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Tax Publishers Arm's Length Pricing (ALP) of media rights - whether CUP method adopted for one year can be resiled in another year - Bundled Sports Broadcasting (BSB) rights whether these can be cherry picked and evaluated instead of aggregating the same *Facts :* Assessee a subsidiary of Star sports was sub-licensed BSB (Bundled Sports Broadcasting) from its offshore AE for a period of 5 years. The payout would be 90.5% of the payout what the AE would have done. This was buttressed with a DCF valuation from independent valuers. During the earlier AY 2014-15 the assessee adopted the price paid by the AE to be the CUP ALP and since they ended up paying only 90.5% of it was claimed not to be against TP provisions. AO gave his reading of the BSB rights and made additions of 66% of the payout the case went to ITAT and the ITAT remanded it to the AO for fresh consideration. Pending this adjudication, in the next asst. year AY 2015-16, assessee adopted "other method" in the TP by producing more than one valuation report and some expert opinions on the ALP value of the BSB rights. Revenue once again sustained the additions @ 66% of the payouts made by the assessee alleging that there were cross subisidizations of the BSB payouts if individually seen and it was a finite period contract and thus terminal value ought not to be considered in the ALP other method benchmarking. DRP upheld the additions of AO/TPO. On further appeal, ITAT constituted a special bench to decide the question - whether the method of ALP can be resiled from year to year on the same transaction and the computation method by assessee was correct and was at ALP. Held in favour of the assessee that they may resile the method of ALP year on year. The "other method" adopted was the correct method (thus held the ITAT in a split tie breaker verdict amongst the members). CUP method was held to be inappropriate in this case. The other method was held to be at ALP as valuation of media rights is a complex issue and the assessee had secured expert valuations and manifestations while revenue could not produce evidences adducing such facts for their TP add backs. *Ed. Note :* The decision is a 120 paged and has path breaking findings and is a worthy case of a landmark verdict. *Case :* Star India (P) Ltd. v. ACIT 2023 TaxPub(DT) 3505 (Mum-Trib)

Tax Publishers

Arm's Length Pricing (ALP) of media rights - whether CUP method adopted for one year can be resiled in another year - Bundled Sports Broadcasting (BSB) rights whether these can be cherry picked and evaluated instead of aggregating the same

Facts :

Assessee a subsidiary of Star sports was sub-licensed BSB (Bundled Sports Broadcasting) from its offshore AE for a period of 5 years. The payout would be 90.5% of the payout what the AE would have done. This was buttressed with a DCF valuation from independent valuers. During the earlier AY 2014-15 the assessee adopted the price paid by the AE to be the CUP ALP and since they ended up paying only 90.5% of it was claimed not to be against TP provisions. AO gave his reading of the BSB rights and made additions of 66% of the payout the case went to ITAT and the ITAT remanded it to the AO for fresh consideration. Pending this adjudication, in the next asst. year AY 2015-16, assessee adopted "other method" in the TP by producing more than one valuation report and some expert opinions on the ALP value of the BSB rights. Revenue once again sustained the additions @ 66% of the payouts made by the assessee alleging that there were cross subisidizations of the BSB payouts if individually seen and it was a finite period contract and thus terminal value ought not to be considered in the ALP other method benchmarking. DRP upheld the additions of AO/TPO. On further appeal, ITAT constituted a special bench to decide the question - whether the method of ALP can be resiled from year to year on the same transaction and the computation method by assessee was correct and was at ALP.

Held in favour of the assessee that they may resile the method of ALP year on year. The "other method" adopted was the correct method (thus held the ITAT in a split tie breaker verdict amongst the members). CUP method was held to be inappropriate in this case. The other method was held to be at ALP as valuation of media rights is a complex issue and the assessee had secured expert valuations and manifestations while revenue could not produce evidences adducing such facts for their TP add backs.

Ed. Note : The decision is a 120 paged and has path breaking findings and is a worthy case of a landmark verdict.

Case : Star India (P) Ltd. v. ACIT 2023 TaxPub(DT) 3505 (Mum-Trib)