TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 1506
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....submits that the learned AO erred in passing the order on the following grounds: 1. In making an upward transfer pricing adjustment of Rs. 4,36,18,542 in determining the arm's length pricing (ALP) of the international transaction pertaining to investment advisory/support services provided by the Appellant to its overseas associated Enterprises(AE), inter alia, on following grounds: a) Rejecting the search process adopted and documentation maintained by the Appellant for the international transaction; b) Rejecting the following companies selected as comparables by the Appellant in the transfer pricing documentation: * IDC (India) Limited; * Access India Advisors Limited; * ICRA Management Consulting Services Limited; * Informed Technologies Limited; and * Kinetic Trust Limited. c) Not sharing the search process conducted by the learned transfer pricing officer (TPO) to arrive at the final set of comparable companies: d) Accepting the following additional companies which are functionally not comparable to the investment advisory services provided by the Appellant: * Motilal Oswal Investment Advisors Pvt. Ltd.: * IDFC Investment Advisory Ltd.; and * Kshit....
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.... contemporaneous and multiple year data available for computing the ALP as on the date of filing of return of Income and relying only on the single year data (i.e. for the year ended 31 March 2010) for the purpose of determining the ALP. 3. In making an upward transfer pricing adjustment to the extent of Rs. 4,97,37,603 for the international transact pertaining to broking services to its AE and in re-computing the arm's length price under the Comparable Uncontrolled Price (CUP), inter alia, on following grounds: a) Making an upward adjustment to commission earned from AEs under the CUP method, by considering only top 10 offshore clients as comparables and disregarding commission from other foreign and on shore clients in the absence of any dissimilarity in the nature of functions performed for the securities broking services rendered to onshore and offshore clients in respect of securities traded in cash equity segment on NSE and BSE; b) Not granting the following adjustments to the CUP data: * For significantly higher volume of transactions of the Appellant with the AEs as compared to other clients; * Difference in risks assumed for transactions with AEs versus third....
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....opportunity to argue the appeal in a physical Court. The ld. AR, accordingly was required to address whether he was ready to argue his case on a virtual platform. 4.1. The ld. AR Mr. Madhur Aggarwal submitted that ITA 1115/Mum/2015 is a stay granted appeal wherein on the extension of Stay granted by the ITAT the Revenue had invoked the Writ jurisdiction of the Hon'ble High Court, the assessee consequently is now ready to argue these appeals on a virtual platform itself. Copy of the order dated 13.09.2021 in Writ Petition No. 666 of 2020 was filed. The relevant extract of the decision is extracted hereunder for completeness: "2. Mr. Agarwal states that main Appeal before the Income. Tax Appellate Tribunal had come up for hearing sometime in last week at which time the departmental representative sought adjournment and the next date fixed is sometime in October, 2021. 3. Mr. Suresh Kumar states that if the Court can direct Income Tax Appellate Tribunal to dispose of the Appeal itself on the next date of hearing or at least by 30th November, 2021, this Petition can be disposed of. 4. The stay has been in force for almost three years. The Miscellaneous Application rejecting ....
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.... its Associated Enterprises: 1. International Transactions During the year under consideration, the company has entered into the following international transactions with its Associated Enterprises: 1 Provision of Investment banking services Rs. 149,429,101 (Receipt for services) Rs. 34,450,732 (Payment for services) TNMM 2 Investment advisory and support services in respect of strategic investments into India Rs. 511,629,884 TNMM 3 Securities broking services in respect of securities traded in the cash equity segment on NSE and BSE Rs. 399,170,671 CUP 4 Securities broking and clearing services in respect of contracts entered in the derivatives segment on NSE and BSE Rs. 630,021,886 CUP 5 Provision of Information Technology Enabled Services Rs. 557,141,116 TNMM 6 Reimbursement/recovery of expenses Rs. 1,04,98,35,657 NA 7 Allocation of expenses Rs. 5,90,39,695 NA 7. Pursuant to the reference made to the TPO for computing the arms length price in relation to the international transactions, the TPO made an upward adjustments aggregating to Rs. 20,53,90,931/-. The breakup of the adjustments is as under: 8. The assessee objected to these adjustmen....
