TaxTMI 
TaxTMI 
2025 (7) TMI 1035
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....2018 at an income of Rs. 100,72,58,850/. Thereafter, pursuant to APA entered into with CBDT, the Appellant filed modified return of income on 29. 05.2019 declaring total income at Rs. 124,34,58,390/-. The case of the assessee was selected for complete scrutiny. Since, the assessee has entered into international transactions, therefore, the reference was made to the TPO to compute the Arm's Length Price u/s 92CA of the Act in respect of the international transaction carried out. The TPO vide its order passed u/s 92CA(3) dated Nil proposed an upward adjustment of Rs. 1,53,73,858/- to the value of the International Transaction entered into by the assessee. Thereafter, the AO has passed a draft assessment order u/s 144C of the Act wherein the AO has proposed the additions towards the adjustments done by TPO in international transaction at Rs. 1,53,73,858/- and further proposed disallowance on delayed payment of employees contribution of PF and ESI of Rs. 50,484/-. 3. Aggrieved by the draft assessment order, the assessee filed objections before the ld. DRP, who though confirmed the action of the TPO, however direct the TPO to verify the contention raised by the assessee and adopt cor....
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....ding functionally similar companies selected by the Appellant on arbitrary/ frivolous grounds, even though they are comparable to the Appellant in terms of the functions performed, assets employed and risks assumed. 2.8. rejecting additional companies proposed/ identified by the Appellant even though they are comparable to the Appellant in terms of functions performed, assets employed and risks assumed, 2.9. denying the benefit of working capital adjustment to the Appellant by not computing the margins of the comparables in a consistent manner; 2.10 denying the benefit of risk adjustment to the Appellant by disregarding the difference in risks assumed by the Appellant vis-à-vis comparable companies proposed by the Ld. TPO, and 2.11 Without prejudice to the above contentions raised by the Appellant, the Ld. TPO has failed to give effect to the directions issued by the Hon'ble DRP to verify the operating margins of the comparables and re-compute the adjustment. Corporate Tax Grounds 3. On the facts and circumstances of the case and in law, the Ld. AO/Ld. DRP erred in disallowing a sum of INR 50,484 pertaining to employe....
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....n the assessee has challenged the action of the AO/TPO enhancing the income of assessee by Rs. 1,53,73,858/- towards international transactions related to provisions of Research Development Services. 7. Before us, the Ld. AR of the assessee submitted that the assessee has selected TNMM as most appropriate method and by using gross profit/total costs as PLI, computed the ALP where the tested parties margin was 20% and on the basis of 9 comparable companies, the adjusted average rate comes 11.46% to 15.68% with the median of 15.49%. Since the median margin comes to 15.49% of the comparables and assessee's margin was 20%, therefore, no adjustment was made by the assessee on such transactions. The assessee selected 9 comparable companies which are as under: S. No. Name of the Company Data Source Average OP/TC Working Capital Adjusted OP/TC 1 IIML Asset Advisors Ltd. P 29.23% 27.03% 2 HDFC Property Ventures Ltd. -Advisory segment P-Seg 54.42% 55.50% 3 Acuitas Capital Advisors Pvt. Ltd. SEBI 1.23% 0.91% 4 IDG Ventures India Advisors Private Ltd. SEBI 15.50% 15.68% 5 India Life Capital Private Ltd. SEBI....
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....ted, the Ld. AR submitted that the companies is functional dissimilar as it is engaged in the distribution of financial products vis-à-vis provisions of research support services and Revenue from distribution of Mutual Funds; therefore, the companies could not be included as comparable. The Ld. AR further submits that the assessee has also proposed new comparable companies namely SG Analytics Private Ltd ('SG Analytics') which is accepted by the ld. DRP in assessee's own case as fit comparable in the order passed for Assessment Year 2018-19, and also passes all the quantitative filters of the TPO for year under appeal however, the same has not been taken into consideration. The Ld. AR further submits that the other two comparable companies as proposed by assessee namely Axience Consulting Private Limited ('Anxience') and Cyber Media Research and Service Limited ('Cyber Media') have also passed all the filters applied by assessee as well as modified filters applied by TPO and, therefore, these should be included in the final set of comparables. The ld. AR further submitted that the AO included additional compare companies proposed and identified by him for which the argument ....
