TaxTMI 
TaxTMI 
2016 (2) TMI 115
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....ce to the directions of Dispute Resolution Panel (DRP), Mumbai. At first, we will deal with the departments appeal in ITA 22/M/15. Only substantive ground raised by the department is as under:- 1. "Whether on the facts and in the circumstances of the case and in law, the Hon'ble Dispute Resolution Panel erred in rejecting the comparable viz. Asian Business Exhibition and Conferences Limited which was adopted by the TPO for computation of Arms Length Pricing when the comparable's functioning was very much similar to activities undertaken by the assessee company". 2. As could be seen from the ground raised, the only issue raised by the department is in relation to exclusion of Asian Business Exhibition and Conferences L....
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....t to operating cost as Profit Level Indicator (PLI). Considering itself as the tested party, assessee has conducted search in the data bases for selecting comparables and had short listed twenty one companies as comparables with arithmetic mean margin of 11.26%. As operating margin of the assessee was shown at 12%, the transactions with the A.E.'s were considered to be at arm's length. As far as business and marketing support services is concerned, it was considered as a separate segment in the TP study and ALP was benchmarked by adopting TNMM as most appropriate method with operating profit to operating cost as PLI. Fourteen companies with average arithmetic mean of 10.32% were selected as comparables. As assessee's margin was shown at 12%....
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....tional transaction independently. Though, the TPO agreed with the assessee that TNMM is the most appropriate method with operating profit to operating cost as the PLI, however, he did not agree on the overall TP study report prepared by the assessee. He observed, that the assessee has selected 14 comparables as far as business support services segment is concerned with arithmetic mean margin is 10.32% to its own operating margin of 12% and has treated the transactions to be an arm's length. He observed, while doing so assessee considered multiple year data instead of current year's data. Out of 14 comparable selected, relevant data for A.Y.2009-10 in respect of 3 comparables are not available. Further, two comparables are persistently loss ....
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.... visitors for visiting exhibition. The DRP also observed, the company has earned super-normal profit during the year which cannot be ignored. The DRP further observed segmental reporting of the company is not available. The DRP observed merely because the company was considered in the T.P. Study, it has to be included as a comparable. Accordingly, DRP directed the assessing officer to remove Asian Business Exhibition and Conferences Limited from the list of comparables. Since, DRP found that after removal of Asian Business Exhibition and Conferences Limited assessee's margin comes within +/- 5% of other comparables it did not decide assessee's objections in respect of other comparables. Further, the DRP also directed the assessing officer t....
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....s considered in the T.P. Study of assessee. 10. The learned counsel referring to the annual report of Asian Business Exhibition and Conferences Limited submitted, the directors report of the company make it clear that it is engaged in organizing exhibitions and conferences. Further, referring to schedule 12 of the profit and loss account of the company learned counsel submitted the income earned is from exhibition and events, sponsorship, delegates attending conference/events and entry fees charged from visitors for visiting exhibition. Whereas, assessee is providing support service to its A.Es. in re-insurance and actuarial activities. Therefore, under no circumstances this company can be considered to be a comparable to assessee. As fa....
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....lace etc. 12. Thus, on overall analysis of facts and materials placed on record it is very much clear that the business model of the assessee and Asian Business Exhibition and Conferences Limited are totally different. While assessee undoubtedly is providing support services to its overseas AE's, Asian Business Exhibition and Conferences Limited is primarily and fundamentally engaged in event management. Thus, under no circumstances it can be considered as a comparable to the assessee. Therefore, for the aforestated reasons the DRP, in our view, was justified in excluding this company as a comparable. As far as the contention of learned DR that reasons on which this company was excluded equally applies to other comparables retained by th....