TaxTMI 
TaxTMI 
2019 (2) TMI 1733
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....diary of Goldman Sachs (Mauritius) LLC. The assessee is conducting business in various segments such as merchant banking, investment advisory services, provisions of information technology enabled services (ITES) and securities business. For the assessment year under dispute, the assessee filed its return of income on 29th November 2012, declaring income of Rs. 437,63,20,560. During the assessment proceedings, the Assessing Officer noticing that in the previous year relevant to the assessment year under dispute, the assessee has entered into international transactions with its overseas AE, made a reference to the Transfer Pricing Officer for determining the arm's length price of the international transaction. In the course of proceedings before him, the Transfer Pricing Officer noted that the assessee has bench marked the international transaction pertaining to investment advisory segment adopting Transactional Net Margin Method (TNMM) as the most appropriate method with operating profit/operating cost (OP/OC) as the profit level indicator (PLI). By applying certain filters, the assessee has selected four companies as comparables with average mean margin of -4.32%. Since, the profi....
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....erchant banking activity cannot be treated as a comparable to a non-binding investment advisory service provider. He submitted, the aforesaid principle has also been laid down by the Hon'ble Jurisdictional High Court in various decisions. He submitted, in case of one of the group companies of the assessee viz. Goldman Sachs Asset Management India Pvt. Ltd., which is for the very same assessment year, the Tribunal has held that this company cannot be a comparable to a non-binding investment advisory service provider. In this context, he drew our attention to the order passed by the Tribunal in ITA no.1427/ Mum./2014, dated 31st August 2018. He also relied upon the following decisions:- i) Temasek Holdings Advisory Services Pvt. Ltd. v/s DCIT, ITA no.477 and 816/Mum./2016, dated 11.08.2017; ii) Temasek Holding Advisory Services Pvt. Ltd. v/s ITO, ITA no.1429/Mum./2017, dated 03.01.2018; and iii) Wells Fargo Real Estate Advisory Pvt. Ltd. v/s DCIT, ITA no.1520/Mum./2016, dated 17th January 2018. 5. Proceeding further, the learned Authorised Representative submitted, Informed Technologies Ltd. was wrongly rejected as a comparable, though, it is functio....
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....n assessee's own case for the assessment year 2011-12, the Tribunal has not included it as a comparable. In support of his contention learned Departmental Representative relied upon the following decisions:- i) Mphasis Ltd. v/s ACIT,, ITA no.14/Bang./2012, dated 19.05.2017; ii) H&S Software Development v/s DCIT, ITA no.6455/ Del./ 2012, dated 18.01.2016; iii) Services India Pvt. Ltd. v/s DCIT, IT(TP)A no.2315/Bang./ 2016, dated 13.04.2017; iv) Vishay Components Pvt. Ltd. v/s ACIT, ITA no.341/Pun./ 2013, dated 31st May 2017; v) XM Software Solution Private Ltd. v/s ACIT, dated 07.02.2018; vi) Cengage Learning India Pvt. Ltd. v/s ITO, ITA no.5926/ Del./2010, dated 11.05.2018; vii) Dialogic Networks India Pvt. Ltd. v/s DCIT, TS-2-ITAT-2017(Mum.)-TP; and viii) Magma Design Automation India Pvt. Ltd. v/s DCIT, ITA no.1279/Bang./2014, dated 28.02.2017. 9. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions cited before us. Insofar as Ladderup Corporate Advisory Pvt. Ltd. is concerned, no doubt, the assessee has objected to selection of this compan....
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....8, has held that the company is a good comparable to an investment advisory service provider. Notably, as brought to our notice by the learned Authorised Representative, the Transfer Pricing Officer himself has accepted this company as a comparable in assessment year 2013-14 and 2014-15. Even, in the other decisions cited by the learned Authorised Representative it has been held that this company is a comparable to a non-binding investment advisory service provider. The decisions relied upon by the learned Departmental Representative appears to be factually distinguishable since in those decisions, this company has been rejected by application of certain filters. However, in case of the present assessee, the Transfer Pricing Officer and the DRP have not rejected this company by applying those filters. In any case of the matter, as per the accepted legal principle, in case of divergent views on a particular issue the view favourable to the assessee has to be taken. In view of the aforesaid, we direct the Assessing Officer to compute the arm's length price of non-binding investment advisory service segment by including Informed Technologies India Ltd. as a comparable. Since, in co....
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....of Rs. 6,35,32,502 to the arm's length price. Though, the assessee objected to the transfer pricing adjustment by raising various grounds before the DRP, however, the DRP granted partial relief to the assessee which resulted in reduction of transfer pricing adjustment to Rs. 5,20,09,149. 14. The learned Authorised Representative submitted, R. Systems Ltd. being functionally similar to the assessee has to be included as a comparable. He submitted, only because this company has a different financial year ending, the Transfer Pricing Officer and the DRP have rejected this company. The learned Authorised Representative submitted, before the Transfer Pricing Officer and the DRP the assessee has furnished quarterly financial results from the audited accounts of this company from which the profit margin of the company for the relevant financial year can easily be ascertained. To demonstrate that the financial result of the company in the relevant previous year can be ascertained from the quarterly figures, learned Authorised Representative drew our attention to the objections raised before the DRP showing the margin of the company for the relevant previous year. Thus, he submitted, it ....
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....as been rightly selected as a comparable. As regards comparability of R. Systems Ltd. is concerned, he heavily relied upon the reasoning of the Transfer Pricing Officer and DRP. The learned Departmental Representative submitted, since the assessee has not challenged the application of specific filters by the Transfer Pricing Officer, it cannot challenge the selection of the comparable. In support, he relied upon the following decisions:- i) Aegis Ltd. v/s DCIT, ITA no.7694/Mum./2014, ITA no. 1209/Mum./2015, dated 08.02.2017; ii) Vishay Components Pvt. Ltd. v/s ACIT, IT(TP)A no.341/ Pun./2013, dated 31.05.2017; iii) XL Health Corporation India Pvt. Ltd. v/s ACIT, IT(TP)A no. 2311/Bang./2016, dated 09.02.2015; iv) DCIT v/s Ocwen Financial Solutions P. Ltd. v/s ITA no.511/ Pn./2016 and C.O. no.01 and 14/Pun./2018, dated 14.05.2018; v) Hopag Lloyd Global Services Pvt. Ltd., IT(TP)A no.8499/ Mum./2010, dated 28.02.2013; and vi) Wills Processing Services India Pvt. Ltd. v/s DCIT, IT(TP)A no.4547/Mum./2012 & ITA no.4429/Mum./2012 dated 01.03.2013. 17. We have considered rival submissions and perused the material on record. It is evi....
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.... the learned Authorised Representative clearly express similar view. As regards the contention of the learned Departmental Representative that the assessee has not challenged the filters applied by the Transfer Pricing Officer, we do not find merit in same since the assessee has raised specific grounds challenging the filters applied by the Transfer Pricing Officer. Though, we have examined the principle laid down in the decision cited by the learned Departmental Representative, however, we prefer to follow the decisions expressing view favourable to the assessee. In course of hearing, it was submitted by the learned Authorised Representative that in case R. System International Ltd. (supra) is included and Excel Infoways Ltd. is excluded, assessee's profit margin would be within the acceptable range of average margin of the rest of the comparables. In view of the aforesaid submission of the learned Authorised Representative we desist ourselves from dealing with the acceptability or otherwise of all other comparables disputed before us and the issue relating to the comparability aspect of the rest of the comparables are left open. Ground no.2, is partly allowed. 18. In ground no....