TaxTMI 
TaxTMI 
2025 (12) TMI 1720
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....ions of arm's length price of the international transaction with its associated enterprises. 2. The appellant craves, leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of appeal." 4. The facts as noted are that the assessee/respondent was providing investment advisory services to its Associated Enterprises (AE) Trikona Advisors Mauritius Limited (Trikona, in short). Funds Manager as per Consultancy Agreement dated 01.04.2008 entered between the assessee and Trikona. The assessee was engaged to provide investment advisory services to Trikona as single client and accordingly 100% of its revenue of Rs. 13,43,38,418/- was derived from the export of services and there was no domestic revenue. 5. During the Financial Year 2009-2010, assessess provided investment advisory services to its AE in the nature of investment recommendations primarily in real estate sector in India, which were not binding in nature and served as back office for its AE. From the note on function/activities undertaken by the assessee, the assessee acts as a back office of Trikona, with certain specific manpower, skill....
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.... The Ld. DR relied upon the findings of the TPO. (ii) Brescon Corporate Advisors Global Services Ltd.: Since this company is not undertaking any fund based activities earning income for it, hence, it is a correct comparable as it is providing intermediation and advisory services of Debt Resolution and Recapitalization, Debt syndication and Other Corporate Financial Services which are in the nature of financial advisory services. Hence, it is a correct comparable. The TPO further observed that a temporary dip in revenue in one year does not matter, in fact revenue had increased in FY 2008-09 and its revenue had dipped only marginally in FY 2009-10. Thus, the Ld. DR submitted that this comparable be retained. (iii) Karvy Investors Services Ltd.: The Ld. DR submitted that this comparable is already rejected by the TPO. (iv) Kshitij Investment Advisory Co. Ltd.: The Ld. DR submitted that realignment of this comparable is only in respect of one customer and that too has effect for 3 moths only which is 25% of the period. Hence, it will not have substantial impact. The TPO has taken corrected margin of 79.60 to chose it in final list of comparables. (v....
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....ted to apply such proposition/ filter in this case. As held by Mumbai ITAT in the case of Temasek Hording Advisors India P Ltd. vs. Dy. CIT, Ajcon Global Services Ltd. is not comparable to the Appellant (carrying investment advisory services) since such Company's major activities is in field other than financial advisory services. Moreover, segmental information regarding fund and non-fund based financial activities of this Co. are not available from its financial statements and hence on this basis, it cannot be considered a comparable Company. As about 50% of this Company's income was earned from stock market and DP operations as well as profit from securities trading activities, accordingly consultancy provided by this company does not meet the service revenue filter of 75% as adopted by TPO. Percentage of export income of this company is nil out of total turnover whereas income of tested party is 100% from exports. Accordingly this company is to be excluded on the basis of 75% export turnover filter. Accordingly, as per Rule 10(B)(2) of I.T. Rules, this company is to be excluded from the list of comparable companies. (2) Brecon Corporate Advisors Ltd....
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....ervices/activities. Hence, this merchant banking services Co. cannot be compared with the tested party which is providing investment advisory services as held by ITAT Mumbai in Acumen Fund Advisory Services India (P) Ltd. vs. Dy. CIT. As income from consultancy services was Rs. 2,09,65,732/- (i.e. about 30.57% of this company's total income of Rs.6,85,75,179/-which included other activities, accordingly consultancy provided by this company does not meet the service revenue filter of 75% as adopted by the TPO. Percentage of export income of this company is nil out of total turnover whereas income of tested party is 100% from exports. Accordingly this company is to be excluded on the basis of 75% export turnover test. The TPO concluded that this company does not meet the services revenue filter and hence is not comparable with the tested party. However, it appears that while computing ALP, the TPO has inadvertently included this company as one of the comparable companies with the tested party. Accordingly, as per Rule 10(B)(2) of I.T. Rules, this company is to be excluded from the list of comparable companies. (4) Kshitij Investment Advisory Co. Ltd. : The Compa....
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....pany is more than 17 times of capital employed of tested party. This company fails the functional test since it is deriving its income from NBFC activities including from trading in shares/derivative transactions, whereas the tested party is not an NBFC and accordingly is not permitted to nor it carries out or has any income from operations/activities that are carried out by NBFC. This Co. carries on fund based activities also and the therefore its earning is not on account of its personnel only but also on account of its capital and hence is not comparable with the tested party. This proposition/filter has been used by the TPO for rejecting Karvy Investors Services Ltd as a comparable Company but omitted to apply such proposition/filter in this case. Moreover segmental information regarding fund and non-fund based financial activities of this Co. are not available from its financial statements and hence on this basis, it cannot be considered a comparable Company. Percentage of export income of this company is nil out of total turnover whereas income of tested party is 100% from exports. Accordingly this company is to be excluded on the basis of 75% export turnover test/fi....