TEMASEK HOLDINGS ADVISORS INDIA P.LTD, MUMBAI V. ITO CIR 14(3)(1), MUMBAI

ITA 1429/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0975 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 01-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAYANT KUMAR
• Assessee Lawyers: PORUS KAKA SENIOR
• Keywords: Related party transaction; Transfer pricing; Opportunity of being heard; International transaction
• Section: 92C; 143(3); 115JB

Judgement Text

P A G E | 1 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, M UMBAI BEFORE SHRI RAJENDRA , AM AND SHRI RAVISH SOOD, JM ITA NO. 1429 /MUM/201 7 ( / ASSESSMENT YEAR:2012 - 13 ) TEMASEK HOLDINGS ADVISORS INDIA PRIVATE LIMITED 12, 3 NORTH AVENUE, MAKER MAXITY BANDRA KURLA COMPLEX, BANDRA (EAST) MUMBAI / VS. INCOME TAX OFFICER CIRCLE - 14(3)(1) AAYAKAR BHAVAN M.K.ROAD MUMBAI - 400 020 ./ ./ PAN NO. AACCM4000H ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI PORUS KAKA , SENIOR ADVOCATE & SHRI DIVESH CHAWLA , A.R / RESPONDENT BY : SHRI JAYANT KUMAR , D.R / DATE OF HEARING : 09.10 .2017 / DATE OF PRONOUNCEMENT : 03 .01 .201 8 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER (FOR SHORT A.O) UNDER SEC. 143(3) R.W. SEC.144C(13) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT) , DATED P A G E | 2 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) 30.01.2017 . THE ASSESSEE HAD ASSAILED BEFORE US THE ORDER OF THE A.O BY RAISING THE FOLLOW ING GROUNDS OF APPEAL: - BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TEMASEK HOLDINGS ADVISORS INDIA PRIVATE LIMITED (HEREINAFTER REFERRED TO AS THE 'APPELLANT') RESPECTFULLY CRAVES LEAVE TO PREFER AN APPEAL UNDER SECTION 253 OF THE INCOME - TAX ACT, 1961 (ACT) AGAINST THE ORDER DATED 30 JANUARY 2017 PASSED BY THE INCOME - TAX OFFICER, CIRCLE - 14(3)(1), MUMBAI (HEREINAFTER REFERRED TO AS THE 'LEARNED AO ') UNDER SECTION 143(3) READ WITH SECTION 144C(13) OF THE ACT IN PURSUANCE OF THE DIRECTIONS ISSUED BY THE DISPUTE RESOLUTION PANEL - 2, MUMBAI (HON'BLE DRP). GROUND 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO BASED O N THE DIRECTIONS OF THE HON'BLE DRP, ERRED IN MAKING AN UPWARD ADJUSTMENT OF INR 62,254,019 IN DETERMINING THE ARM'S LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTION PERTAINING TO THE PROVISION OF NON - BINDING INVESTMENT ADVISORY SERVICES BY THE APPELLAN T TO ITS ASSOCIATED ENTERPRISE. GROUND 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED A . O BASED ON THE DIRECTIONS OF THE HON'BLE DRP, FAILED TO APPRECIATE THAT THE ALP AS DETERMINED BY THE APPELLANT BY APPLYING THE PRESCRIBED METHOD IN ACCORDANCE WITH SUB SECTION (1) AND (2) OF SECTION 92C OF THE ACT, SHOULD HAVE BEEN ACCEPTED SINCE THE PRE - CONDITION IN SECTION 92C(3) OF THE ACT, BEFORE THE DEPUTY COMMISSIONER OF INCOME - TAX, TRANSFER PRICING - 4(2)(1) (HEREINAFTER REFERRED TO AS 'LEARNED TPO') COULD PROCEED TO DETERMINE THE ALP, WAS NOT FULFILLED IN THIS CASE. FURTHER, THE DATA USED BY THE APPELLANT IN COMPUTATION OF ALP IS TAKEN FROM TWO WIDELY RECOGNISED COMMERCIAL INFORMATION DATABASES FOR OBTAINING PUBLICLY AVAILABLE FINAN CIAL INFORMATION IN INDIA. THE APPELLANT HAS USED THE CONTEMPORANEOUS DATA FOR COMPUTATION OF THE ALP AS ON THE DATE OF FILING OF RETURN OF INCOME IN ACCORDANCE WITH RULE 10D(4) OF THE INCOME - TAX RULES, 1962 (RULES). THE TRANSFER PRICING DOCUMENTATION, DETAILED WORKINGS AND ALL THE OTHER INFORMATION REQUESTED BY THE LEARNED TRANSFER PRICING OFFICER WERE PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. GIVEN THAT THE COMPARABILITY ANALYSIS UNDERTAKEN BY THE ASSESSEE WAS BASED ON WELL ACCEPTED TP PRIN CIPLES, THE LEARNED A . O HAS ERRED IN REJECTING THE SEARCH PROCESS THAT IS ADOPTED BY THE APPELLANT IN ITS TRANSFER PRICING DOCUMENTATION AND HAS ALSO NOT HIGHLIGHTED THE SPECIFIC SUB - CLAUSE OF S ECTION 92C(3) OF THE ACT, ON THE BASIS OF WHICH THE SAME HAS B EEN REJECTED. GROUND 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED A . O BASED ON THE DIRECTIONS OF THE HON'BLE DRP, ERRED IN NOT FOLLOWING A SEARCH PROCESS IN DETERMINING THE COMPARABLE COMPANIES AND ARBITRARILY P A G E | 3 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) SELECTING THE COMPARABLE COMPANIES TO BENCHMARK THE TRANSACTION OF NON - BINDING INVESTMENT ADVISORY SERVICES RENDERED BY THE APPELLANT. GROUNDS 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TEAMED A . O BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS, IN ARRIVING AT THE ARITHMETIC MEAN OF THE COMPARABLE COMPANIES TO BENCHMARK THE TRANSACTION OF NON - BINDING INVESTMENT ADVISORY SERVICES RENDERED BY THE APPELLANT, ERRED ON THE FOLLOWING GROUNDS: A. IN REJECTING ICRA MANAGEMENT CONSULTING SERVICES LIMITED, ICRA ONLINE LIMITED, INFORMED TECHNOLOGIES LIMITED, INTEGRATED CAPITAL SERVICES LIMITED AND CYBER MEDIA RESEARCH LIMITED [FORMERLY KNOWN AS IDC (INDIA) LIMITED] SELECTED BY THE APPELLANT AS COMPARAB LE COMPANIES