I tested the audio over HDMI ARC on the TV. Below are my findings:
1. HDD connected to TV through USB and sound over HDMI ARC to AVR:
- DTS - You have to set the speakers to Auto/Passthrough for the TV to send DTS signal over ARC. AVR rightly detects the stream as DTS
- DTS HDMA - Since ARC does not support lossless format, you have to set the speakers to either PCM/Passthrough/DD. I found DD/Passthrough sounds better than PCM
- Dolby - You can set speakers to Auto/DD/Passthrough - All work and AVR detects stream rightly as DD
- Dolby TrueHD - Again here, all you get is DD and not lossless audio
2. Netflix app in TV
- NF app strangely shows 5.1 only and not Atmos when you have output set as 'ARC'.
- Here the PCM setting gives 2.1, while DD setting gives you DD 5.1 signal on AVR
3. Prime/NF app on FireTV 4k
- Nothing except DD setting on TV works. AVR detects stream as DD rightly. I assumed FireTV has DD only and thus nothing else works
So if you have HDD connected to TV, you get the right 5.1 sound (DD/DTS) while lossless is output as DD/DTS only. May be eARC would have solved the issue. Given I have 5.1 AVR, I am ok with it. If you have 7.1 AVR, may be you should connect FireTV 4K to AVR rather than TV. My AVR does not passthrough 4K so I have to connect the FireTV 4K to TV and send audio over ARC.
Hope this helps someone looking for audio answers. Also if you have found a way to send DTS HDMA/Dolby TrueHD rightly to AVR from TV, let me know.