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....tions sent and answers received; and denial of opportunity of being heard thereon [Ground No. 1(i)] all these grounds raised may be considered to be vehemently agitated by the assessee and are not being given up. Maintaining the challenge posed in the grounds raised, it was submitted that the assessee would first seek adjudication on the issue of exclusion of Moti Lal Oswal Investment Advisors Pvt. Ltd. challenged on various grounds before the TPO and the DRP also. It was submitted that the assessee is confident on the basis of facts and precedents available in assessee's own case that the assessee has a binding precedent in its favour and hence must succeed in the absence of any contrary view and decision. In the said backdrop it was submitted that once this prayer of the assessee on examining the record and the judicial precedent is allowed, the other grounds in this segment become academic for the assessee in the present proceedings. These issues consequently may be kept open to be considered at some later stage, if need be and in the present proceedings, assessee would not seek any adjudication on these grounds raised. 9.1. In the said backdrop, the ld. AR submitted that t....
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....hs (India) Securities Private Limited v. DCIT, Circe- 7 (1)(1) [ITA No. 927/Mum/2016] 2011-12 4. Goldman Sachs Asset Management India Pvt Ltd. v. DCIT [ITA N . 6989/Mum/2014] 2010-11 5. Goldman Sachs (India) Securities Private Limited v. DCIT, Range 3(1)[ITA No. 222/Mum/2014] 2009-10 6. NVP Venture Capital India Private Limited v. DCIT - 3(2)(2) [ITA No.1564/Mum/2015] 2010-11 7. Bain Capital Advisors (India) Private Limited v. DCIT - 3(3) [ITA N0. 413/Mum/2015] 2010-11 8 3i India Private Limited v. DCIT [ITA No. 581/Mum/2015] 2010-11 9 AGM India Advisors Private Limited [ITA No. 4757/Mum/2015] 2010-11 10 Carlyle India Advisors Private Limited [ITA No. 1040/Mum/2015 2010-11 11 FIL Capital Advisors India Private Limited v. DCIT [ITA No. 7403/Mum/2014] 2010-11 12 AGM India Advisors Private Limited [ITA No. 537/Mum/2016] 2011-12 13 Carlyle India Advisors Private Limited v. DCIT -10(1) [ITA No. 2200/ Mum/2014] 2009-10 14 Carlyle India Advisors Private Limited v. DCIT -10(1), Mumbai [ITA No. 7367/Mum/2012] 2008-09 9.4. The ld. AR carrying the Bench through the TPO's order and the objections of the assessee posed before the DRP and the rejection by....
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....O have no relevance. The specific extract from the Director's Report page 292 of the Paper Book highlighting the activities referred to is reproduced hereunder: "During the year ended 31st March, 2010 the revenue of your company have increased from Rs. 468.47 million to Rs. 655.26 million and the Profit After Tax (PAT) have increased from Rs. 149.38 million to Rs. 216.60 million-an increase of 40% and 45% respectively over the previous year. The company derives its business income from four different business verticals viz Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications and Structured Debt. The income source across the four products was more or less evenly balanced. The company continues to perform well on advising Indian corporate on cross border acquisitions. The Private Equity business over the last three years has skill set and experience within the team is very well appreciated by our clients." (emphasis supplied) 11.1. Referring to the disclosure in Schedule-J of income from operations, (Paper Book page 301 read alongwith page 305) it was submitted that all these activities were shown as "advisory fees'. Attention was also invited to....