IN THE TRANSFER PRICING DOCUMENTATION MAINTAINED BY THE APPELLANT; B. IN SELECTING LADDERUP CORPORATE ADVISORY PRIVATE LIMITED, ICRA TECHNO ANALYTICS LIMITED AND CRISIL LIMITED AS COMPARABLE COMPANIES WITH REGARD TO THE NON - BINDING INVESTMENT AD VISORY SERVICES PROVIDED BY THE APPELLANT WHEN IN FACT THE SAID COMPANIES ARE FUNCTIONALLY NOT COMPARABLE TO THE APPELLANT. FURTHER THE LEARNED A . O HAS NOT PROVIDED AN OPPORTUNITY OF BEING HEARD TO THE APPELLANT REGARDING THE COMPARABILITY OF THESE COMPANI ES ADDITIONALLY INCLUDED BY THE LEARNED AO; AND C. IN COMPUTING THE INCORRECT OPERATING MARGIN OF LADDERUP CORPORATE ADVISORY PRIVATE LIMITED, ICRA TECHNO ANALYTICS LIMITED AND CRISIL LIMITED, AND IN NOT SHARING THE BASIS OF COMPUTATION OF ARRIVING AT THE OPERATING MARGINS OF THE SAID COMPARABLE COMPANIES . GROUND 5 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP ERRED IN CONCLUDING THAT THE APPELLANT IS ENGAGED IN RENDERING, NON - DISCRETIONARY PORTFOLIO MANAGEMENT/ INVESTMENT MANAGEMENT SERVICES. GROUND 6 THE LEARNED AO, BASED ON THE DIRECTIONS OF THE HON'BLE DRP ERRED, ON FACTS AND IN LAW, IN REJECTING THE USE OF CONTEMP ORANEOUS AND MULTIPLE YEAR DATA AVAILABLE FOR COMPUTING THE ALP AS ON THE DATE OF FILING THE RETURN OF INCOME AND RELYING ONLY ON SINGLE YEAR DATA (I.E. FOR THE YEAR ENDED 31 MARCH 2012) FOR THE PURPOSE OF DETERMINING THE ALP. IN THIS REGARD, SINCE THE CO MPARABLE DATA IN RESPECT OF ALL THE COMPANIES FOR THE FINANCIAL YEAR (FY) 2011 - 12 WAS NOT AVAILABLE AT THE TIME OF COMPLYING WITH THE DOCUMENTATION REQUIREMENTS UNDER THE ACT, THE APPELLANT HAS COMPUTED THE ARM'S LENGTH NATURE OF THE INTERNATIONAL TRANSACTION OF PROVISION OF NON - BINDING INVESTMENT ADVISORY SERVICES USING THE FINANCIAL INFORMATION OF THE COMPARABLE COMPANIES PERTAINING TO THE FY 2009 - 10, FY 2O1O - 11 AND FY 2011 - 12 THAT WERE AVAILABLE AT THE TIME OF COMPLYING WITH THE TP DOCUMENTATION REQUIREMENTS. DURING THE P A G E | 4 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) ASSESSMENT PROCEEDINGS, THE APPELLANT HAS SUBMITTED DETAILED REASONING ON THE USE OF CONTEMPORANEOUS AND MULTIPLE YEAR DATA WITH THE LEARNED TPO VI DE SUBMISSION DATED 2 MARCH 2015. EACH OF THE GROUNDS OF APPEAL REFERRED ABOVE IS SEPARATE, AND MAY KINDLY BE CONSIDERED INDEPENDENT OF EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMIT, SUBSTITUTE OR AMEND ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT , THE TIME OF THE APPEAL, SO AS TO ENABLE THE HON'BLE INCOME - TAX APPELLATE TRIBUNAL TO DECIDE THIS APPEAL ACCORDING TO LAW. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF RENDERING N ON - B INDING INVESTMENT ADVISORY SERVICES TO ITS HOLDING COMPANY , VIZ. TEMASEK HOLDINGS PVT. LTD. , HAD E - FILED ITS RETURN OF INCOME FOR AY 2012 - 13 ON 26.11.2012, DECLARING TOTAL INCOME OF RS.8,57,28,430/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUC H UNDER SEC. 143(1) OF THE ACT. T HE CASE OF THE ASSESSEE WAS THEREAFTER SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE ACT. 3. TH AT THE ASSESSEE COMPANY IN ITS TP STUDY REPORT HAD BENCHMARKED THE INTERNATIONAL TRANSACTIONS PERTAINING TO PROVI SION OF INVESTMENT ADVISORY SERVICES RENDERED TO ITS AE USING THE TNMM METHOD, AND THE PLI USED WAS OPERATING PROFIT TO OPERATING COST. THE ASSESSEE AS PER ITS TP STUDY REPORT REFLECTED AN OPERATING PROFIT MARGIN OF 19.42 % AS IN COMPARISON TO THE WEIGHTED AVERAGE MARGIN OF 13 .2 1 % OF COMPARABLE COMPANIES FOR THREE YEARS. THAT STILL FURTHER THE UPDATED MARGIN USING SINGLE YEAR DATA FOR F.Y. 201 1 - 1 2 WORKED OUT TO - 0.13% ON OPERATING COSTS, AS UNDER: - NAME OF THE COMPANY OPERATING MARGIN AS PER TP STUDY BASE D ON MULTIPLE YEARS. SINGLE YEAR MARGINS FOR F.Y. 201 1 - 1 2 IDC(INDIA) LIMITED 11.66 % - 30.51% P A G E | 5 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) ICRA MANAGEMENT CONSULTING SERVICES LIMITED. 7.60 % 6.94% ICRA ONLINE LIMITED. 30.65 % 16.64 % INFORMED TECHNOLOGIES LIMITED. 15.10 % 8.26 % INTEGRATED CAPITAL SERVICES LIMITED. - 2.92 % - 1.98 % ARITHMETIC MEAN 1 3 . 21 % - 0.13% 4. TH E A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS MADE A REFERENCE UNDER SECTION 92CA(1) TO THE TRANSFER PRICING OFFICER ( FOR SHORT TPO) FOR COMPUTATION OF ARMS LENGTH PRICE (ALP) IN RESPECT OF THE INVESTMENT ADVISORY SERVICES RENDERED BY THE ASSESSEE COMPANY, VIZ. TEMASEK HOLDINGS ADVISORY INDIA PVT. LTD. (THAIPL) TO ITS HOLDING COMPANY, VIZ. TEMASEK HOLDINGS PVT. LTD., SINGA PORE (THPL). THE TPO NOT BEING PERSUADED TO SUBSCRIBE TO THE CONTENTION OF THE ASSESSEE THAT MULTIPLE YEAR AVERAGES WERE TO BE USED FOR THE PURPOSE OF BENCHMARKING THE ALP, THUS BEING GUIDED BY RULE 10D, WHICH AS PER HIM REQUIRED THAT ONLY CONTEMPORANEOUS DATA TO BE USED, THEREFORE , CONSIDERED THE CURRENT YEAR DATA FOR THE PURPOSE OF COMPARABILITY WHILE EXAMINING THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE WITH ITS AE. THAT ST ILL FURTHER , THE TPO IN HIS ORDER OBSERVED THAT THE ASSESSEE WAS ALSO PERFORMING NON - DISCRETIONARY PORTFOLIO MANAGEMENT SERVICES FOR ITS AE. THE TPO REJECTED ALL THE COMPARABLES SELECTED BY THE ASSESSEE AND SUBSTITUTED THE SAME BY A SET OF THREE NEW COMPAR ABLES , WHICH WERE IDENTIFIED BY HIM AS COMPARABLE TO THE ASSESSEE, AS UNDER: - NAME OF THE COMPANY OPERATING MARGIN FOR F.Y. 201 1 - 1 2 ICRA TECHNO ANALYTICS LIMITED (SEGMENT PROFESSIONAL SERVICES). 