AKIL KURESHI, J.

1. The petitioner has challenged an order dated 15.10.2018 as at Annexure “M” to the petition passed by the Transfer Pricing Officer (“TPO” for short) under Section 92CA(3) of the Income Tax Act, 1961 (“the Act” for short).

2. Brief facts are as under:-

2.1 Petitioner - Times Global Broadcasting Company Ltd is a company registered under the Companies Act, 1956 and his a wholly owned subsidiary of Benett, Coleman and Company Ltd (hereinafter referred to as “BCCL”). The petitioner is engaged in the business of distribution of television channels for the Times Group entities. It also provides support services to Times Group entities in the area of finance, legal, human resources, commercial, administration and technical and broadcasting. With effect from 1.4.2014, the petitioner demerged one of its business undertakings into BCCL. The scheme of demerger was approved by the High Court at Bombay by an order dated 16.1.2015. Consequently, the business pertaining to “Times Now” television channel of the petitioner got vested in BCCL. All assets and liabilities pertaining to demerged undertaking were also transferred to BCCL at the book value as on 31.3.2014. The difference between assets and liabilities was then adjusted against the brought forward profit and loss account balance as on 31.3.2014. However, no expenditure or income was charged to the profit and loss account for the financial year as per the scheme of demerger approved by the High Court.

2.2 For the assessment year 2015-16, the petitioner filed return of income on 28.11.2015 declaring total income of Rs. 5.90 crores (rounded off). In the said return, the petitioner had reported following two specified domestic transactions:-

Sr. No.	Nature of transaction	Related party	Amount (Rs. in Crs)	Method adopted for benchmarking
1	Payment of subscription fees earned from distribution services	BCCL ZENL	39.45 9.73	Transaction Net Margin Method (‘TNMM’)
2	Payment to Key Management Personnel	Key Managerial Personnel	3.00	Other Method (Rule 10AB)
	Total		52.19

The petitioner would point out that under the distribution services, the petitioner distributes television channels owned by BCCL and Zoom Entertainment Network Ltd (‘ZENL’ for short), either directly or through its distribution network. Upon distribution, it receives subscription fees, retains 8% of the fees as its service income and remits the balance to BCCL and ZENL based on their respective revenue share. Likewise, under support services, the petitioner manages back office operations of its group companies, including BCCL and ZENL. For this work, the petitioner is compensated at a cost plus 10% mark-up basis.

2.3 According to the petitioner, the distribution services involved a payment to related parties and accordingly, in terms of Section 92E of the Act, such transaction was reported in the prescribed form ‘3CEB’. According to the petitioner, the support services resulted into an income in the hands of the petitioner and therefore, the same could not be considered a specified domestic transaction and was accordingly, not reported.

2.4 In order to determine the arm’s length of the specified domestic transaction, the petitioner had adopted TNMM as the ‘Most Appropriate Method’. The petitioner presented data to contend that the payment of subscription fee to the related party was at arm’s length.

2.5 Return of income filed by the petitioner was selected for scrutiny. The Assessing Officer made a reference to the TPO for determining the arm’s length price of the specified domestic transactions reported in from “3CEB”. The petitioner appeared before the TPO in response to the notice issued and besides others, took a contention that in view of the express omission of clause (i) to Section 92BA of the Act withou