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..../TPO is further directed to exclude M/s Angel Financial Advisors Private Limited from the final set of comparable as it is functionally dissimilar and re-worked out the comparable analysis of the companies suggested by the assessee as tabulated herein above. The AO/TPO is also directed to take the correct margins and applied the same accordingly. With these directions, the grounds of appeal No.2 to 2.11 of the assessee are partly allowed for statistical purposes. 15. Ground of Appeal No.4 is with regard to the levy of interest u/s 234B and 234C. In this regard, the assessee submitted that it is entered into Advance Pricing Agreement (APA) with CBDT which has resulted into enhanced income and thus additional tax was payable for the purpose of filing the modified return of income. While filing the modified return of income, the utility provided by the Govt. e-filing portal was taken wherein as per the utility provided interest u/s 234B and 234C is charged on modified income. The Ld. AR submitted that in terms of APA entered by the appellant with CBDT, it does not specify the payment of any interest u/s 234B and 234C on the additional tax liability as a result of enhanced margin, h....
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.... income filed on 26.10.2018 at Rs. 1,00,72,58,850/-. As per section 209 of the Act the advance tax has to be computed on the income estimated and since the assessee has already paid advance tax on its income which was declared return regular return filed u/s 139 of the Act (original as well as revised). The additional tax liability on additional income computed because of enhanced margins as per APA entered with CBDT could not be foreseen when the estimation of income was made for the purpose of advance tax. Since, it is not possible for the assessee to file modify the return through e-filing portal unless the additional amount of interest u/s 234B and 234C was paid which was computed in accordance with utility provided by the official website of the Department, therefore, assessee was left with no alternate but to deposit the interest u/s 234CB and 234C so computed. Therefore, the claim of the assessee for refund of such excess payment of interest/s 234B and 234C of the Act is a genuine claim. The Co-ordinate Bench of the Tribunal in case of Colte Technology Services India Pvt. Ltd. (supra) has also of the view that any additional income on account of APA between assessee and CBDT....
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....ry interest mandatory. It is for this purpose that the court proceeded to decide that even the Settlement Commission which was vested with the vast power had no power to waive the interest payable under these provisions. Going by this interpretation of sections 234A, 234B and 234C as given by the Constitution Bench of the Supreme Court, it is clear that the interest is payable in case the advance tax is not paid in consonance with the law in force at the time when the advance tax is paid and there is a default. Therefore, for charging interest under section 234B, committing of default in payment of advance tax is condition precedent. Perusal of the judgment of the Delhi High Court, which is relied on by the learned counsel appearing for the respondent, shows that in that case also the Delhi High Court has held that for charging of interest establishment of default in payment of advance tax is necessary. In the present case, it is nobody's case that the appellant at the time of payment of advance tax has committed any default or that payment of advance tax made by the appellant was not in consonance with law. The Division Bench of this court in its judgment in the case of the ap....
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....e modified return filed based on the APA with CBDT. With these directions, the Grounds of appeal No.4to 4.1 of the assessee are allowed. 19. Ground No.5 is with regard to the non-granting of due credits of prepaid taxes. The AO is directed to allow the credit of all prepaid taxes after making necessary verification. 20. Ground No.6 is with respect to initiation penalty proceedings u/s 270A which is pre-matured at this stage and, thus, dismissed. 21. In the result, the appeal of the assessee is partly allowed. Order pronounced on 25.06.2025. ============= Document 1 S. No. Company Appellant's comments 1. SG Analytics Private Limited ('SG Analytics") 1) The Hon'ble DRP has accepted the Company as comparable for AY 2018-19, The relevant extract of the DRP directions is as follows: (CC. Pg. 257) SG Analytics Pass all the quantitative filters This comparable la involved in market Private Limited of the assessce and the Ld. research, investment research, data TPO management, data analytics, robotic Functionally comparable- process automation. The DRP observes The company is engaged in that a part of the functions performed provision of Investment by this company is broad....
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.... analysis for advisory Comparable Under TNMM broad functional comparability is mailicient which thie comparable satisfies. However, the AO/TPO is directed to re-verity if this comparable paises other filters as contended by the husetsne_med_pass.a. speking order. 2) Passes all the quantitative filters of the Appellant and the modified/additional filters of Ld. TPO (on a without prejudice basis) for AY 2017-18 (P.B. 831). 3) Functionally comparable to the Appellant selected by the Appellant in the L S. No Company TPO's Comments Appellant's comments while fundamental analysis involves long term view with in-depth analysis of few select assets. With this background, it would be correct to suggest that technical analysis is less in the nature of investment and more in the nature of trading. . The I.d. TPO has stated that Money Makers undertakes'technical analysis' whereas the Appellant undertakes 'fundamental analysis' and that both these are fundamentaly different and hence cannot be compared. (Appeal Set Pg. No. 165) . It is hereby stated that both technical and fundamental analysis are part and parcel of the broad investment advisory function. What is important to note....