24.96% CRISIL LIMITED (SEGMENT - RESEARCH SERVICES) 50.09% LADDERUP CORPORATE ADVISORY PRIVATE LIMITED. 38.41 % ARITHMETIC MEAN 37.82 % P A G E | 6 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) THE TPO ADOPTED THE AVERAGE MARGIN OF 37.82 % ON OPERATING COSTS AS THE ALP MARGIN AS AGAINST 19.42 % SHOWN BY THE ASSESSEE , AND VIDE HIS ORDER PASSED UNDER SECTION 92CA(3), DATED 13 /01/201 6 , CALCULATED THE ALP IN RESPECT OF THE INVESTMENT ADVISORY SERVICES RENDERED BY THE ASSESSEE COMPANY, VIZ. TEMA SEK HOLDINGS ADVISORY INDIA PVT. LTD. TO ITS AE, AS UNDER: CALCULATION OF ARMS LENGTH PRICE OP/OC OF COMPARABLES A 37.82% OP/OC OF ASSESSEE B 19.42% TOTAL OPERATING INCOME C 40,40,42,118 OPERATING COST AS PER ASSESSEE D 33,83,37,061 ARMS LENGTH OPERATING COST E=D*A 12,79,59,076 ARMS LENGTH VALUE OF TRANSACTION F=D+E 46,62,96,137 DIFFERENCE IN ACTUAL AND ARMS LENGTH G=F - C 6,22,54,019 5% OF INTERNATIONAL TRANSACTION H=5% OF I 2,02,02,016 ADJUSTMENT PROPOSED 6,22,54,019 THE TPO THUS PROPOSED AN UPWARD TRANSFER PRICING ADJUSTMENT OF RS. 6,22,54,019/ - . 5. THE A.O. AFTER RECEIVING THE REPORT OF THE TPO PASSED A DRAFT ASSESSMENT ORDER U/S 143(3) R.W.S 144C(1) , DATED 14 /03/201 6 AND PROPOSED TO ASSESS THE INCOME OF THE ASSESSEE COMPANY AT RS. 14,79, 82,45 - / - . THE ASSESSEE BEING AGGRIEVED WITH THE VARIATIONS PROPOSED BY THE AO IN THE D RAFT ASSESSMENT ORDER FILED OBJECTIONS WITH THE DISPUTE RESOLUTION PANEL - 2, MUMBAI ( FOR SHORT DRP ) . 6 . T HE DRP VIDE ITS DIRECTIONS PASSED U/S 144C(5) OF THE ACT , DISMISSED THE OBJECTIONS WHICH WERE RAISED BY THE ASSESSEE AGAINST P A G E | 7 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) THE T P ADJUSTMENTS MADE BY THE TPO. THE DRP AFTER DELIBERATING ON THE CONTENTIONS OF THE ASSESSEE AS REGARDS THE REJECTION OF THE COMPARABLES SELECTED BY THE ASSESSEE, VIZ. (I ) ICRA MANAGING CONSULTING SERVICES LTD; (II) ICRA ONLINE LTD; (III) INFORMED TECHNOLOGIES LTD; (IV) INTEGRATED CAPITAL SERVICES LTD; AND (V) IDC (INDIA) LTD., OBSERVED THAT AS THE REJECTION OF ALL OF THE SAID COMPARABLES BY THE TPO IN THE IMMEDIATELY PREC EDING YEAR, VIZ. A.Y 2011 - 12 WAS UPHELD BY HIS PREDECESSOR, THEREFORE, FOR THE SAID REASON DECLINED TO INTERFERE WITH THE ORDER OF THE TPO. THAT AS REGARDS THE CHALLENGE THROWN BY THE ASSESSEE TO THE INCLUSION OF CERTAIN COMPARABLES IN THE FINAL LIST OF CO MPARABLES BY THE TPO THE DRP UPHELD THE SAME AND DECLINED TO ISSUE ANY DIRECTIONS TO THE AO/TPO. THE DRP OBSERVED THAT AS THE INCLUSION OF THE COMPARABLE , VIZ. LADDERUP CORPORATE ADVISORY PVT. LTD. BY THE TPO WAS UPHELD BY THE DRP IN THE CASE OF THE ASSESS EE FOR THE IMMEDIATELY PRECEDING YEAR, T HEREFORE, FOR THE SAID REASON T HE INCLUSION OF THE SAME AS A COMPARABLE BY THE TPO DURING THE YEAR UNDER CONSIDERATION DID NOT CALL FOR ANY INTERFERENCE ON HIS PART . T HAT AS REGARDS THE OTHER TWO COMPARABLES SELECTED BY THE TPO, VIZ. (I). CRISIL LTD. ; AND (II). ICRA TECHNO ANALYTICS LTD . , THE DRP OBSERVED THAT AS THE IR ACTIVITIES WERE FUNCTIONALLY COMPARABLE TO THE ASSESSEE, THEREFORE, THE IR INCLUSION IN THE FINAL LIST OF COMPARABLES BY THE TPO WAS LIABLE TO BE SUSTAINED. THE DRP FURTHER UPHELD THE OBSERVATIONS OF THE TPO THAT THE ASSESSEE WAS ENGAGED IN RENDERING PORTFOLIO MANAGEMENT/INVESTMENT MANAGEMENT SERVICES. THUS, ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE DRP UPHELD THE ORDER OF THE TPO AND DECLINED TO ISSUE ANY DIRECTIONS TO THE AO/TPO. 7 . THE A.O FOLLOWING THE DIRECTIONS OF THE DRP, THEREIN VIDE HIS ORDER PASSED UNDER SECTI ON 143(3) R.W. SECTION 144C(13), DATED 30.01.2017, CARRIED OUT AN UPWARD TP ADJUSTMENT OF P A G E | 8 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) RS. 6,22,54 ,019/ - TO THE TOTAL INCOME OF THE ASSESSEE COMPANY AND ASSESSED ITS INCOME AT RS. 14,79,82,450/ - UNDER THE NORMAL PROVISIONS AND THE BOOK PROFIT U/S 115JB AT RS. 7,03,79,199/ - . 8. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3) R.W.S. 144C(13) HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE (FOR SHORT A.R) HAD ASSAILED THE UPWARD ADJUSTMENT OF RS. 6,22,54,019 / - CARRIED OUT BY THE A.O/TPO ON THE BASIS OF THE D IRECTIONS OF THE DRP. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE MR. PORUS KAKA, SENIOR ADVOCATE , AT THE VERY OUTSET SUBMITTED THAT HE WAS ONLY PRESSING THE G ROUND OF APPEAL NO. 4 . IT WAS SUBMITTED BY THE LD. A.R THAT THE TPO IN THE PRESENT CASE HAD FAILED TO PASS A SPEAKING ORDER AND HAD MERELY REPRODUCED THE OBSERVATIONS OF HIS PREDECESSOR FOR THE IMMEDIATELY PRECEDING YEAR, VIZ. AY 2011 - 12. THE LD. A.R IN ORDER TO FORTIFY HIS AFORESAID CONTENTION TOOK US THROUGH THE ORDER OF THE T PO, WHICH REVEALED THAT THE LATTER HAD FROM PARA 9 TO PARA 18.2.2 MERELY RE PRODUCED THE OBSERVATIONS RECORDED BY HIS PREDECESSOR IN THE IMMEDIATELY PRECEDING YEAR, VIZ. A . Y 2011 - 12. IT WAS SUBMITTED BY THE LD. A.R THAT THE TPO IN STEAD OF DELIBERATING ON TH E FACTS OF THE CASE IN THE BACKDROP OF THE SUBMISSIONS OF THE ASSESSEE , HAD RATHER ADOPT ED A CONVENIENT APPROACH BY TRANSPOSING THE ORDER PASSED BY HIS PREDECESSOR FOR THE IMMEDIATELY PRECEDING YEAR IN THE ORDER FOR THE YEAR UNDER CONSIDERATION . THE LD. A.R ADVERTING TO THE REJECTION OF THE COMPARABLES SELECTED BY THE ASSESSEE IN ITS TP STUDY REPORT FOR BENCHMARKING ITS INTERNATIONAL TRANSACTIONS PERTAINING TO PROVISION OF INVESTMENT ADVISORY SERVICES RENDERED TO ITS AE , SUBMITTED THAT THE EXCLUSI ON OF THE COMPARABLES SELECTED BY THE ASSESSEE WAS UPHELD BY THE DRP BY MERELY THE OBSERVATIONS OF HIS PREDECESSOR IN P A G E | 9 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) THE CASE OF THE ASSESSEE FOR A . Y 2011 - 12 . THE LD. A.R SUBMITTED THAT THE EXCLUSION OF TWO COMPARABLES, VIZ (I) ICRA MANAGEMENT CONSULTANCY SERVICES LTD.; AND (II) INFORMED TECHNOLOGIES LTD. HAD BEEN SET ASIDE BY THE TRIBUNAL WHILE DISPOSING OF THE APPEAL OF THE ASSESSEE FOR. A . Y 2011 - 12, VIZ. TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD VS. DCIT (ITA NO. 477/MUM/2016 AND AY 2011 - 12), DATED 11.08 .2017 . IT WAS SUBMITTED BY THE LD. A.R THAT THE TRIBUNAL AFTER DELIBERATING AT LENGTH ON THE AFORESAID TWO COMPARABLES, OBSERVING THAT AS THE SAME WERE GOOD COMPARABLES HAD DIRECTED THE AO/TPO TO INCLUDE THE SAME IN THE FINAL LIST OF COMPARABLES. THAT AS R EGARDS THE COMPARABLES WHICH HAD BEEN INCLUDED BY T HE TPO AND THEREAFTER APPROVED BY THE DRP, IT WAS SUBMITTED BY THE LD. A.R THAT ONE OF THE COMPARABLE, VIZ. LADDERUP CORPORATE ADVISORY PVT. LTD. WAS ALSO INCLUDED BY THE TPO IN THE CASE OF THE ASSESSEE FO R THE IMMEDIATELY PRECEDING YEAR, VIZ. A . Y 2011 - 12 AND APPROVED BY THE DRP, BUT HOWEVER , THE SAME ON APPEAL BY THE ASSESSEE WAS DIRECTED BY THE TRIBUNAL TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLE S , FOR THE REASON THAT THE SAME WAS FUNCTIONALLY INCOMPARABLE TO THE ASSESSEE COMPANY . THAT AS REGARDS THE REMAINING TWO COMPARABLES, VIZ. (I ) ICRA TECHNO ANALYTICS LTD., (SEGMENT - P ROFESSIONAL SERVICES); AND (II) CRISIL LTD. (SEGMENT RESEARCH SERVICES), IT WAS SUBMITTED BY THE LD. A.R THAT AS IN THE CASE OF THE CRISIL LTD, THE RELATED PARTY TRANSACTIONS (FOR SHORT RPT ) WERE TO THE EXTENT OF 47 .1 %, THEREFORE, THE SAME COULD NOT HAVE BEEN TAKEN AS A COMPARABLE. THE LD. A.R TO FORTIFY HIS AFORESAID CONTENTION TOOK US THROUGH PAGE 41 - PARA 10.151 OF HIS OB JECTION FILED BEFORE THE DRP, WHICH REVEALED THAT INCLUSION OF THE SAID COMPARABLE WAS ASSAILED BY THE ASSESSEE BEFORE THE DRP, IN THE BACKDROP OF THE FACT THAT IT HAD SIGNIFICANT RPT OF 47.71% . THAT AS REGARDS ICRA TECHNO ANALYTICS LTD ., I T WAS SUBMITTED BY THE LD. A.R THAT AS THE SAID COMPARABLE WAS A S OFTWARE DEVELOPMENT COMPANY, P A G E | 10 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) THEREFORE, THE SAME BEING FUNCTIONALLY DIFFERENT WAS WRONGLY INCLUDED BY THE TPO AS A COMPARABLE IN THE CASE OF THE ASSESSEE. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT THE TP O WHILE INCLUDING THE AFORESAID COMPARABLES HAD NEITHER CONFRONTED THE SAME NOR AFFORDED AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE LD. A.R IN ORDER TO DRIVE HOME HIS CONTENTION THAT NO OPPORTUNITY OF BEING HEARD WAS AFFORDED BY THE TPO WHILE I NCLU DING THE FRESH SET OF COMPARABLES, DREW OUR ATTENTION TO PAGE 39 - PARA1 0 .135 OF THE OBJECTIONS FILED BEFORE THE DRP, WHICH REVEALED THAT A SPECIFIC OBJECTION AS REGARDS NON AFFORDING OF AN OPPORTUNITY BY THE TPO AS REGARDS INCLUSION OF CRISIL AS A COMPARABLE WAS RAISED BY THE ASSESSEE BEFORE THE DRP . THE LD. A.R FUR THER TO SUPPORT HIS CLAIM THAT SPECIFIC OBJECTION AS REGARDS NON AFFORDING OF AN OPPORTUNITY OF BEING HEARD BY THE TPO, WHILE SELECTING ICRA TECHNO A NALYTICS AS A COMPARABLE WAS RAISED BEFORE THE DRP, TOOK US THROUGH PAGE 42 - PARA 10.156 OF THE OBJECTIONS, WHICH DULY SUBSTANTIATED HIS AFORESAID CONTENTION. IT WAS SUBMITTED BY THE LD. A.R THAT DESPITE THE FACT THAT THE FAILURE ON THE PART OF THE TPO TO ALLOW AN OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE WHILE INCLUDING THE AFORESAI D COMPARABLES, VIZ. (I). CRISIL ; AND (II). ICRA TECHNO ANALYTICS WAS SPECIFICALLY RAISED BEFORE THE DRP, HOWEVER, THE SAID OBJECTION OF THE ASSESSEE WAS NOT DISPOSED. THE LD. A.R DREW OUR A TTENTION TO PAGE 18 - PARA 10.25 OF THE OBJECTIONS FILED BEFORE THE DRP, AND SUBMITTED THAT THE ASSESSEE HAD FURTHER AVERRED BEFORE THE DRP THAT THE TPO HAD MERELY RELIED ON THE ORDER PASSED BY HIS PREDECESSOR FOR A . Y 2011 - 12 AND HAD FAILED TO CONDUCT ANY FRESH ANALYSIS FOR THE YEAR UNDER CONSIDERATION. THE LD. A.R FURTHER TOOK US THROUGH THE RELEVANT PAGES OF THE ORDER PASSED BY THE DRP. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D . R ) RELIED ON THE ORDER PASSED BY THE ITAT, DELHI IN THE CASE OF THE MOTOROLA SOLUTION INDIA (P) LTD., VS. ACIT - CIRCLE - 2(2014) 48 TAXMAN.COM 248 (DELHI - TRIB) , TO SUPPORT HIS P A G E | 11 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) CONTENTION THAT AS THE ASSESSEE WAS PROVIDING SERVICES TO ITS AE AS A CAPTIVE SERVICE PROVIDER, THEREFORE, THE TPO HAD RIGHTLY SELECTED THE COMPARABLES IN THE FINAL LIST OF COMPARABLES. THE LD. D.R SUBMITTED THAT THE APPEAL OF THE ASSESSEE WAS DEVOID OF ANY MERIT AND DESERVED TO BE DISMISSED. 9. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LO WER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDULGENCE IN THE PRESENT CASE IS SOUGHT TO ADJUDICATE AS TO WHETHER THE REJECTION OF THE COMPARABLES SELECTED BY THE ASSESSEE IN ITS TP STUDY REPORT, AND SUBSTITUTION OF THE SAME BY A FRESH SET OF COMPARABLES BY THE TPO IN T H E FINAL LIST OF COMPARABLES , IS IN ORDER OR NOT. WE SHALL FIRST ADVERT TO THE COMPARABLES WHICH WERE SELECTED BY THE ASSESSEE IN ITS TP STUDY REPORT FOR BENCHMARKING ITS INTERNATIONAL TRANSACTIONS PERTAINING TO PRO VISION OF INVESTMENT ADVISORY SERVICES RENDERED TO ITS AE , VIZ. (I) ICRA MANAGING CONSULTING SERVICES LTD; (II) ICRA ONLINE LTD; (III) INFORMED TECHNOLOGIES LTD; (IV) INTEGRATED CAPITAL SERVICES LTD; AND (V) IDC (INDIA) LTD. WE FIND THAT AS AVERRED BY THE LD. A.R, THE EXCLUSION BY THE TPO OF TWO COMPARABLES, VIZ (I) ICRA MANAGEMENT CONSULTANCY SERVICES LTD.; AND (II) INFORMED TECHNOLOGIES LTD. IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATE PRECEDING YEAR, VIZ. A.Y. 2011 - 12 WAS SET ASIDE BY THE TRIBUNAL WHILE DISPOSING OF THE APPEAL OF THE ASSESSEE FOR. AY 2011 - 12, VIZ. TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD VS. DCIT (ITA NO. 477/MUM/2016 AND AY 2011 - 12), DATED 11.08.2017 . WE HAVE PERUSED THE AFORESAID ORDER AND FIND THAT WHILE HOL D ING THAT ICRA MANAGEMENT C ONSULTANCY SERVICES LTD WAS A GOOD COMPARABLE AND DIRECTING THE AO/TPO TO INCLUDE THE SAME IN THE FINAL LIST OF COMPARABLES, THE TRIBUNAL HAD IN ITS AFORESAID ORDER OBSERVED AS UNDER: P A G E | 12 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) 9. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PLACED ON RECORD. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND THAT THE DRP AS A MATTER OF FA CT RELYING ON THE ORDER PASSED BY HIS PREDECESSOR IN THE CASE OF THE ASSESSEE FOR A.Y. 2010 - 11, WHEREIN THE REJECTION OF THE AFORESAID COMPARABLE, VIZ. ICRA MANAGEMENT CONSULTANCY SERVICES LIMITED BY THE TPO WAS UPHELD BY HIS PREDECESSOR, HAD MERELY GONE B Y THE SAID VERY REASON AND UPHELD THE REJECTION OF THE SAID COMPARABLE DURING THE YEAR UNDER CONSIDERATION. WE FIND THAT THE REJECTION OF THE AFORESAID COMPARABLE BY THE AO/TPO IN A.Y. 2010 - 11 HAD BEEN SET ASIDE BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE, REPORTED AS TEMASEK HOLDING ADVISORS INDIA PRIVATE LIMITED VS. DCIT, CIRCLE 14(3)(1), MUMBAI, VIDE ORDER DATED 25.02.2016 , WHEREIN THE TRIBUNAL HAD CATEGORICALLY HELD THAT THE AFORESAID COMPANY, VIZ. ICRA MANAGEMENT CONSULTANCY SERVICES LIMITED WAS A GO OD COMPARABLE AND HAD DIRECTED THE INCLUSION OF THE SAME IN THE LIST OF THE FINAL COMPARABLES. WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE ORDER OF THE AO/TPO IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING YEAR, VIZ. A.Y. 2010 - 11, THEREIN EX CLUDING THE AFORESAID COMPARABLE, VIZ. ICRA MANAGEMENT CONSULTANCY SERVICES LIMITED HAD BEEN SET ASIDE BY THE TRIBUNAL, THEREFORE THE REJECTION OF THE SAID COMPARABLE, VIZ. ICRA MANAGEMENT CONSULTANCY SERVICES LIMITED BY THE A.O DURING THE YEAR UNDER CONSI DERATION PURSUANT TO THE DIRECTION OF THE DRP, WHEREIN THE LATTER HAD MERELY FOLLOWED THE ORDER OF HIS PREDECESSOR SO PASSED IN THE CASE OF THE ASSESSEE FOR. A.Y. 2010 - 11, WHICH AS OBSERVED BY US HEREINABOVE HAD BEEN SET ASIDE BY THE TRIBUNAL, THUS CANNOT BE UPHELD AND IS LIABLE TO BE VACATED ON THE SAID COUNT ITSELF. WE ARE FURTHER PERSUADED TO SUBSCRIBE TO THE CONTENTION OF THE LD. A.R THAT CHERRY PICKING OF THE COMPARABLES EVERY YEAR BY THE TPO, WITHOUT POINTING OUT THAT THE FACTS IN CONTEXT OF THE COMPA RABLES ACCEPTED IN THE PRECEDING YEARS HAD CHANGED DURING THE YEAR UNDER CONSIDERATION, CANNOT BE PERMITTED. WE FURTHER FIND THAT THE AFORESAID COMPARABLE, VIZ. ICRA MANAGEMENT CONSULTANCY SERVICES LIMITED HAD ALSO BEEN HELD TO BE A GOOD COMPARABLE BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR A.Y(S). 