TMI Blog2023 (12) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee without questioning if the assessee was right in taking up comparable of segment financial services/ selling of financial products however in same set and scope of business activity and model when accepted in AY 2008-09 onwards the assessee s changed stand with comparables of different segment of business support services . Thus the comparables of segment AY 2008-09 onwards are binding on the TPO and if those are accepted the whole TPSR becomes defective and that causes prejudice to both the parties. In any case, if additional evidence of fresh TPSR on new set of comparables is allowed, the TPO will still have a right to not consider the same and allege that in present AY the comparables of right segment were taken. Admissibility of additional evidence we are of the considered view that Rule 29, bars the right of parties to the appeal to produce additional evidence either oral or documentary. However, if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders, the additional evidence can be called for. Further the Rule 29 provides that for any other substantial cause also the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. First Appellate Authority or in short as the Ld. FAA ) in appeal No.88/2013-14/CIT(A)-XX arising out of an appeal before it against the order dated 28.12.2006 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) by the ITO, Ward-2(1)(3), Mumbai (hereinafter referred to as the Ld. AO ). 2. Heard and perused the record. 3. It was pointed out by the ld. AR that an application for admission of additional evidences has been filed under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, the copy of which along with copies of the documents stands supplied to the opposite party. The ld. DR submitted that the arguments should first be heard on the admission of evidence and consequently the arguments on merits should be heard. We find force in the submissions of the ld. DR as in case the additional evidence is allowed, the matter will certainly have to be restored to the TPO and, accordingly, the arguments on the application of the appellant assessee for admission of additional evidences were heard. 4. The ld. counsel for the applicant-assessee submitted that in the present AY, being first year, the assessee had erroneously consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tudy Report it submitted at the time of original assessment, the following functional profile emerges out on the perusal of the financials/TPSR:- (1) The assessee is part of the AMEX group and the business profile is mentioned in TPSR at para 1.2.1 page 153 /paper book volume 1 is reproduced below:- 1.2.1 American Express is a transnational group founded in 1850 in New York. It covers a global network of more than 130 countries and caters to individuals, small businesses and financial education services. The American Express Group (Amex Group) is primarily engaged in travel-related services, financial advisory services and international banking services around the world. Also the business profile of the assessee company, as mentioned, at para 2.3.6 at page 157/paper book is mentioned below:- 2.3.6 In September, 2003, in order to avoid any duplication of efforts between itself and its wholly owned subsidiary AEFESIL, AESIL discontinued its foreign exchange line of business. AESIL aims at being a leading distributor of retail financial products by offering a comprehensive product range, and is conducting its business through a combination of owned and third party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Business services. 4.12.30. This search listed 511 companies30. From this broad set, we selected companies falling under the main headings of financial and leasing services and Business services and those falling under the following specific sub-types: Hire Purchase and leasing services Investment service Other financial services Other consultancy Business activity nec. Also the selection criteria/filter applied by the assessee company in another software called Capital line given at page 183 is also reproduced below:- iv. Selection process from Prowess We extracted segmental financial data from prowess (402 companies having segmental data) using the industry classification query module as given in Prowess, and selected those segments (of companies), which were classified under the Services industry. This resulted in 203 segments. Further, from the aforesaid, the following sub industry classification were selected: Financial ; Leasing services Companies classified under Financial Consultancy services, Other consultancy and Business activity nec, all of which fall under the sub-type of Business Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has only stated that as in subsequent years its profile was accepted as a different profile by authorities then it should be allowed to undo the activities/functional profile decided by the assessee itself/TP expert /department for earlier years , which cannot be permitted. 5.2 Coming to the power of the Tribunal to admit additional evidence, it was submitted that the Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 allow the additional evidence to be admitted only in two circumstances and otherwise the parties are restrained from filing additional evidences. It was submitted that the Tribunal can accept the additional evidences only if: (i) the Tribunal required these documents for evidences at its own instance or (ii) if the income-tax authorities have decided the case without giving sufficient opportunities to the assessee. It was submitted that both the conditions are not satisfied. In this regard, the ld. DR relied on the Tribunal decision in the case of Kanniappan Murugadoss vs. Income Tax Officer, Non Corporate Ward- 7(4), Chennai, 79 taxmann.com 244/164 ITD 260 (Chennai Tribunal 2017); judgement of the Hon ble Bombay High Court in the case of CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted by the assessee/ its TP study report, which is based on the results of the subsequent assessments conducted in the case of the assessee company. The so called additional evidence is mainly created/fabricated by the assessee to somehow give post facto approval/validation to the comparable companies and the benchmarking process adopted by it. This additional evidence was not in existence earlier and it is clearly a case of bringing in fresh/ fabricated evidence to make out a new case . B. The assessee was unsuccessful before the lower authorities and to cover up the weak part/lacuna in his case, he is bringing freshly created evidence which was not there at the time of original assessment. The assessee is part of the Amex group which has operations in more than 130 countries with revenue in billion in dollars. The assessee company employs best of the brains/Chartered Accountants, financial expert etc. and after a detailed discussion with their Transfer Pricing Expert they have prepared a TP Study report mandated as per Income Tax Act and now they are trying to negate it by creating a fresh TP report which they are not permitted to do under the provision of Income Tax Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. DR has tried to argue that segment of assessee has been financial services/ selling of financial products only but he could not cite that there was any change in the functional profile of the assessee from AYs 2004-05 to 2007- 08 and onwards and that in present year comparables were rightly taken and subsequently rightly changed. 7.1 In this context we find that Section 92CA(3) rests obligation on TPO to determine the arm s length price in relation to the international transaction in accordance with sub-section (3) of section 92C. This exercise at one end is to accept or discredit the TPSR of the assessee on the other hand obliges the TPO to make an independent enquiry of his own on the question of determination of ALP. The point is that in present AY the TPO accepted the comparables of segment taken by assessee without questioning if the assessee was right in taking up comparable of segment financial services/ selling of financial products however in same set and scope of business activity and model when accepted in AY 2008-09 onwards the assessee s changed stand with comparables of different segment of business support services . Thus the comparables of segment AY 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power to pass such orders thereon as it thinks fit . This makes the discretion and power of Tribunal under Rule 29 to be quiet wider and majestic than one available to CIT(A) under Rule 46A or even to appellate Civil Courts under Order 41 of Rule 27 of CPC. 10. So here in the case in hand the facts and circumstances establish that either both TPO and the assessee or the TPO only hand failed to take comparables of correct segment. Thus, there is force in the contention of the ld. counsel for the assessee that both the assessee and TPO were mistaken on facts of the functional profile of the assessee to consider comparables engaged in financial and leasing services instead of business support services . Hence at the end, before us, neither the assessee nor the Revenue can completely justify the comparables accepted by them. 11. Further, the assessee has sought indulgence of the Bench to allow the additional evidences of new set of comparables, but, the same require verification as the whole exercise has to be done again by the TPO who has right to rebut the same. Thus, the question of admissibility of these evidences as to the assessee had opportunity to lead this eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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