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....vidence to establish comparability with the assessee. The specific para is extracted hereunder for completeness: "'8.10 Further, the assessee has also submitted reasons for rejecting the additional comparables mentioned in the notice as under: * Motilal Oswal Investment Advisors Private Limited: The TPO used information collected u/s. 133(6) from the said company. The assessee has furnished its explanation on the proposal of the TPO to reject this comparable, as under: The assessee has contended that the functions performed by the company are not comparable to that of the Assessee since the company is engaged in rendering comprehensive investment banking solutions and transaction expertise covering private placement of equity, debt and convertible instruments covering international & domestic capital markets, mergers & acquisitions advisory and restructuring advisory & implementations. Further, the assessee contended that the companies earning super normal profits should be rejected while arming at the ALP. The company is into private equity advisory services and qualified all the filters applied by the TPO. The assessee objected to its inclusion saying that the sam....
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....rendered advisory services to Citigroup Venture Capital. The compensation of Rs. 53.67 crores has been received from these 10 clients for rendering the advisory services mentioned above. These top 10 clients account for 82.64% (53.67/64.94 crores) of the total advisory fees received by the said company during the year under the proceedings. (c) On going through the Balance Sheet of Motilal Oswal Investment Advisors Pvt. Ltd., it is seen that the company has single reportable operational income segment and it is advisory fees of Rs. 64.94 crores. The other income is a minor component of Rs. 58.14 lacs. Further, on going through the Balance sheet, it is seen that the assessee has investments of Rs. 52.50 lacs only. As per the notes to the accounts, the company has given a capital commitment of Rs. 1.5 crores to Aditya Birla Pvt. Equity and Reliance Alternative Investment Fund out of which the company has contributed only Rs. 30 lacs and Rs. 22.50 lacs respectively. It has received Rs. 31.72 crores of advisory fees (48.84%) in foreign exchange. At no place there is any mention of any investment fund or investment related activity being handled by the company. The related party trans....
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....3. We find that the assessee in the facts of the present case qua the Investment advisory segment has all along opposed the inclusion of the said comparable on the reasoning that it is engaged in merchant banking and acquisition and mergers, thus, cannot be compared to assessee's investment advisory services. Infact, on a reading of the orders of the ITAT right from 2008-09 assessment years and earlier as noted in order dated 22.07.2016 in ITA 6912/Mum/2012 it is seen that the merchant banking companies have all along been considered to be not comparable with activities and functioning of companies engaged in investment advisory services. There is overwhelming legal precedent available on these facts which shows that all along consistently and unanimously the Courts/Tribunal have judicially noticed that FAR of merchant and advisory services is entirely distinguishable. Admittedly a merchant banker by its very nature of functions arranges capital and can become a share holder in the company, the FAR of a Investment advisor is entirely distinguishable. Thus, Moti Lal Oswal Investment Advisors Pvt. Ltd. cannot be taken up as comparable for the assessee vis-à-vis its Investm....
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....pril, 2012 in Carlyle India Advisors (P.) Ltd. (supra) to this Court in appeal. The appeal being (CIT v. Carlyle India Advisors (P.) Ltd. [2013] 32 taxmann.com 23 (Bom.)) -wherein this Court refused to entertain the Revenue's appeal as is reflected in the order dated 22nd February, 2013. Thus, we see no reason to interfere with the impugned order of the Tribunal; (b) In the circumstance, the Tribunal in the impugned order adopted the same comparable it had adopted in the case of Carlyle India Advisors (P.) Ltd. (supra) for the purpose of arriving at the ALP in respect of its International Transaction; (c) Further, Mr. Kotangale, learned Counsel appearing for the Revenue my fairly points out that a similar issue as arising herein, was a subject matter of consideration by this Court in Income (CIT v. General Atlantic (P.) Ltd. [2016] 68 taxmann.com 88 (Bom.). In the above case also the Assessee was engaged in the business of advisory services like the Respondent here and the TPO had relied upon the comparable selected by him in the case of Carlyle India Advisors (P.) Ltd. (supra) to determine the ALP in the case of Assessee therein i.e. General Atlantic (P.) Ltd. (supra). The....