2007 - 08, 2008 - 09 AND 2009 - 10, WHILE FOR IN THE EARLIER YEARS THE TPO HIMSELF HAD ACCEPTED THE SAID COMPANY AS A COMPARABLE. THUS IN THE TOTALITY OF THE AFORESAID FACTS, WE FIND NO REASON TO TAKE A DIVERGENT VIEW, AND THUS SET ASIDE THE ORDER OF THE AO/TPO REJECTING THE AFORESAID COMPARABLE, AND THEREIN DIRECT THAT THE SAME BE INCLUDED IN THE FINAL LIST OF THE COMPARABLES. WE FURTHER FIND THAT THE TRIBUNAL IN ITS AFORESAID ORDER HAD ALSO CONCLUDED THAT INFORM ED TECHNOLOGIES LTD WAS RIGHTLY SELECTED BY THE ASSESSEE AS A COMPARABLE, AND HAD DIRECTED THE AO/TPO TO INCLUDE THE SAME IN THE FINAL LIST OF THE COMPARABLES, BY OBSERVING AS UNDER: P A G E | 13 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) 11. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES FOR BOTH THE PAR TIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND THAT IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING YEAR, I.E A.Y. 2010 - 11, THE AFO RESAID COMPARABLE HAD BEEN ACCEPTED BY THE TPO AS A GOOD COMPARABLE, AND WAS CONSEQUENTLY INCLUDED IN THE FINAL LIST OF COMPARABLES. WE FIND OURSELVES TO BE IN AGREEMENT WITH THE CONTENTION OF THE LD. A.R THAT NOW WHEN THE AFORESAID COMPARABLE HAD BEEN ACC EPTED BY THE TPO IN THE IMMEDIATELY PRECEDING YEAR, I.E A.Y. 2010 - 11, THEREFORE WITHOUT POINTING OUT ANY SUBSTANTIAL VARIANCE, EITHER FUNCTIONALLY OR OTHERWISE, IT WOULD BE ABSOLUTELY IMPERMISSIBLE ON THE PART OF THE TPO TO WHIMSICALLY REJECT THE SAID CO MPARABLE DURING THE YEAR UNDER CONSIDERATION. WE ARE FURTHER PERSUADED TO SUBSCRIBE TO THE CONTENTION OF THE LD. A.R THAT THOUGH DECLINING TURNOVER FILTER MAY BE APPROPRIATE IN SCALE BASED OPERATIONS, BUT THE SAME CANNOT BE APPLIED TO THE EXCLUSION OF TH E OTHER RELEVANT FACTORS FOR DRAWING OF ADVERSE INFERENCES IN THE CASE OF A SERVICE ENTITY, AS MARGINS IN THE LATTER CASE ARE NOT DEPENDENT ON THE SCALE OR SIZE OF OPERATIONS. THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE CONSIDERED VIE W THAT NOW WHEN THE COMPARABLE, VIZ. INFORMED TECHNOLOGIES LIMITED HAD BEEN CONSIDERED AS A GOOD COMPARABLE QUA THE FUNCTIONS PERFORMED BY THE ASSESSEE IN A.Y. 2009 - 10 AND A.Y. 2010 - 11, THEREFORE IN THE ABSENCE OF ANY MATERIAL CHANGE, THERE IS NO REASON AS TO WHY THE SAME IS TO BE REJECTED AS A COMPARABLE DURING THE YEAR UNDER CONSIDERATION. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE OF THE CONSIDERED VIEW THAT THE AFORESAID COMPARABLE, VIZ. INFORMED TECHNOLOGIES LIMITED HAD RIGHTLY BEEN SELE CTED BY THE ASSESSEE AS A COMPARABLE, AND THUS SET ASIDE THE ORDER OF THE AO/TPO, AND DIRECT THAT THE SAME BE INCLUDED IN THE FINAL LIST OF THE COMPARABLES. WE THUS BEING OF THE CONSIDERED VIEW THAT AS BOTH OF THE AFORESAID COMPARABLES , VIZ (I) ICRA MANAGEMENT CONSULTANCY SERVICES LTD.; AND (II) INFORMED TECHNOLOGIES LTD. HAD BEEN HELD BY THE TRIBUNAL TO BE GOOD COMPARABLES WHILE DISPOSING OF THE APPEAL OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING YEAR, VIZ. A.Y. 2011 - 12, THEREFORE, NOW WHEN THERE IS NO CHANGE IN THE FUNCTIONAL PROFILE OF THE SAID RESPECTIVE COMPARABLES AS IN COMPARISON TO THAT OF THE ASSESSEE COMPANY, AND THE FACTS AND CIRCUMSTANCES INVOLVED THEREIN REMAIN THE SAME , THUS IT CAN SAFELY BE CONCLUDED THAT THE ASSESSEE HAD RIGHTLY INCLUD ED THE SAID COMPARABLES IN ITS TP STUDY REPORT FOR BENCHMARKING ITS P A G E | 14 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) INTERNATIONAL TRANSACTIONS PERTAINING TO PROVISION OF INVESTMENT ADVISORY SERVICES RENDERED TO ITS A E. WE THUS DIRECT THE AO/TPO TO INCLUDE THE AFORESAID COMPARABLES, VIZ. (I) ICRA MANAGEM ENT CONSULTANCY SERVICES LTD.; AND (II) INFORMED TECHNOLOGIES LTD. IN T H E FINAL LIST OF COMPARABLES. WE FIND THAT THOUGH THE ASSESSEE HAD IN ITS GROUND OF APPEAL NO. 4 ASSAILED THE EXCLUSION OF THE REMAINING THREE COMPARABLES WHICH WERE SELECTED BY IT FOR BENCHMARKING ITS INTERNATIONAL TRANSACTION S , VIZ. (I) INTEGRATED CAPITAL SERVICES LTD; (II) ICRA ONLINE LTD; AND (III) CYBER MEDIA RESEARCH LTD, FROM TH E FINAL LIST OF COMPARABLES BY THE TPO WHILE DETERMINING THE ALP OF THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE, HOWEVER, AS NO SUBMISSIONS HAD BEEN ADVANCED BEFORE US AS REGARDS THE SAME, THEREFORE, WE REFRAIN FROM ADJUDICATING THE SAME. 11. WE SHALL NOW ADVERT TO THE COMPARABLES WHICH HAD BEE N INCLUDED BY THE TPO IN TH E FINAL LIST OF THE COMPARABLES AND THEREAFTER APPROVED BY THE DRP. WE FIND THAT THE TPO HAD INCLUDED THREE FRESH COMPARABLES IN THE FINAL LIST OF COMPARABLES, VIZ. (I) LADDERUP CORPORATE ADVISORY PVT. LTD.; (II). CRISIL LTD.; AN D (III). ICRA TECHNO ANALYTICS LTD . WE FIRST ADVERT TO LADDERUP CORPORATE ADVISORY PVT. LTD. WHICH WAS INCLUDED BY THE TPO IN THE FINAL LIST OF COMPARABLES FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE PERTAINING TO PROVISION OF INVESTMEN T ADVISORY SERVICES RENDERED TO ITS A E . WE FIND THAT THE SAID COMPARABLE W AS ALSO INCLUDED BY THE TPO FOR DETERMINING THE ALP OF THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE IN THE IMMEDIATE PR ECEDING YEAR, VIZ. A.Y. 2011 - 12 AND APPROVED BY THE DRP, WAS HOWEVER ON APPEAL BY THE ASSESSEE EXCLUDED BY THE TRIBUNAL. WE FIND THAT THE TRIBUNAL OBSERVING THAT THE SAID COMPARABLE WAS FUNCTIONALLY INCOMPARABLE HAD DIRECTED P A G E | 15 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) THE AO/TPO TO EXCLUDE THE SAME FROM THE FINAL LIST OF COMPARABLES, BY OBSERVING AS UNDER: 11. