Beam Global Sprits & Wine (India) Pvt. Ltd., Gurgaon V. DCIT, New Delhi

ITA 252/DEL/2013

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9996 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I2
• Next Hearing Date: 27-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 14-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Wholly owned subsidiary
• Section: 92D

Judgement Text

1 ITA NO. 252/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I-2 NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBE R AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 252/DEL/2013 ( A. Y 2008-09) BEAM GLOBAL SPIRITS & WINE (INDIA) PVT. LTD. 12 TH FLOOR, BUILDING NO.10, TOWER-C, DLF CYBER CITY, PHASE-II GURGAON AAACA1614R (APPELLANT) VS DCIT CIRCLE-2(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. RAVI SHARMA, ADV, MS. SHRUTI KHIMTA, ADV RESPONDENT BY SH. RAKESH KUMAR, ADDL. CIT ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE A SSESSMENT ORDER DATED 17/11/2011 PASSED U/S 143(3)/144C/92CA (4) OF THE INCOME TAX ACT, FOR ASSESSMENT YEAR 2008-09. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LEARNED DISPUTE RESOLUTION PANEL (LD. DRP ) AND THE LEARNED DEPUTY COMMISSIONER OF INCOME-TAX (LD. AO) (FOLLO WING THE DIRECTIONS OF THE LD. DRP), ERRED ON FACTS AND IN LAW, IN ENHANCING T HE INCOME OF THE APPELLANT BY RS. 0.64 CRORES 1 , ON ACCOUNT OF THE TRANSFER PRICING (TP) ADJUSTM ENT U/S 92CA(3) OF THE INCOME-TAX ACT, 1961 (ACT) MADE BY THE LEARNED ASSISTANT DIRECTOR OF INCOME-TAX, TRANSFER PRICING OFFICER - 1(4) (LD. TPO), BY HOLDING THAT THE INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES (AES) DOES DATE OF HEARING 27.11.2018 DATE OF PRONOUNCEMENT 11.12.2018 2 ITA NO. 252/DEL/2013 NOT SATISFY THE ARMS LENGTH PRINCIPLE (ALP) ENVI SAGED UNDER THE ACT AND IN DOING SO HAVE GROSSLY ERRED IN: 1.1 DISREGARDING THE FACT THAT THE SPENDS TO THIRD PART Y VENDORS ARE PASS THROUGH IN NATURE AND ARE RECOVERED FULLY FROM THE AES ON WHOSE BEHALF SUCH PAYMENTS ARE MADE AND THEREFORE THE APPELLANT DOES NOT ASSUME ANY RISK OF NON-PAYMENT BY THE CUSTOMER/AES. 1.2 DISREGARDING THE FACT THAT THESE PAYMENTS MADE TO T HIRD PARTY VENDORS DO NOT REPRESENT ANY VALUE ADDING ACTIVITY UNDERTAKE N BY THE APPELLANT AND THEREFORE SHOULD NOT BE CONSIDERED FOR THE PURPOSE OF DETERMINING THE APPELLANTS OPERATING PROFITABILITY; 1.3 TOTAL ADJUSTMENT AMOUNT = INR 6,369,110 = 6,046,05 6 (RECOMPUTED TP ADJUSTMENT) + 323,054 (ADJUSTMENT ALREADY MADE BY T HE APPELLANT) DISREGARDING THE ALP AS DETERMINED IN THE TP DOCUME NTATION MAINTAINED BY THE APPELLANT IN TERMS OF SECTION 92D OF THE ACT RE AD WITH RULE 10D OF THE INCOME-TAX RULES, 1962 (RULES); 1.4 USING CURRENT YEAR DATA FOR COMPARABLE COMPANIES, I .E., DATA FOR FINANCIAL YEAR 2007-08, DESPITE THE FACT THAT THE SAME WAS NO T AVAILABLE WITH THE APPELLANT AT THE TIME OF PREPARING ITS TP DOCUMENTA TION REPORT, AND THE APPELLANT USED MULTIPLE YEAR DATA FOR THE ANALYSIS; 1.5 REJECTING WITHOUT REASON, THE QUANTITATIVE AND QUAL ITATIVE SCREENS/FILTERS APPLIED AND SET OF COMPARABLES ARRIVED AT BY THE AP PELLANT FOLLOWING A DETAILED AND ROBUST SEARCH METHODOLOGY CARRIED OUT IN THE TP DOCUMENTATION REPORT, AND PROCEEDING TO EARN 7 OUT FRESH