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.... the ground that the said company was carrying on business of mergers and acquisitions and other related activities as well as, as a merchant banker, whereas the assessee was providing Investment Advisory Services. Learned counsel for the revenue however contended that the Transfer Pricing Officer had recorded that during the year under consideration Motilal Oswal had earned income only from Advisory fees and not from any activity of merchant banking. According to him, therefore, the Tribunal committed an error in discarding Motilal Oswal as a comparable. 4. We notice that similar issue had come up for consideration before the Tribunal in case of Carlyle India Advisors (P.) Ltd. Vs. Deputy Commissioner of Income-tax, 10(1), Mumbai. The Tribunal considered the instance of Motilal Oswal and discarded the same relying on the earlier decision in case of the very same assessee in which the Tribunal had inter-alia observed that the profit and loss account appears to be only consolidated account. The company is registered with SEBI as a merchant banker. It was further observed that the said company was engaged in merchant banking. This view has been confirmed by this Court in series of ....
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....ombination have excluded Motilal Oswal Investment Advisors Pvt. Ltd. from the list of final comparables. 12.9. It has been seen that this view on challenge before the Hon'ble High Court has been upheld by their Lordships. The legal precedent on facts namely that merchant banking companies cannot be included as a comparable for investment advisory companies has consistently been followed. It is also seen that this position has been followed by the Co-ordinate Bench in 2011-12 assessment year also in the case of the assessee itself in ITA 927/Mum/16 wherein vide its order dated 11.01.2017 Moti Lal Oswal Investment Advisors India Pvt. Ltd. (MOIAPL) introduced by the TPO as a valid comparable was directed to be excluded by the DRP as it was engaged in merchant banking and hence functionally not comparable to investment advisory services of the assessee. The Co-ordinate Bench considering the decision rendered in the case of AGM (India) Advisors Pvt. Ltd. in ITA 4757/Mum/2015 and others held as under: "...........4.b. In the case of Tamasek(supra) for the AY. 2010-11, the Tribunal has held that MOIAPL cannot be considered a valid comparable, as far as investment advisory services ....
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....(supra), it has been held that, the merchant banking functions are entirely different from investment advisory services and this decision of the Tribunal has been upheld by the Hon'ble Bombay High Court. Thus, in view of plethora of judicial decisions as referred to by Ld. Counsel and in view of functional differences as discussed as above, we hold that Motilal Oswal cannot be put into the comparability list and is directed to be excluded." In the case of Wells Fargo Real Estate Advisors Pvt. Ltd.(supra) similar view was taken as under: "6. We have heard the rival submissions and perused the material before us. We find that on 07.12.2012 the assessee had submitted its profile and analysis of the functions performed, assets utilised and risks assumed. As per the FAR the assessee would identify opportunity for parent company to participate in equity security particularly relating to commercially physical projects in the real estate sector, that it was sharing business intelligence, market research, compliance of regional regulatory requirement so as to assist its AE, that it would not conclude any contract on behalf of the AE nor was it facilitating external commercial borrow....
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....Ltd., has operating profit at 21.79% whereas OPM of Motilal Oswal Investment Advisors Pvt. Ltd. is 72.33%. The comparables used by the TPO themselves are showing extreme OPM.A perusal of the Directors report of Motilal Oswal Investment Advisors Pvt. Ltd. shows that during the year under consideration, the said company has completed 23 assignments successfully as against 14 completed in the immediately preceding year. A close look at the financial statements of the said company show that the income from operations have been shown only as advisory fees whereas it is admittedly an undisputed facts that the said company is engaged in diversified activities. Segmental reporting is not available. Profit and loss account appears to be only of consolidated accounts. The said company is registered with SEBI as a merchant banker and the Directors report show that it is into takeover, acquisitions, disinvestments etc. In the absence of specific data it is not possible to make comparison. It can therefore, be safely said that the said company being into merchant banking and cannot be considered as a comparable. We, accordingly, direct the AO not to consider Motilal Oswal Investment Advisors Pv....
