TMI Blog2019 (1) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... I RAJESH KUMAR, AM For The Appellant : Shri Arijit Chakravarty ARs For The Respondent : Shri Jayant Kumar Rajeev K. Gubgotra, DRs ORDER PER MAHAVIR SINGH, JM: This appeal is arising out of the order of Dispute Resolution Panel-1, Mumbai [in short DRP ], directions dated 05.09.2012. The Assessment was framed by the Asst. Commissioner of Income Tax-Range 4(3), Mumbai (in short ACIT/AO ) for the assessment year 2008-09 vide order dated 25.10.2012 under section 143(3) of the Income Tax Act, 1961(hereinafter the Act ). 2. The first and second issues are common and interconnected. The first issue in this appeal of assessee is against the order of DRP/TPO/AO in making transfer pricing adjustment relating to international taxation of the Investment Banking Division. For this assessee has raised the following ground No. 1: - Ground I - Transfer Pricing Adjustment relating to international transactions of the Investment Banking Division of ₹ 342,133,208 I. On the facts and in the circumstances of the case, the learned Transfer Pricing Officer ('TPO') and the learned Assessing Officer ('AO') under the directions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 78,78,825/-. For this assessee has raised the following ground: - Ground 2 - Transfer Pricing Adjustment relating to Securities Broking transactions of ₹ 7,878,825/- 1. On the facts and in the circumstances of the case, the learned TPO and the learned AO under the directions of the Hon ble DRP erred on facts and in law in making an addition of Ks. 7.878.825 in relation to provision of Equity Broking services (The Broking Transactions) of the Appellant based on the provisions of Chapter X of the Act. 2. The learned AO/ TPO under the directions of the Hon'ble DRP erred on in the facts of the case and in law in rejecting the adjustments claimed by the Appellant for differences in volumes transacted and research costs while determining the ALP of the Broking Transactions. 3. The learned AO / TPO under the directions of the Hon'ble DRP erred in the facts of the case and in law by arbitrarily considering tile top JO third party clients for the purpose of determining the ALP of the Broking Transactions, instead of comparing the brokerage charged to all clients. 4. The learned TPO erred and the Hon'ble DRP further erred in upholding / cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee had made special efforts and incurred significant expenses on marketing so as to establish its presence in India and therefore, an adjustment on account of marketing and startup expenses should be granted from the mean NCP margin computed above. 6.3 The assessee's submissions have been considered and found to be not acceptable. The Lehman Brothers Group at the relevant time was an internationally renowned group in the area of merchant banking. The mere trade name would be enough to enter any new market and gain a foot hold in the same. We are therefore, of the view that no adjustments on account of marketing expenses or startup costs are required to be made. 5. The AO accordingly passed an order following DRP s direction and making adjustment of ₹ 34,21,33,208/-. Aggrieved, assessee came in appeal before Tribunal. 6. At the outset, it is noticed that exactly on identical facts, the Tribunal in earlier year has set aside the matter back to the file of the AO/ TPO for fresh determination of the transfer pricing adjustment by observing in Para 4 as under: - 4. We have considered rival contentions and have perused material on record including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various Lehman Brother entities across globe participate along with bankers and client to successfully conclude the transactions and hence Revenue Split was claimed to be most appropriate method to bench mark its international transactions with its AE and the said method was claimed to be consistently and uniformly applied since 1999-00 by Lehman Brother Group worldwide across all its entities . The assessee claimed that the assessee business model is unique one and there are no comparable companies available in the segment in which the assessee is engaged into. It was submitted by the assessee before the TPO that the functions performed in the AE segments related to Investment Banking Division and concerns Underwriting, Leverage Finance, Private Placement, Mergers and acquisitions, Restructuring etc. . It was stated by the assessee that by no stretch of imagination, such functions be benchmarked with the non-binding investment advisory services proposed in the show cause issued by TPO. The TPO rejected this method as the assessee could not explain the basis of the same properly and applied TNMM method at entity level and comparables were drawn by TPO accordingly. The TPO could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for benchmarking international transactions by adopting Revenue Split Method instead of Profit Split Method or other specified methods as are acceptable in Indian TP jurisprudence . We have observed based on material on record that the assessee could not make effective representations before the authorities below due to extraordinarily situation faced by the assessee owing to collapse of Lehman Brothers group worldwide leading to liquidation in 2009 . This year was also the first year operations and it is claimed that there certain extraordinary expenses such as fees paid for increase in share capital, rental paid for premises lying vacant due to non appointment of employees being first year of operation, signup bonuses being given to employees on joining the assessee and recruitment cost incurred in the initial phase of appointment of the new employees as assessee s base being setup in India which deserves to be seen by the authorities below on merits in accordance with law before arriving ALP of its international transactions with AE .The assessee has prayed and agreed for open set-aside to enable it to make effective representation before the authorities below in de-novo pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first year of operation of the company, when this issue arose, which has already been set aside to the file of the AO/ TPO for fresh determination of Transfer Pricing adjustment after giving proper opportunity to the assessee. As the issue in first year has already been set aside, we in this year also, setting aside the same on similar directions to the file of the AO/ TPO. 8. As the above issue has already been set aside for the reason that the TPO/ AP/ DRP in the absence of details furnished by assessee proceeded to apply ALP to broking transaction and we have already set aside the first issue exactly on identical reasoning s, we restore this second issue to the file of the AO/ TPO exactly on similar directions. Hence, this issue of the assessee s appeal is also set aside to the file of the AO /TPO. 9. The next issue in this appeal of assessee is against the order of AO in not allowing claim of depreciation of goodwill. For this assessee has raised the following ground No. 3: - Ground 3 - Claim for depreciation on goodwill On the facts and in the circumstances of the case and in facts, the learned AO has erred in disregarding the claim of the Appellant for de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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