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(i) Ground no. 1 is general in nature;

(ii) In ground no.2 to 5, the assessee has challenged that, the Ld. DRP as well as AO has erred in law and on facts in not applying the Profits Split Method (PSM) which was approved by the TPO, on non-AE transactions and thereby holding that revenue of Rs. 118,59,30,000/- from sale of advertisement air time from non-AE needs to be separately computed and on such revenue applying 28% of profit;

(ix) In ground no. 27, the assessee has challenged denial of set off of brought forward losses and amounting to Rs.1004,27,61,307/- for AY 2006-07.

4. In additional grounds, again assessee has raised following grounds:-

"On the facts and in the circumstances of the case and in law, the learned DRP and the learned AO-

Ground number 30:

erred in considering the profitability rate of 27.18% [arrived at after consideration of suo moto disallowance under section 40(a)(i) of the Act by the Appellant], instead of profitability rate of 14.04% and 13.14% towards specific tax adjustments under Section 40(a)(i) of the Act as determined by the Additional Commissioner of Income-tax (Transfer Pricing) - 11(4) ('TPO') for computing the Arms' Length Price ('ALP') under Profit Split Method ('PSM').

19. Mr. Kaka, on the issue of levy of interest under section 234B, submitted that, the decision of Alcatel Lucent (supra) now has been distinguished by the Delhi High Court itself in the case of DIT vs. GE Packaged Power Inc. reported in 373 ITR 365 wherein this matter of chargeability of 234B has been decided in favour.

20. We have considered the rival contentions raised by the parties, perused the relevant finding given in the impugned order and material placed on record. We have already discussed succinctly the relevant facts and the background of the case. The whole issue boils down to the manner in which Profits Split Method (PSM) is to be applied. STAR Ltd and Star Channel companies derive revenues from the distribution of T. V. Channels and sale of advertisement time to be aired on these channels. The role and functions performed by these companies have been elaborated in the earlier part of the order. All the transactions leading to the earning of various streams of revenues are amongst the entities only and are highly integrated. That is why, there is no dispute between the Revenue and the assessee that the Most Appropriate Method (MAM) for benchmarking the profits of the M/s Satellite Television Asian Region Limited & Five others ITA Nos. 8683 to 8685/Mum/2011 ITA Nos. 8693 to 8695/Mum/2011 entities is PSM and the allocation of the combined net profit amongst the entities have been apportioned on the basis of their role and functions performed, risks assumed and assets deployed and all the companies are taxable at the same rate. Not only that, the combined net profit determined under the PSM has been arrived at 14.04% which has been accepted to be at Arm's Length by the TPO in the reference made under section 92(CA). Thereafter, the assessee has made suo moto disallowance under section 40(a)(i) in the return of income with regard to the payment made to the third party on account of expenditure related to content source from foreign suppliers; payments to third parties for hire transponder and payments for up-linking / maintenance of equipments and lastly, by disallowance of interest expenses. Such disallowances had led to upliftment of profit rate of 27.18%. Thus, the taxable income was shown @ 27.18% which has been apportioned amongst entities as per the percentage which has been incorporated in the foregoing paragraphs. The first and foremost issue is, whether the DRP was justified in segregating the revenues from non-AE and directed the AO to tax separately @ 28% by applying Rule 10 of the Income-tax Rules. Further, whether the disallowance under section 40(a)(i) is required to be made on account of various payments which either were already offered by the assessee or were part of combined profit determined on account of transactions of the entities and whether such a disallowance has led to multifold or double disallowances.

"(d) profit split method, which may be applicable mainly in international transactions involving transfer of unique intangibles or in multiple international transactions which are so interrelated that they cannot be evaluated separately for the purpose of determining the arm's length price of any one transaction, by which--

(i) the combined net profit of the associated enterprises arising from the international transaction in which they are engaged, is determined;