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....ereas the activities of the assessee are confined to rendering non-binding investment advisory for its Associated Enterprises. No doubt, both the concerns may be in the business of rendering advisory services, so, however, it would also be necessary to evaluate the manner and the specific sectors, in which such services are being rendered by the two concerns. It is revealed from the Annual Financial Statement of Motilal Oswal Investment Advisors Private limited that the said concern is engaged in rendering services in diversified fields, viz. Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications and Structured Debt, etc. In the case of Carlyle India Advisors Private Limited(supra) for A.Y. 2008-09, the Tribunal concluded that though the said concern was declaring a solitary stream of operating income under the head 'advisory fee', but undisputedly it was engaged in diversified fields and the financial results for each segment were not available. The Tribunal also found that the said concern was registered with SEBI as a Merchant Banker, and that it was carrying on merchant banking activities. In our considered opinion, the afore-said features with resp....
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....he comparable, hence, the decisions of the Hon'ble High Court and the ITAT in assessee's own case do not constitute a valid binding legal precedent. On examining the same, we hold that this argument is clearly misconceived and devoid of merit. It is not disputed by the Revenue that the queries raised and the answers received u/s. 133(6) has not been fully shared with the assessee. The assessee has repeated this objection before the DRP and has also raised a specific ground in the present appeal. The selective reliance on selectively shared information, we are of the view cannot be given any judicial recognition or precedence over and above the information available in the public domain. We are of the view that allowing the use of such selective information would result in opening the flood gates to the use and abuse of powers which have been vested in the authorities. The mischief so carried out in this garb of statutory powers vested cannot be tolerated. If any information is sought to be used to the detriment of a party by a Quasi judicial authority, then it is expected to be used fairly. In order to use the information adversely it must necessarily be fully shared with t....
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....assessee wherein apart from challenges posed to the order passed on the grounds of incorrect application of filters; selection of companies with super normal profits not allowing risk adjustments and adjustment to working capital; rejecting use of contemporaneous multiple year data etc. the challenge is also posed on the action of the TPO upheld by the DRP in excluding valid comparables suggested by the assessee and inclusion of companies which were functionally not comparable. INCLUSION OF R SYSTEMS LTD. AND CG VAK SOFTWARE AND EXPORTS LTD. 14. The ld. AR submitted that the TPO has rejected R Systems on the ground that it had a different year ending. The rejection of this comparable in view of this fact was sustained by the DRP. 14.1. The assessee before the ITAT has argued that functionally the said comparable is a good comparable and this fact is evidenced by the past history of the assessee itself wherein the TPO itself in 2009-10 assessment year i.e. in the immediately preceding assessment year has accepted the said comparable as a good comparable. It has also been argued that the ITAT in assessee's own case in 2011-12 and 2012-13 assessment years has overruled identica....
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....ken us through the relevant pages in the Paper Book which have been the basis of submissions extracted in page 25 and 26 of the DRP's order. On considering the same, we find that the said comparable in the light of the judicial precedent cited before the DRP and argued before us, the said comparable does not have consecutive losses in the BPO segment for three years in a row. Hence, considering the facts of the BPO segment, which is the comparable segment, we direct the inclusion of the said comparable. We have seen that these facts are not disputed by the Revenue. We have also seen that no specific economic circumstance is pleaded or brought on record by the Revenue to justify its exclusion. In the absence of operation of any unique economic circumstance being of the view that fluctuations in loss and gains are normal business cycles of an entity. Thus, merely because losses have been noticed in some year by itself is not a specific ground to seek its exclusion where TNMM is the most appropriate method accepted by the parties to determine the arm's length price of the transaction. Considering the precedent and the facts, the comparable in the segment relevant is not a pers....
