TaxTMI 
TaxTMI 
2016 (6) TMI 1267
X X X X Extracts X X X X
X X X X Extracts X X X X
.... at arm's length in terms of the provisions of section 92C of the Act read with Rule 10D of the Income-tax Rules,1962 ("the Rules"). 3. That on the facts and circumstances of the case and in law, the DRP / AO / TPO while rejecting Appellant's determination of arm's length price for rendering marketing support services have erred in including inappropriate comparables from the Appellant's search matrix. 4. That on the facts and circumstances of the case and in law, the DRP / AO / TPO have erred, in arbitrarily rejecting certain functionally comparable companies identified by the Appellant, inter alia, using unreasonable comparability criterion. 5. That on the facts and circumstances of the case and in law, the AO has erred in charging interest under Sections 234B and 234D of the Act. 6. That on the facts and circumstances of the case and in law, the AO erred in initiating penalty proceedings under Section 271(1)(c) of the Act for furnishing of inaccurate particulars and concealment of income. Each of the above grounds is independent and without prejudice to the other grounds of appeal preferred by the Appellant. The Appellant prays for leave to add, alter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e TP study that the assessee does not own any valuable intangible property. 2.4 The functions performed by the assessee and the risk assumed by it are similar to those of sales and marketing companies as the assessee is mainly engaged in selling and marketing support activities. On the basis of the financial results, the assessee had selected the following comparables whose arithmetic mean was 11.94% as under: Sr. No. Company Name Data Base 3 Year Average (FY 2009- 2011) 1. Asian Business Exhibition & Conferences Ltd Prowess 40.42% 2. Concept Communication Ltd. Prowess 3.59% 3. Hindustan Unilever Field Services Pvt. Ltd. Prowess 10.69% 4. IDC (India) Ltd. Capitaline 13.18% 5. India Exposition Mart Ltd. Prowess -4.36 6. Marketing Consultants & Agencies Ltd. Prowess 8.11% 7. Arithmetic Mean 11.94% 2.5 From the above, the Ld. TPO accepted IDC India Ltd., Concept Communications Ltd. and Hindusthan Unilever Field Services Pvt. Ltd. The Ld. TPO, applied quanlitative filter and arrived at new set of comparables, of which the average mean calculated was 23.20%, which are as under: S.No. Company Name OP/TC 1 IDC (India) Ltd. 10.60 2 Media Res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orporation headquartered in Mountain View, California in the United States was incorporated on 06/03/2003. The company operates an online professional network on the Internet through which the company's members are able to create, manage and share their professional identities online, build and engage their professional networks, access shared their knowledge and insights and find business opportunities. On LinkedIn, more than 1 20 million professionals find jobs, people and service providers through their network of business relationship. LinkedIn offers 4 types of account basic, premium for business, premium for jobseekers and premium for recruiters and employers. LinkedIn platform provides members with solutions including applications and tools to search connect and communicate with business contacts, learn about career opportunities, join industry groups research organisation and share information. 5.2 During the year under consideration the assessee has generated revenue under the following categories hiring solutions, marketing solutions, premium subscriptions. It is observed from this TP study that the assessee does not bear any risks associated with the intangibles includi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave perused the annual reports of this comparable and have found that the main revenue has been generated only from the subscription fees from members and it meets its expenses through these subscription fees. Further it is observed that this company is a non-profit making organisation. We are thus of the considered opinion that this company should be excluded from the list of comparables. 7. Info Edge India Ltd.: 7.1 The assessee objected the inclusion of this company proposed to be used in the final set of comparables by the TPO by contending that it was not functionally comparable. The ld.TPO included this company on the ground that this comparable is providing services which fall within the broad category of consultancy services. On the contrary the Ld.AR submitted that this comparable is an Internet based service provider operating in 4 verticals through web portals namely Naukry.com for recruitment related services, Jeevan Sathi.com for matrimony related services, 99 acres.com for real estate related services and Shiksha.com for education and related services. He submitted that this comparable is spread across wide spectrum of domains in the Indian Internet space and its si....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pany and thus, does not match functionally with the assessee in any manner whatsoever. 8.3 We have considered the rival submissions and the material placed before us. It is observed that this comparable company is into a wide range of services including advertising, interior decoration and event management. On a similar footing we had excluded in for edge India Ltd as it was involved in various web portals. There cannot be a different yardstick for deciding comparability of cases. Accordingly, we direct this comparable to be excluded from the list. 9. Concept communication Ltd 9.1 The assessee has prayed for inclusion of this company as a comparable. It has been submitted that this company is engaged in providing communication agency services, digital advertising and marketing services, event management services and consultancy, media planning and buying, public relations services etc. The Ld. AR submitted that this comparable passes through the filters applied by the TPO. He further submitted that only broad functional and product compatibility is to be considered as net margins are less influenced by product and functional differences. 9.2 On the contrary the Ld. DR relied up....