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TMI Blog2017 (11) TMI 1661X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal was legally justified in adopting an aggregated approach rather than a segregated approach, which is against the Transfer Pricing Guidelines & provisions of Section 92, which stipulates that each transaction is to be separately benchmarked?" 4. The facts of the case are that the assessee has declared book profit u/s 115JB at Rs. 17,31,86,774/- for MAT purposes. The return of income was processed u/s 143(1) of the Act on 26.10.2011. The case was selected for scrutiny under CASS. The statutory notice u/s 143(2) of the Income Tax Act, 1961 was issued on 19.9.2012 which was duly served by speed post AD. A notice u/s 142(1) was issued on 16.9.2013 alongwith detailed questioner. In response to this notice and other further notices, Sh. M.L. Agarwal, FCA as AR of the assessee attended from time to time as per the entries of order sheet and filed details and documents as placed on record. 4.1 The assessee company is a 100% subsidiary of Sakata Inx Corporation, Japan. During the year under consideration the assessee Company was engaged in manufacturing & trading of printing Inks and allied products. The assessee Company manufactures printing inks for packing and printing Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins of the assessee. (2) Atul Ltd.: This company was proposed to be rejected on the ground of significant related party transactions, as the financial information would not be considering as reasonable representing financial results of the uncontrolled transactions. The assessee claimed that it had adopted the rejection criteria of filtering out companies which had related party transactions in excess of 25%. As per the figures available with the assessee, this company had 14.26% related party transactions as a percentage of sales (Total 99.75 crore related party transaction as against sales of Rs. 699.38 crore). India assessee has quoted the ITAT (Delhi) decision in the case of Sony India (Pvt.) Ltd. which has observed...." An entity can be taken as uncontrolled if its related party transactions do not exceed 10 to 15% of total revenue..." It was claimed by the assessee that the comparable company's related party transaction did not exceed 15% of sales, the same cannot be rejected on account of related party transactions. However, the observation regarding 10- 15% related party transaction squarely covers the case of the company which, according to the assessee, has 14.26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r companies are: (1) DIC India Ltd: This Company was proposed to be rejected on account of having related party transactions. The assessee objected by claiming that DIC had only 6.27% related party transactions as compared to its sales, and hence this cannot be considered significant. On the other hand, this company had been taken out in the manufacturing function on account of non-comparable products (by the assessee). However, it was seen that this also dealing in printing inks. Hence, this is considered a Comparable under both the segments. (2) Metrochem Industries Ltd.: It was proposed to be excluded on account of product differences. The assessee has objected to the same by claiming that this company is dealing in dyes intermediates and hence should be considered. It is observed that this company has been taken as a comparable in the manufacturing segment as well, and hence this is considered as a comparable for both segments." 5. The conclusion which has been reached by the AO ought not to have been disturbed by the tribunal and comparison which has been made and amount which has been deducted which reads as under:- "Accordingly, the Arm's Length Price of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing services of Broking Services, Business Support Services and Investment advisory services to its customers. The TPO had adopted a list of comparable companies which were primarily engaged in providing services as merchant banker as comparable to determine the ALP in respect of the Investment Advisory Services rendered by it to its AEs. The companies selected by the TPO were identical to one selected in Carlyle India Advisors (P) Ltd., The aforesaid decision of the TPO in Carlyle (I) Advisors (P.) Ltd. v. Asstt. CIT [2012] 24 taxmann.com 176 (Mum.) was a subject matter of consideration by the Tribunal in ITA No. 7901/Mum/2011. The Tribunal after examining the business of each of the individual comparable concluded that they were different from that of the services provided by Carlyle India Advisors (P.) Ltd. {supra). This is so as the comparable used were in the merchant banking business while M/s. Carlyle India (supra) just like the Respondent-Assessee were inInvestment Advisory Services. The Revenue carried the issue from the order of the Tribunal rendered on 4th April, 2012 in Carlyle India Advisors (P.) Ltd. {supra) to this Court in appeal. The appeal being {CIT v. Carlyle In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al had in this case also adopted only IDC (India) Ltd. as comparable as in its decision in Carlyle India Advisors (P.) Ltd. (supra). It must be noted that the figures of IDC (India) Ltd. to arrive at the ALP were of the subject Assessment Year. It may also be pointed out that the decision of the Tribunal in case of Carlyle India Advisors (P.) Ltd. (supra) was the subject matter to challenge by the Revenue before this Court. This Court by an order dated 22nd February, 2013 refused to entertain the appeal of the Revenue CIT v. Carlyle India Advisors (P.) Ltd. MANU/MH/0544/2013 : [2013] 357 ITR 584/214 Taxman 492/32 taxmann.com 23 (Bom.). 8. We note that finding of the comparable to be adopted to determine the ALP as the basis of the activity conducted by the respondent-assessee is essentially a finding of fact. The view taken by the Tribunal is a reasonable and possible view. Moreover it has not been shown us to be in any manner perverse. Thus the question as raised does not give rise to any substantial questions of law." 7.1 He has also relied upon the decision of Commissioner of Income Tax-3 vs. Goldman Sachs (India) Securities (P) Ltd. (2016) 290 CTR (Bom) 236 wherein it has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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