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....ued before the TPO which have been taken into consideration by him we find in peculiar facts of the present case require no repetition. The comparable is directed to be excluded. 24. Referring to the reasons for the exclusion of the remaining two comparables, it is seen that the following reasoning has been advanced by the DRP at page 41 & 42 for justifying their inclusion: "4.2.5 The assessee also objected to inclusion of two comparable which are discussed as under:- 1. Acropetal Technologies Limited : It is the objection of the assessee that this company provides services in the following segment: 1. Enterprise Development 2. Software Development 3. Project Development The annual report show that the company is into following segments viz Engineering Design Services, Information Technology Services and health care. This company is functionally comparable to the assessee. 2. EClerx Services Limited (eclerx): It is the objection of the assessee that this company is providing KPO Services and hence it is not a comparable. We are of the view that the ITES segments covers whole range of services such as call centre operations, data processing, customer service support, ....
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....design services are being performed by Acropetals Technologies, we have no hesitation in directing its inclusion. The company is functionally not similar and the judicial precedent available fully supports this view. We further support our conclusion placing reliance on the case of Rampgreen Sales Pvt. Ltd. Vs CIT (2015) 377 ITR 533 (Delhi) wherein the Hon'ble High Court examined similar claim of a wide spectrum of ITeS companies and went on to deliberate on the various sub-classifications in this segment in para 31 of the order. Accordingly, considering the facts, we direct the exclusion of Acropetals Technologies Ltd. 30. Addressing the inclusion of Eclerx Services Ltd. challenged by the assessee which we find has also been claimed to be functionally different by the assessee, the objections placed before the DRP extracted at pages 32 to 38 namely that the company is functionally different, have been seen. The arguments on risk adjustments sought on account of difference in FAR, we find remain unrebutted and the inclusion of the said comparable has also been directed by the DRP on the reasoning that proper opportunity was provided by the TPO. Again observing that providing o....
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....n has been discussed by the DRP at pages 18 to 23 in para 3 to 3.2. In the year under consideration, the assessee provided trade execution and clearing services on NSE and BSE for equity market both to its AE and third party clients. Upward adjustment was made by the TPO by considering only off-shore clients and that too only top 10 FII clients as comparables. The commission from on-shore clients was considered to be dissimilar on the grounds of distinctions on account of dissimilarity in the nature of functions performed and risks assumed. The said action has been opposed by the assessee before the TPO as well as the DRP. Since the DRP confirmed the view of the TPO, the assessee is in appeal before the ITAT. 33. The ld. AR objects to the Approach/Methodology of selecting only top ten FIIs and not the entire pool of FIIs stating that there is no rationale given in the year under consideration to deviate from the accepted practice followed in the earlier years and also subsequent assessment year. It was submitted that for the deviation in the year under consideration, no justification for picking up of only top ten FIIs has been given. Maintaining its objections on all the points a....
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....lncome-tax-4, Pune v. Vishay Components India (P.) Ltd. (IT Appeal No. 1643 of 2016) (High Court of Bombay) * Principal Commissioner of lncome-tax-8 v Quest Investment Advisors (P.) Ltd. (IT Appeal No. 280 of 2016) (High Court of Bombay) 33.2. It was further submitted that even on facts, there is no justification for considering only top ten off-shore clients as comparables and disregarding the commission from other foreign and on-shore clients in the absence of any functional dissimilarity. Attention was invited to para 9.4 of the TPO's order wherein it has been held that there is no co-relation between the brokerage rates charged and the volume of business given by the client. Thus, it was submitted that there was no valid rationale to pick up only top ten FIIs. 33.3. It has also been argued that there is no justification on record for rejection of domestic clients. The DRP has upheld the TPO's orders which has no justification on the reasoning that the assessee is exposed to foreign exchange risk which fact is absent in domestic client, hence commission from domestic client should not be considered. The ld. AR submitted that the said argument is hollow and incorrect ....
