TaxTMI 
TaxTMI 
2022 (12) TMI 833
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ld. CIT(A) was right in rejecting the list of comparable companies selected by the TPO and granting relief to the assessee. 2. Whether on the facts and in the circumstance of the case and in law, the Ld.CIT(A) was right in rejecting the list of comparable companies by the TPO without adjudicating on the finding of the TPO that main business of the assessee company is not merely investment banking but knowledge process Outsourcing Services (KPO Services). 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in reducing list of 8 comparable companies selected by the assessee itself in its TP Study report only on the basis of difference in functionality. 4. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 5. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 3. Both the assessee and the revenue filed cross appeal against the order of the Ld. CIT(A). Here, we are passing a common order by considering both the appeals for the assessment year 2008-09. 4. In brief we advert the fact of the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ynote Corporate Services Ltd. The revenue filed an appeal before the ITAT on the grounds that the Ld. CIT(A)erred by rejecting the comparison of the assessee to KPO companies selected by the TPO. On the other hand, the assessee filed an appeal on ground that the Ld. CIT(A) erred by rejecting the assessee's prayer to exclude two companies i.e.Khandwala Securities Ltd. and Keynote Corporate Services Ltd from the list and not including KJMC Global Market (India) Limited and Kinetic Trust Limited in the final list. Second ground which was selected by the assessee as comparable in its TP study. Incorrectly including two companies Khandwala Securities Ltd. and Keynote Corporate Services Ltd. by the Ld. CIT(A) without considering the activities of the company. Both the revenue and assessee filed an appeal before the ITAT for further adjudication. 5. The learned counsel of the assessee vehemently argued that the ld. TPO in his order determined the function of investment Banking Support service specific to AE as captive unit would fall under a KPO services with the Broad Category of BPO. The ld Counsel mentioned the nature of business is the point of contradiction with TPO in between KPO....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Department are fully covered in favour of assesseeby the Apax Partners India Advisers Pvt. Ltd. v/s. DCIT (AY 2008-09) [86 taxmann.com 169 (Mum.)] - (Pg 3 of the legal paperbook). The relevant paragraph is extracted as follows: - "7. The learned AO/TPO under the directions of the Hon'ble DRP erred on facts and in law in not allowing appropriate adjustments namely; risk adjustment to the comparables as is required to be done in accordance with the provisions of Rule 10B(1)(e)(iii) of the Income-tax Rules, 1962 to account for difference between the risk profile of the Appellant and the alleged comparable selected by the learned AO/TPO." It was also pointed out that the view expressed in the aforesaid decision is the consistent view of the Hon'ble Tribunal by relying on the following other decisions: 1. Apax Partners India Advisers Pvt. Ltd. v/s. DCIT (AY 2009-10) [98 taxmann.com 500 (Mum.)] 2. Cariyle India Advisors Pvt. Ltd. v/s. DCIT (AY 2014-15) [118 taxmann.com 135 (Mum.)] 3. Cariyle India Advisors Pvt. Ltd. v/s. DCIT (AY 2015- 16) [ITA no 7515/Mum/2019 and SA No 28/Mum/020] 6. In Ground no-3, during the hearing the only....
X X X X Extracts X X X X
X X X X Extracts X X X X
....consider a blend of comparable companies that are involved in provision of investment banking and advisory activities, since it is not possible to identify comparable companies engaged in exactly the same functions as undertaken by the assessee.The assessee had selected Investment Banking companies in addition to those companies engaged in the field of providing advisory services. The assessee placed reliance on the ruling of JP Morgan India Pvt Ltd v/s ACIT (ITA no 1502/Mum/2014) for AY 2009-10, wherein the Tribunal recognised in identical circumstances, that since it was not possible to identify any other company which carries on exactly same nature of activities as that of the assessee.There is no other option but to include Investment Banking companies in the comparable set. Ld Counselsubmitted that where only companies engaged in advisory services are considered from the list of comparables selected by the assessee.The same can be identified from the comparable already selected by the assessee, and upheld by the CIT(A), without requiring a remand of the matter. The same are provided below: Name of the Company Nature of Activity Margin Access India Advisors Ltd ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(i.e. 1st of the 3 years to be taken into consideration) it cannot be regarded as a persistent loss making company and therefore cannot be excluded. 7.3. We heard the rival submission & considered the documents available in records. The persistence loss- making company are normally excluded as comparable. As per the submission of assessee both the companies are made profit in relevant years. Ld. DR did not strongly object on the plea of assessee. No objection was made by the ld DR in factual position. So, these companies should not be excluded on the ground of loss-making company. It is to be directed to the ld. TPO that KJMC Global Market (India) Limited and Kinetic Trust Limited be included in the set of comparable. Accordingly, the Ground no-1 of the assessee is allowed. 7.4. Ground 2 of the Assessee: Erroneous acceptance of KhandwalaSecurities Ltd and Keynote Corporate Services Ltd. The ld Counsel further argued that the ld. CIT(A) had erred in rejecting the plea of the assessee to exclude Khandwala Securities Ltd, on the basis that it is functionally comparable to the Assessee. 7.4.1.The ld. Counsel further stated that Khandwala Securities Ltd. is not a comparable ....