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PLACED ON RECORD BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND THEREIN FIND THAT THE AFORESAID COMPARABLE, VIZ. LADDERUP CORPORATE ADVISORY PVT. LIMITED IS REGISTERED AS A CATEGORY ONE MERCHANT BANKING WITH SEBI AND IS ENGAGED IN RENDERING MERCHANT BANKING SERVICES W.E.F JULY 2010, WHICH FACTUAL POSITION STANDS DULY SUBSTANTIATED FROM THE PERUSAL OF THE WEB PORTAL EXTRACTS OF THE AFORESAID COMPANY. WE FURTHER FIND THAT AS PER THE ANNUAL REPORT THE AFORESAID COMPARABLE IS ENGAGED IN ONLY ONE SEGMENT, WHICH INCLUDES MERCHANT BANKING. WE THUS IN THE BACKDROP OF THE VERY FACT THAT THE AFORES AID COMPARABLE IS ENGAGED IN THE MERCHANT BANKING/INVESTMENT BANKING AND OTHER SIMILAR ACTIVITIES, ARE OF THE CONSIDERED VIEW THAT THE SAME CANNOT BE CONSIDERED AS FUNCTIONALLY COMPARABLE TO THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF RENDERI NG NON BINDING INVESTMENT ADVISORY SERVICES. WE ARE FURTHER NOT IMPRESSED BY THE AVERRMENT OF THE LD. D.R WHO BY REFERRING TO THE OBSERVATIONS RECORDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF AVENUE ASIA (SUPRA) HAD THEREIN AVERRED THAT THO UGH THE AFORESAID COMPARABLE WAS PLANNING TO EXPAND ITS WINGS BY VENTURING INTO MERCHANT BANKING ACTIVITIES AND BROADEN ITS HORIZON, WHICH REVEALED THAT DURING THE YEAR IT WAS NOT ENGAGED IN MERCHANT BANKING ACTIVITIES, HAD THEREIN TRIED TO DRIVE HOME HIS CONTENTION THAT THE AFORESAID COMPARABLE WAS NOT INVOLVED IN MERCHANT BANKING ACTIVITIES. WE ARE OF THE CONSIDERED VIEW THAT THE AFORESAID OBSERVATIONS OF THE COORDINATE BENCH OF THE TRIBUNAL WERE RECORDED IN CONTEXT OF A.Y. 2009 - 10 INVOLVED IN THE CASE BE FORE THEM, WHILE FOR THE YEAR BEFORE US IN THE PRESENT APPEAL IS A.Y. 2011 - 12. THUS THE CASE LAW RELIED UPON BY THE LD. D.R IS DISTINGUISHABLE ON FACTS, AND AS SUCH FOR THE FOREGOING REASON WOULD BE OF NO ASSISTANCE TO HIM TO SUPPORT HIS AFORESAID CONTENTI ON. THAT IN THE BACKDROP OF THE AFORESAID FACTS AS HAD BEEN BROUGHT TO OUR NOTICE, AND AS SUCH ARE IRREBUTTABLY SUPPORTED BY THE RECORDS PRODUCED BEFORE US, WE HOLD A STRONG CONVICTION THAT NOW WHEN THE AFORESAID COMPARABLE, VIZ. LADDER UP CORPORATE ADVISO RY PVT. LTD. IS ENGAGED IN MERCHANT BANKING/INVESTMENT BANKING AND OTHER SIMILAR ACTIVITIES DURING THE YEAR UNDER CONSIDERATION, THEREFORE THE SAME CANNOT BE CONSIDERED AS FUNCTIONALLY COMPARABLE TO THE ASSESSEE COMPANY WHICH IS ENGAGED IN RENDERING NON BI NDING INVESTMENT ADVISORY SERVICES. WE THUS ARE PERSUADED TO SUBSCRIBE TO THE CONTENTION OF THE LD. A.R THAT THE AFORESAID COMPARABLE, VIZ. LADDER UP CORPORATE ADVISORY PVT. LTD. IS FUNCTIONALLY INCOMPARABLE TO THE ASSESSEE COMPANY, AND AS SUCH HAD WRONGLY BEEN INCLUDED BY THE AO/TPO IN THE FINAL LIST OF THE COMPARABLES. WE THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS DIRECT THE P A G E | 16 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) AO/TPO TO EXCLUDE THE AFORESAID COMPARABLE, VIZ. LADDERUP CORPORATE ADVISORY PVT. LTD. FROM THE FINAL LIST OF COMPARABLES. WE HAVE PERUSED THE AFORESAID OBSERVATIONS OF THE TRIBUNAL AND ARE OF THE CONSIDERED VIEW THAT NOW WHEN THERE IS NO SHIFT IN THE FUNCTIONAL PROFILE OF THE AFORESAID COMPARABLE, VIZ. LADDER UP CORPORATE ADVISORY PVT. LTD. AS IN COMPARISON TO THAT OF THE ASSESSEE, THEREFORE, THERE IS NO REASON FOR US TO TAKE A DIFFERENT VIEW. WE THUS BEING OF THE CONSIDERED VIEW THAT THE AFORESAID COMPARABLE, VIZ. LADDER UP CORPORATE ADVISORY PVT. LTD. IS FUNCTIONALLY INCOM PARABLE TO THE AS SESSEE COMPANY AND HAD WRONGLY BEEN INCLUDED BY THE AO/TPO IN THE FINAL LIST OF THE COMPARABLES , THEREFORE, DIRECT THE AO/TPO TO EXCLUDE THE SAME FROM THE FINAL LIST OF COMPARABLES. 12. WE NOW ADVERT TO THE REMAINING TWO COMPARABLES , VIZ. (I ) ICRA T ECHNO ANALYTICS LTD., (S EGMENT - P ROFESSIONAL SERVICES); AND (II) CRISIL LTD. (SEGMENT RESEARCH SERVICES) WHICH WERE SELECTED BY THE TPO AS COMPARABLES AND INCLUDED IN THE FINAL LIST OF THE COMPARABLE FOR DETERMINING THE ALP OF THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE. BEFORE US, THE LD. A.R HAD SUBMITTED THAT AS IN THE CASE OF CRISIL LTD . , THE RELATED PARTY TRANSACTIONS (FOR SHORT RPT) WERE TO THE EXTENT OF 47.1%, THEREFORE, THE SAME COULD NOT HAVE BEEN TAKEN AS A COMPARABLE BY THE TPO . WE FIND THAT THE LD. A.R HAD SUBMITTED BEFORE US THAT THOUGH THE SAID FACT WAS SPECIFICALLY RAISED IN THE OBJECTIONS FILED WITH THE DRP, HOWEVER, THE LATTER HAD FAILED TO CONSIDER THE SAME WHIL E PASSING THE ORDER. WE FIND SUBSTANTIAL