holding that comparable selected by assessee did not fit in the software distribution and assessee selected comparable having low margin which suited the requirement of TP study.Held: Software distribution company could be taken as good comparable to distributor of satellite channels like assessee. However, TPO rejected comparables selected by assessee summarily, without examining their segmental data, hence TPO was directed to verify segmental data of four comparable for the relevant financial year as per rule 10B(4) and recompute TP adjustment afresh and allow appropriate relief to assessee.

Relied:Turner International India (P) Ltd. v. Dy. CIT [ITA No. 218/Delhi/2017 and ITA No. 1069/Delhi/2014 for assessment year 2009-10 and 2012-13) : 2019 TaxPub(DT) 2288 (Del-Trib).

REFERRED :

FAVOUR : Matter remanded.

A.Y. :

INCOME TAX ACT, 1961

Section 254(1)

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