The assessee is a multi-system operator in distribution of television channels through analog and digital cable distribution network and internet services through cable. It operated as a last mile cable operator for certain territories of the country. Over the years, it acquired stake in other entities by subscribing to majority shares therein. These entities fell within the meaning of related parties as defined in S. 40A(2)(b) of the Act.  The assessee adopted a pooled model under which it negotiated and settled with the broadcasters for their channels or bouquets of channels. The placement fees as determined between the company and the broadcaster on the basis of the total number of subscribers was received by the assessee and the amount relatable to the related parties was then paid by the company to the respective related parties. The DRP directed the TPO to retain the adjustment to the extent or 10 per cent. or the allocated amount. On appeal the Tribunal held that there was no justification for upholding any ad hoc addition of 10 per cent. The adjustment of 10 per cent. upheld by the Panel was without following any of the prescribed methods under S.  92C(1) nor had any benchmarking been adopted in determination of the arm’s length price. The ad hoc determination of the arm’s length price de hors S.  92C could not be sustained, rendering the entire transfer pricing adjustment unsustainable in law. (AY.2014-15)