FORCE IN THE AFORESAID CONTENTION OF THE ASSESSEE AND FIND THAT A PERUSAL OF PAGE 41 - PARA 10.151 OF THE OBJECTION FILED BY THE ASSESSEE BEFORE THE DRP REVEALS T HAT THE ASSESSEE HAD ASSAILED THE INCLUSION OF THE SAID COMPARABLE ON THE GROUND THAT AS IT HAD SIGNIF ICANT RPT OF 47.1% DURING THE YEAR UNDER CONSIDERATION, THEREFORE, IT WAS WRONGLY INCLUDED BY THE TPO IN P A G E | 17 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) THE FINAL LIST OF THE COMPARABLES. WE FIND THAT THE DRP WHILE PASSING THE ORDER HAD FAILED TO TAKE COGNIZANCE OF THE SAID SPECIFIC OBJECTION OF THE ASS ESSEE, AND LOOSING SIGHT OF THE SAID MATERIAL FACT HAD UPHELD THE INCLUSION OF THE COMPARABLE ON THE GROUND THAT THE SAME WAS FUNCTIONALLY COMPARABLE. WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE SAID OBSERVATION OF THE DRP. WE FURTHER FIND SUBS TANTIAL FORCE IN THE CONTENTION OF THE LD. A.R THAT THE ASSESSEE WAS NOT AFFORDED ANY OPPORTUNITY OF BEING HEARD BY THE TPO AT THE TIME OF INCLUDING THE SAID COMPARABLE, VIZ. CRISIL LTD. IN THE FINAL L IST OF COMPARABLES. RATHER, WE FIND THAT THE ASSESSEE I N ITS OBJECTIONS FILED BEFORE T HE DRP HAD RAIS ED A SPECIFIC OBJECTION OF HAVING BEEN DIVESTED OF AN OPPORTUNITY OF BEING HEARD AT THE TIME OF INCLUSION OF CRISIL AS A COMPARABLE BY THE TPO ( PAGE 39 - PARA 10.135 OF THE OBJECTIONS), BUT HOWEVER, THE DRP LOOS ING SIGHT OF THE SAME WHILE PASSING THE ORDER, HAD ALLOWED SUCH SERIOUS INFIRMITY ON THE PART OF THE TPO TO PERPETUATE. WE ARE OF THE CONSIDERED VIEW THAT IN ALL FAIRNESS, NOW WHEN THE ASSESSEE WAS NEVER AFFORDED AN OPPORTUNITY OF BEING HEARD AT THE TIME OF INCLUSION OF THE AFORESAID COMPARABLE BY THE TPO, AND ITS OBJECTIONS BEFORE THE D RP , BOTH AS REGARDS SUCH NON - AFFORDING OF OPPORTUNITY OF BEING HEARD AND INCLUSION OF THE SAID COMPARABLE IN THE BACKDROP OF ITS SIGNIFICANT RPT OF 47.1% DURING THE YEAR, HAD NOT BEEN DISPOSED OF BY THE DRP , THEREFORE, RESTO RE THE MATTER TO THE FILE OF THE AO/TPO WITH A DIRECTION TO READJUDICATE THE SAME AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS REGARDS INCLUSION OF THE SA I D COMPARABLE, VIZ. CRISIL LTD. IN THE FINAL LIST OF COMPARABLES. HOWEVE R , WE MAY HEREIN CLARIFY THAT IN CASE THE RPT IN THE CASE OF THE SAID COMPARABLE IS FOUND TO BE MORE THAN 25%, THEN THE AO/TPO SHALL EXCLUDE THE SAME FROM THE FINAL LIST OF COMPARABLES. P A G E | 18 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) 13. WE SHALL NOW ADVERT TO THE INCLUSION OF ICRA TECHNO ANALYTICS LTD AS A COMPARABLE BY THE TPO. WE FIND THAT THE LD. A.R HAD SUBMITTED BEFORE US THAT AS THE SAID COMPARABLE WAS A SOFTWARE DEVELOPMENT COMPANY, THEREFORE, IT COULD NOT HAVE BEEN SELEC T ED AS A COMPARABLE IN THE CASE OF THE ASSESSEE WHICH WAS PROVIDING INVESTMENT ADVISORY SERVICES TO ITS AE. THE LD. A.R HAD FURTHER AVERRED THAT THE ASSESSEE WAS NOT AFFORDED ANY OPPORTUNITY OF BEING HEARD BY THE TPO AT THE TIME OF INCLUDING THE SAID COMPAR ABLE, VIZ. ICRA TECHNO ANALYTICS LTD . IN THE FINAL LIST OF COMPARABLES. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT THOUGH THE ASSESSEE HAD SPECIFICALLY OBJECTED TO NON AFFORDING OF AN OPPORTUNITY OF BEING HEARD AT THE TIME OF INCLUSION OF THE AFORESAID C OMPARABLE, VIZ. ICRA TECHNO ANALYTICS LTD IN THE FINAL LIST OF COMPARABLES BEFORE THE DRP, HOWEVER, THE LATTER FAILING TO TAKE COGNIZANCE OF THE SAID OBJECTION OF THE ASSESSEE HAD ALLOWED SUCH SERIOUS INFIRMITY ON THE PART OF THE TPO TO PERPETUATE. WE HAVE PERUSED THE OBJECTIONS RAISED BY THE ASSESSE E BEFORE THE DRP AND FIND T H AT THOUGH A SPECIFIC OBJECTION OF HAVING BEEN DIVESTED OF AN OPPORTUNITY OF BEING HEARD AT THE TIME OF INCLUSION OF ICRA TECHNO ANALYTICS LTD AS A COMPARABLE WAS RAISED BY THE ASSESSE E BEFORE HIM ( PAGE 42 - PARA 10.156 OF THE OBJECTIONS), BUT HOWEVER, THE SAME HAD NOT BEEN CONSIDERED BY THE DRP WHILE PASSING THE ORDER. WE ARE OF THE CONSIDERED VIEW THAT IN ALL FAIRNESS, NOW WHEN THE ASSESSEE WAS NEVER AFFORDED AN OPPORTUNITY OF BEING HE ARD AT THE TIME OF INCLUSION OF THE AFORESAID COMPARABL E BY THE TPO AND THE OBJECTION OF THE ASSESSEE AS REGARDS SUCH FAILURE ON THE PART OF THE TPO TO CONFRONT THE SAID COMPARABLE HAD ALSO NOT BEEN DISPOSED OF BY THE DRP, THEREFORE, RESTORE THE MATTER TO THE FILE OF THE AO/TPO WITH A DIRECTION TO RECONSIDER THE INCLUSION OF THE SAID COMPARABLE, VIZ. ICRA TECHNO ANALYTICS LTD I N THE FINAL LIST OF COMPARABLES AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . P A G E | 19 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1) 14. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PR ONOUNCED IN THE OPEN COURT ON 03 /01/2018. SD/ - SD/ - ( RAJENDRA ) ( RAVISH SOOD ) ACCOUNTANT MEMBER JU DICIAL MEMBER MUMBAI ; 03 .01.2018 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 20 ITA NO. 1429/MUM/2017 AY: 2012 - 13 TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. ITO CIRCLE 14(3)(1)