Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (12) TMI 993 - AT - Income TaxTP Adjustment - Comparable selection - assessee has sought exclusion of Motilal Oswal Investment Advisor Pvt. Ltd. primarily on the ground that it is functionally different from the assessee and secondly it does not qualify RPT filter - HELD THAT:- Notably, while examining the functional similarity of the aforesaid comparable in assessee’s own case in assessment year 2009-10, the Tribunal had excluded this company as a comparable. However, while deciding Revenue’s appeal [2018 (4) TMI 1510 - DELHI HIGH COURT] the Hon'ble High Court, remanded the issue relating to comparability of this company to the Tribunal for fresh consideration. The reasons being, the Hon'ble High Court was of the opinion that the formula of percentage of RPT being equal to expenses paid to related parties divided by total expenditure multiplied by 100 cannot be applied only to one particular entity without applying the same procedure in respect of all other comparables, as, it may lead to a distorted picture. As could be seen from the foresaid observations of the coordinate Bench, assessee’s contention that the RPT filter should be applied only with respect to the total expenditure did not find favour with the Bench. Thus, the claim of the assessee that this company was functionally different and also failed the RPT filter was rejected by the Bench. Basic facts relating to the comparability of this company, being more or less identical in the impugned assessment year, respectfully following the aforesaid decision of the co-ordinate Bench in assessee’s own case, we hold that Motilal Oswal Advisors Pvt. Ltd. being comparable to the assessee cannot be excluded. IM+Capitals Ltd., formerly known as Brescon Corporate Advisors be excluded from the list of comparables. M/s Keynote Corporate Services Ltd be excluded as functionally different from the assessee. Working capital and risk adjustment - We agree with the assessee that considering the nature of risk undertaken by the assessee as well as the comparables, adjustment in specific cases has to be made to the margin of the comparables on account of risk profile, however, burden is entirely on the assessee to furnish required details regarding the risk profile of the comparables to ascertain the nature of risk being undertaken by the assessee and the comparables. Since, the required details regarding the risk profile of the comparables are not properly gone into either due to lack of details furnished by the assessee or otherwise, we are inclined to restore this issue to the Assessing Officer for considering assessee’s claim of risk adjustment after examining the material on record and in accordance with settled legal principles. Needless to mention, the Assessing Officer must provide reasonable opportunity of being heard to the assessee.
|