TaxTMI 
TaxTMI 
2026 (6) TMI 672
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....ed in the business of providing Mergers & Acquisitions ('M & A' for short) advisory service to clients globally on cross-border M&A, capital raising and financial restructuring. It is further stated, the assessee offers independent merger and acquisition advisory business to sell-side clients. The aforesaid business model basically comprises of origination and execution in terms of functionality. It is stated, the origination and execution functions are integrated and depended upon one other for successful outcome and without the involvement of either of the functions, the deal cannot be consummated successfully, hence, would not generate revenue for the assessee. It was submitted, once the deal fructifies, the receipts are shared in the following manner: Sr. No. Functional Weightage 1 Origination of mandate 50% 2 Execution of deal 50% 4. During the financial year relevant to the assessment year in dispute, the assessee had reported total revenue of Rs. 5397.71 lacs and expenditure of Rs. 4123.21 lacs, thereby declaring profit of Rs. 1274.49 lacs. 5. For the assessment year under dispute, the assessee filed its return of income on 27.11.2023, declar....
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....n Aiken. It was submitted, the role of India Office on the execution front, has been on the peripheral, largely to support on the due-diligence activities, given India Office's involvement. Hence, the revenue attributable to the execution component have been equally divided between India and UK Office. To demonstrate involvement of UK Office in the execution function, the assessee furnished email communications between the UK and Indian team. 7. The A.O., however, was not convinced with the submissions of the assessee. Though, the A.O. acknowledged that some email correspondences are in the name of Shri Jonathan Aiken, however, he observed, they do not conclusively prove the involvement of the UK branch for execution functions. Hence, according to him, the allocation of 25% of the revenue is not commensurate with the efforts made by the branches. He further observed that the documentary evidence furnished by the assessee did not conclusively prove the involvement of the UK Office. Hence, he held that the sharing of revenue of execution functions between India and UK Office is not permissible. Accordingly, the Revenue attributed to UK Office for both the projects, aggregating to ....
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....ntial part of the execution function was undertaken by the team headed by Shri Jonathan Aiken of UK Office. In this context, ld. Counsel drew our attention to various email communications between various branches of the assessee located in India, UK and USA. He submitted, though cogent documentary evidences were furnished to demonstrate the execution functions executed by UK office, they have been ignored without valid reasons. He submitted, since the UK Office had equally contributed to the execution functions, 25% of the revenue has been shared with them in respect of two projects. 10. Proceeding further, ld. Counsel submitted that the DRP has erroneously relied upon the directions in A.Y. 2021-22 as it was factually different. He submitted, in A.Y. 2021- 22, the major dispute was with regard to existence of PE. Whereas, in the current year, the assessee has admitted existence of PE. He submitted, in A.Y. 2021-22, the departmental authorities have held that the assessee not only had a PE in India, but had also attributed profit to the PE, keeping in view the bonus and other incentives paid to employees of the India Office, over and above their salary. Drawing our attention to ....
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....art, insofar as origination function relating to these two deals, out of 50% of the weightage, the India Office has received 5%. Whereas, 45% has been shared between UK and USA branches, which in other words, means that India, UK and USA branches have placed their role in origination function. Insofar as, execution function relating to the two deals, 50% of the revenue allocable to the execution function has been shared between India and UK branches. Throughout, it is the case of the assessee that a team headed by Shri Jonathan Aiken in UK Office had played a significant role in execution function, which ultimately resulted in consummation of the deals. In this context, the assessee had referred to various email communications between the UK and India Office placed in the paper book. Perusal of the said communications do demonstrate that a team in UK Office was actively involved in execution function relating to the merger and acquisition process. It is also a fact on record the ultimate buyers are located in UK and the sellers are in USA and India. Thus, looking at the location of the buyers, which is in UK, it cannot be denied that the UK Office played significant role in success....