The Special Bench was constituted to consider the following question of law .<\/p>\n
\u201cWhether on facts and in law, the Assessing Officer was justified in making transfer pricing adjustment anent to the international transaction of acquiring Bundle of Sport Broadcasting Rights, on the basis of deficiencies found by him in the valuation report submitted by the assessee?\u201d<\/p>\n
\u00a0<\/strong><\/p>\n \u00a0<\/strong><\/p>\n Star India Pvt. Ltd. for\u00a0acquiring Bundle of Sport Broadcasting Rights (BSB Rights)\u00a0hitherto held by its US-based Associated Enterprise (AE), namely,\u00a0ESPN Star Sports Ltd. (ESS) entered into a transaction that was concluded for\u00a01211 USD million by means of a Master Rights Agreement (MRA)\u00a0entered on 31-10-2013. The assessee furnished a report of an\u00a0independent valuer determining the total value of BSB Rights at this\u00a0level by using the \u2018other method\u2019 (Discounted Cash Flow (DCF) method). The assessee claimed deduction of Rs.1013.26 crore on this\u00a0score for the immediately preceding assessment year, 2014-15. It\u00a0applied the Comparable Uncontrolled Price (CUP) method to demonstrate that the international transaction of acquiring the\u00a0BSB Rights was at Arm\u2019s Length Price (ALP). For doing so, the\u00a0assessee adopted the comparable uncontrolled transaction of ESS\u00a0acquiring such BSB Rights for a total sum of 1338 USD million.\u00a0 The rights acquired by the assessee were by two different means viz., one set of rights was sub-licensed by ESS to\u00a0the assessee. The second set of rights was by means of novation of the\u00a0agreements under which the assessee was substituted in place of\u00a0ESS, becoming liable to make full direct payment to ISBs and\u00a0recovering 9.5% from ESS. The TPO observed that the Valuer had inflated the amount\u00a0of cash flows during the `Finite period\u2019 valuation of the BSB Rights\u00a0by 38%. He determined ALP\u00a0of the international transaction at 411 USD million. This resulted into variation between actual consideration\u00a0and ALP consideration at 66.06% of the\u00a0actual consideration. The TPO\u00a0proposed a transfer pricing adjustment of Rs.669.36 crore for the\u00a0immediately preceding year. Finally, the TPO\u00a0extensively discussed and reproduced his order for the immediately preceding assessment year in his order for the instant year,\u00a0eventually, determining excess payment on the overall basis at 66.06%\u00a0towards the Full terminal value and the Part finite period value.\u00a0 On appeal the Tribunal held that , the Assessee can\u00a0resile from the Most Appropriate method selected earlier\u00a0if the new method is in accordance with applicable provisions,\u00a0is ‘The Most Appropriate Method.’<\/p>\n It was noted that ESS had contracted the liabilities with the third parties in prior years when prevailing market conditions, time period etc., were materially different from the date on which MSA was entered into with the assessee. Since agreed prices were paid by the assessee to various sports bodies by virtue of liabilities assumed under MSA entered into with ESS represented, there was only a discharge of liabilities and was a part of a controlled transaction which was paid to non-AE [Sports Bodies] at the instance of AE [ESS]. Therefore, the said payments would not represent uncontrolled price\/transaction under uncontrolled conditions and would not constitute reliable data to undertake CUP analysis. Therefore, it was held that the MAM to benchmark international transactions in the instant case would be ‘Other Method’ and not ‘CUP Method’. \u00a0Hence, appeal of the assessee was dismissed. Majority view . \u00a0\u00a0( ITA No. 7872 \/Mum\/2019 \u00a0dt 5 -6 -2023 )( AY. 2015 -16 )<\/p>\n \u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" S. 92C : Transfer pricing \u2013 Arm\u2019s length price – Bundle of Sport Broadcasting Rights \u2013 Most Appropriate Method \u2013 CUP Method and Other Method – Report of an independent Valuer – Assessee can resile from the Most Appropriate method selected earlier -The Most Appropriate Method is other Method – On the facts the Assessing Officer was justified in making transfer pricing adjustment in the international transaction of acquiring Bundle of Sport Broadcasting Rights on the basis of deficiencies found by him in the valuation report submitted by the assessee- Majority view . [S. 92 , R. 10B, 10C ] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-34918","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-95c","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/34918","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=34918"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/34918\/revisions"}],"predecessor-version":[{"id":45378,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/34918\/revisions\/45378"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=34918"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=34918"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=34918"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}