TaxTMI 
TaxTMI 
2019 (8) TMI 184
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....ssee") is a subsidiary of Trip Advisor APAC Holding Corporation, and was incorporated on 30.07.2008 under the provision of Companies Act, 1956. The parent company operates user generated travel information website under several brands including trip advisor, independent and traveller, smart traveller, Virtual tourist, holiday Watchdog, travel pod, seat guru, booking Budy and airfair Watchdog. The assessee performs the marketing support services and generally the activities to promote and market trip advisors India website, trip advisor.in under the direction and management of trip UK. 3. For the assessment year 2011-12, they have filed their return f income 29.11.2011 declaring income of Rs. 62,04,883/-. 4. During the Financial year 2....
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.... of Goldmine Advertising Ltd., Ground No.7 challenging the inclusion of MRUC and Ground No.8challenging the denial of risk adjustment. It is submitted by the Ld. AR that in case of inclusion of Goldmine Advertising Ltd and exclusion of MRUC, the margins of assessee will be within the permissible limit of plus or minus 5% and therefore any discussion on ground No. 8 will be purely economical and the assessee will not be pressing for it. 6. In so far as the grievance of the assessee is the Ld.CIT(A) including the alleged reimbursement of third party marketing expenses paid by the assessee, it could beseen from the record that on a perusal of the accounts of the assessee, Ld.CIT(A) found that the total operating profit disclosed was Rs. 37,....
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....p can be charged as cost incurred by the assessee that are attributable on the employees directly engaged in performing the duties of the assessee under the agreement; whereas the cost incurred by the assessee for securing the services performed by third parties, it was defined as third party cost. It is further submitted that all the relevant bills and invoices were submitted before the TPO, the TPO verified and accepted the same and therefore, the interference by the Ld.CIT(A) is unwarranted. 9. Ld.AR further submitted that the assessee is only a conduit between the AEs and third parties or performance of the marketing services, but routed the third parties marketing expenses through P&L A/c on actual cost and reimbursement of such cos....
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....mployees at their disposal, discharge of this obligation to perform the marketing services, the assessee has to engage the third parties, not on behalf of the AE but as their own agents to fulfill their own obligations. We, therefore, are of the considered opinion that the assessee is working as an independent marketing agency and the payments made to the third parties for discharging the obligations of the assessee as envisaged in, are the cost of the assessee alone. We reject the contention of the assessee that the assessee is only a conduit and deal with the third parties agencies on behalf of the AE. With this view of this matter, we uphold the findings of the Ld.CIT(A) and dismiss Ground No.4. 13. Now, coming to the question of incl....
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....ublic relation matters. Ld.CIT(A) does not advert to the service income filter. 16. On a careful consideration of the functions performed by the assessee and also Goldmine Advertising Ltd, we are of the considered opinion that the lowest common factor of functions of these two entities is market support service, and in that perspective there is functional similarity between these two entities and the rejection of this comparable is not tenable. We, therefore, direct the inclusion of this company in the list of comparables for benchmarking the international transactions of provision of marketingsupport services. 17. Next comparable that arises for our consideration is Media Research Users Council (MRUC), the inclusion of which the asse....
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....bers representing advertisers, advertising agencies, publishers and broadcast/other media totally 249 in number; that it is engaged in undertaking surveys, research into readership, viewership, listenership of various media for advertising; that MRUC works for the benefit of its exclusive members only without any objective of profit and making; that the major sources of income earned by the MRUC was in the form of membership and subscription fees for Indian readership survey and Indian outdoor survey reports; and that this company was outsourcing most of its activities to third-party research agencies. 21. We have referred to the page No. 462 to find out that the source of income of this entity is membership subscription, income from sub....