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....39;s AE which are Flls. Therefore, the TPO has issued a show cause as to why only the Fll clients cannot be considered as comparable. He had considered only top 10 Fll clients of the assessee as the pricing considerations for domestic client are different from pricing consideration for the Fll. In para 9.2 the TPO has brought out the total turnover of top 10 Fll as 9497.74 crores on which brokerage of 21.84 cores was earned by the assessee. The request of the assessee with regard to volume and credit risk adjustment has been considered and since there is no co- relation between the brokerage rate charged and the volume of the business given by the client he did not accept the adjustment for volume. From the submissions he ascertained that the assessee was taking margin money from both the 3rd party client as well as the related parties. Since margin money is taken from all the clients including the AEs he concluded there is no need to grant any adjustment for credit risk also. 3.2.1 In the TPSR the average rate of commission charged by the assessee to it's AE was 20.47 bps and the average commission rate charged for third party was 20bps. Since the rate charged for the AEs ar....
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....r under consideration. While coming to the above conclusion, we have seen that there is no rationale given to deviate from the method accepted all along. We have also seen that this argument also has not been rebutted by the Revenue. The justifications given for picking up the top 10 FIIs in the facts, we have seen, are devoid of merit. The other issues argued accordingly do not need to be addressed at this stage as the issue has been decided on the principle of consistency itself. 36. Addressing the issues raised in ground No. 4, the ld. AR relies on past legal precedent so as to argue that it is not an infraction of law hence, the expense have incorrectly been disallowed by the Department. 37. The ld. DR submits that no doubt the addition has been deleted by the ITAT in the earlier years however, maintaining the stand that these are payments for violations hence, the addition, it was his prayer may be sustained. 38. We have heard the submissions and seen the record. It is seen that the facts are discussed in para 6 to 6.6 at pages 11 to 17 by the AO in the draft assessment order wherein for payment of Rs. 10,21,507/- to the Stock Exchange as fine for non compliance of clearing....
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....07 issued by NSCCL in pursuance to the Bye-Laws and Regulations of NSE and circular No. NSE/CL/C&S/242 dated 27.03.2003. Specific point No. 8.9 of NSCC circulars NSCC/CMP/248 dated 09.06.2007 alongwith their copies attached as Annexures relied before the DRP have been seen. Accordingly, we hold that the DRP was incorrect in sustaining the addition in para 6.2 of their order relying on the past history. 38.1. We have seen that the ITAT has had an occasion to examine this issue in assessee's own case in the earlier years and the addition has been deleted. The DRP has categorically held while denying relief that there is no change in fact and circumstance. Nor has the ld. DR made any submission to show that there is a change in facts in the year under consideration. No contrary view on behalf of the Revenue to justify overlooking the legal precedent in assessee's case has been cited considering the settled legal position on this issue in assessee's own case itself. Accordingly, We are of the view that the ground raised has to be allowed. 38.2. We are further fortified by the decision of the jurisdictional High Court in assessee's case itself in ITA 30 of 2017 dated 1....
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....that similar grounds have been allowed to be raised as additional grounds by the Co-ordinate Bench relying upon the decision of the jurisdictional High Court in the case of Sesa Goa Limited v ACIT [(ITA No. 17 of 2013) Bombay HC] Relying upon the decision of the Apex Court in the case of National Thermal Power Co. Ltd. vs CIT [1991] 229ITR 383 (SC), Jai Parabolic Springs v. CIT [2008] 306 ITR 42 (Delhi High Court) and Indian Express (Madurai) (P.) Ltd. v. CIT [1983] 13 Taxman 441 (Madras High Court), it was his prayer that following ground No. 6 raised vide application dated 10th December 2020 may be admitted as it does not require any investigation of new facts and is purely legal. The ground reads as under: "6. Based on the facts and circumstances of the case and in law, the Assessing Officer be directed to allow the deduction in respect of education cess paid on income-tax amounting to Rs. 7,124,404 for the year under consideration. Without prejudice to the above, upon adjudication, where your Honours decide the aforesaid Ground No. 6 in favor of the appellant and any other grounds against the appellant, then the Appellant humbly request your Honours to allow the deduction o....
