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2019 (5) TMI 402 - AT - Income TaxTP Adjustment - selection of comparable - main three issues are viz. (i). exclusion of comparables selected by the assessee in its TP study report for benchmarking its non binding investments advisory services rendered to its AE; (vi) functional profile of Ladder up Corporate Advisory Pvt. Ltd. selected as a comparable by the TPO is similar to that of the assessee; and (iii). non granting the benefit of economic/risk adjustments to the assessee - HELD THAT:- The three companies which were selected by the assessee as comparables for benchmarking the ALP of its international transactions, but were rejected by the lower authorities viz. (i) IDC India Ltd; (ii) ICRA Management Consulting Services Ltd; and (iii) Mecklai Financial Services Ltd are good comparable and safely be taken as a comparable to a company providing non-binding investment advisory services. We are of the considered view that the TPO/DRP had erred in excluding the aforementioned company. We thus in terms of our aforesaid observations being of the considered view that as the aforementioned company i.e. Ladderup Corporate Advisory Pvt. Ltd. which was carrying on merchant banking and investment banking activity was functionally different from the assessee that was providing nonbinding investment advisory services and thus could not have been selected as a comparable for benchmarking the international transactions of the assessee during the year under consideration had wrongly been selected as a comparable for benchmarking the nonbinding investment advisory services provided by the assessee to its A.E during the year under consideration. We thus in terms of our aforesaid observations direct the A.O/TPO to exclude the aforementioned company i.e Ladderup Corporate Advisory Pvt. ltd. from the final list of the comparables and recompute the ALP of the international transactions of the assessee for the year under consideration. We have given a thoughtful consideration and are of the considered view that now when the comparables selected by the TPO/DRP have been excluded by us from the final list of comparables, hence the seeking of risk adjustment by the assessee in the backdrop of the fact that the comparables selected by the TPO/DRP unlike the assessee are entrepreneurs and undertake full range of economic risks does no longer subsists and for the said reason is rejected. Exclusion of comparable selected by assessee - Alomndz Global Securities Ltd. - Crisil Risk & Infrastructure Solutions Limited - ICRA Management Consulting Services Ltd. HELD THAT:- directed the AO/TPO to include these in comparable also directed the AO/TPO to exclude e-Clerx Services Ltd and Hartron Communications Ltd. In terms of our aforesaid observations we direct the A.O/TPO to recompute the ALP of the international transactions of the assessee after including/excluding the aforementioned companies from the final list of the comparables. In case the ALP of the assessee is found to be within the safe harbour margin of +/- 5% of the mean margin of the final list of comparables then no TP adjustment would be called for in hands of the assessee.
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