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2014 (10) TMI 901 - ITAT MUMBAITransfer pricing adjustment - inclusion of two comparables by the TPO namely, Brescon Corporate Advisory Ltd. and Sumedha Fiscal Services Ltd., for bench marking the assessee’s arm's length price - Held that:- The assessee has been rendering non–binding investment advisory support services to its A.E. TPG Capital L.P., the functional profile which has been incorporated in the forgoing paragraph reflects that the role of the assessee is limited to providing information and making recommendation for the investment in India. Such advisory services are not binding on its A.E. which take its own call after analysing the details and information given by the assessee. From the functional profile of Sumedha Fiscal Services Ltd., it is seen that it is mainly engaged in investment banking and security dealing. Now coming to the Brescon Corporate Advisory Ltd., it is seen that this company is a leading player in distress and special situation advisory and investment services. It assists the companies in a special situation like re–capitalization, mergers and acquisition, infusion of private equity or direct investment. Its main revenue is from debt syndication and financial re–structuring advisory services. Thus, such a functional profile cannot be held to be comparable at all with the services / functions performed by the assessee which are mainly on account of advisory support services of providing information and investment recommendation. In view of these functional differences, it cannot be held that the said company is comparable on FAR analysis. Accordingly, Brescon Corporate Advisory Ltd., cannot be held to be a comparable company for the purpose of bench marking the assessee’s margin. Thus, both the comparable companies as taken by the Transfer Pricing Officer should be excluded from the list of financial comparables. After excluding these two comparables, the assessee’s margin should be bench marked with the other list of comparables as taken by the Transfer Pricing Officer i.e., out of 10 comparables these two comparables are to be removed and based on the arithmetic means of the margin of the final set of eight comparables, the assessee’s margin should be bench marked accordingly. - Decided in favour of assessee.
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