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....e carried out by the TPO in para 8.1 and 8.2 was highlighted. Addressing Integrated Capital Services it was submitted, that when compared with the functions of the assessee, it was submitted that the two companies were not comparable. Considering the average salary paid to the employees of the assessee which was stated to be Rs. 77 lacs it was argued that it was evident that a higher level of intellect was required in the case of the assessee hence, the assessee is not comparable with Integrated Capital Services. It was submitted that the TPO had adopted certain filters including the filter of low turnover. The ld. DR agreed that in the show cause notice, the TPO has observed at page 8 of his order that the "company is functionally comparable. Thus the company is accepted as a comparable". However, in the final analysis, this comparable has not been accepted. The finding of the DRP at page 17 of the order that this comparable is to be included, it was argued, is without any justification. Once the comparable, it was argued, does not satisfy the requirements of the filters adopted, the said comparable has to be excluded, moreover, it was argued even otherwise it was not functionally....
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.... under: Vide submissions dated 29 October 2013, the assessee submitted the salary range of the above employees as under: Title Min. CTC (INR) Max. CTC (INR) Associate 38,00,000 54,00,000 VP 67,00,000 97,56,000 MD 74,00,000 2,25,00,000 8.4 Before proceeding to analyse the comparables, it would be worthwhile to examine the employee profile of the assessee company. These details have been submitted by the assessee vide its submission dated 14 October 2013. Here the assessee has submitted the list of employees involved in providing investment advisory services to its AE. A total of 9 employees have been paid a salary at an average of Rs. 77 lacs per employee. Even a cursory look at these average salaries show that the assessee has deployed very highly qualified employees in its operation of providing investment advisory services. The brief regarding these qualifications is reproduced above. 8.5 On going through the educational qualifications of these employees and their extremely high pay packages, one gets an idea of the skill sets that these employees bring to the table. These highly qualified employees of the assessee have obviously performed highly skillful set o....
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....hereafter suitable and appropriate filters are selected and applied. The comparables thus thrown up on the application of the selected filters are thereafter analysed keeping the FAR of the tested party in focus. Thus, admittedly the filters have to be applied before establishing functionality of the comparables. The final selection from this group is made on the basis of FAR of these comparable companies. The criteria to select, reject is based on the comparison of their FAR analysis with the tested party. In the facts of the present case, the TPO after applying the filters presumably carried out a FAR analysis and has held that the said comparable is functionally a valid comparable. The occasion to then again apply filter after establishing functionality, we find has not been addressed by the Revenue. We fail to understand why the need to apply it afterwards arose. Once companies are thrown up applying filters, the TPO carries out a FAR analysis of those companies only after that. Having so done, he held that it is a valid comparable. Thereafter, no justification whatsoever is given on record to exclude the said comparable. In the absence of any discussion on this issue, the asse....
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.... assessment order. He has noticed from note 2(vii) of Schedule 14 to final accounts that employee costs include the cost of restrictive stock unit (RSU) and stock option plan under the Goldman Sachs Groups Inc. The assessee was directed to furnish RSU/Option agreement vide order sheet noting of the AO dated 17.02.2014. Expenditure along with exchange difference on the same was charged to the P & L account. The AOs in the earlier year i.e. A.Y. 2008-09 and 2009-10 had disallowed the expenditure and it was also confirmed by the DRP in both the years. Therefore, the show cause was issued to disallow the expenditure charged during the current assessment year. The AO was of the view that the employees will be issued shares free of cost without the employees actually exercising the same and therefore the cost pertaining to RSU should not be regarded as contingent/notional and should be allowed as deduction in the year of vesting u/s. 37(1) of the Act. The AO had referred to the decision of ITAT in the case of Ranbaxy Laboratories Ltd. On an identical issue the DRP has confirmed the action of the AO in A.Y. 2008-09 and 2009-10 and since there is no change in the facts in the current year ....