SEARCH BY ERRONEOUSLY SELECTING COMPARABLES WHICH ARE FUNCTIONALLY DISSIMILAR TO TH E APPELLANTS FUNCTIONAL PROFILE; 1.6 DISREGARDING JUDICIAL PRONOUNCEMENTS IN INDIA IN UN DERTAKING THE TP ADJUSTMENT; AND 2. THAT THE LD. AO FAILED TO TAKE COGNIZANCE OF A VOLUNTARY' ADJUSTMENT OF RS. 3 ITA NO. 252/DEL/2013 0.03 CRORES MADE BY THE APPELLANT TOWARDS THE ARMS LENGTH PRICE ALTHOUGH THE SUBJECT UPWARD ADJUSTMENT WAS TAKEN INTO CONSID ERATION BY THE LD. TPO. CORPORATE TAX DISALLOWANCE 3. THAT THE LD. AO AND LD. DRP GROSSLY ERRED ON FAC TS AND IN LAW IN MAKING A DISALLOWANCE OF RS. 0.21 CRORES BEING 3% OF CUSTOM ER PULL AND SUPPORT EXPENSES ON ADHOC BASIS. THE APPELLANT PRAYS THAT THE ABOVE GROUNDS OF APPEA L ARE WITHOUT PREJUDICE TO EACH OTHER. 3. BEAM INDIA IS A WHOLLY OWNED SUBSIDIARY OF BEA M GLOBAL SPIRITS & WINE, INC.(BEAM USA) AND IS ENGAGED IN THE PRODUCTION A ND SALE OF ALCOHOLIC BEVERAGES IN INDIA. DURING THE RELEVANT FINANCIAL Y EAR, THE ASSESSEE COMPANY UNDERTOOK THE FOLLOWING INTERNATIONAL TRANSACTIONS WITH ITS AES WHICH WERE DULY REPORTED IN THE ACCOUNTANTS REPORT (FORM NO. 3CEB), FILED ALONG WITH THE ASSESSEE COMPANYS RETURN OF INCOME: INTERNATIONAL TRANSACTION AMOUNT IN INR OUTCOME OF TP ORDER PURCHASE OF COMPOUND ALCOHOLIC PREPARATION 14,35,47,473 ACCEPTED PROVISION OF MARKETING SUPPORT SERVICES (MSS) 1,28,11,244 ADJUSTMENT REIMBURSEMENT OF EXPENSES 17,69,26,002 ACCEPTED UNDER THE MSS SEGMENT, THE ASSESSEE COMPANY WAS ENG AGED IN PROVIDING MARKETING SUPPORT SERVICES TO JBB U.S TO PROMOTE TH E DUTY-FREE SALES OF INTERNATIONAL BRANDS OF LIQUOR PRODUCTS OF JBB U.S. THE ASSESSEE COMPANYS BENCHMARKING APPROACH IS SUMMARIZED BELOW: PARTICULARS MARKETING SUPPORT PAGE REFERENCE IN 4 ITA NO. 252/DEL/2013 SERVICES PAPER BOOK 2 NO. OF COMPARABLES 5 877 COMPARABLES MEAN OP/TC MARGIN 12.60% 877 APPELLANTS OP/TC MARGIN 6.97 1 % 884 THE ASSESSEE COMPANY INCURRED CERTAIN ADVERTISING A ND BRAND PROMOTION EXPENSES WHILE RENDERING MARKETING SUPPORT SERVICES TO JBB U.S. THESE EXPENSES WERE REIMBURSED BY JBB, U.S TO THE ASSESSE E COMPANY ON COST-TO- COST BASIS WITHOUT ANY MARK-UP. SUCH EXPENSES WERE IN THE NATURE OF PASS- THROUGH EXPENSES AS THE ASSESSEE COMPANY SUBMITTED THAT IT IS JUST ACTING AS A CONDUIT BETWEEN THE ASSOCIATED ENTERPRISE AND THE T HIRD PARTY VENDORS. THERE IS NO COGENT NEXUS WITH ITS MARKET SUPPORT SERVICES ACTIVITY. THE TRANSFER PRICING OFFICER (TPO) REJECTED THE ECONOMIC ANALY SIS SUBMITTED BY THE ASSESSEE COMPANY AND UNDERTOOK A FRESH SEARCH USING ARBITRAR Y QUANTITATIVE AND QUALITATIVE FILTERS AND ARRIVED AT AN NCP OF 21.76 %. THE TPO FURTHER OBSERVED THAT THE REIMBURSED AMP EXPENSES HAVE BEEN INCURRED WHILE RENDERING MARKETING SUPPORT SERVICE AND, THEREFORE, WOULD FAL L WITHIN THE SCOPE EXPENDITURE FOR SERVICES. ACCORDINGLY, THESE EXPEN SES WERE CONSIDERED WHILE DETERMINING THE OPERATING PROFITS OF THE ASSESSEE C OMPANY. THE TPO PROPOSED AN ADJUSTMENT OF RS.60,77,920/- TO THE INCOME OF TH E ASSESSEE COMPANY. 4. THE DISPUTE RESOLUTION PANEL (DRP) DIRECTED THE EXCLUSION OF VAPI WASTE MANAGEMENT AND EFFLUENT MANAGEMENT CO & RITES LTD. FROM THE COMPARABLES SELECTED BY THE TPO. THE FINAL COMPARABLE SET AFTE R THE ORDER OF THE DRP IS AS FOLLOWS: S. NO. NAME OF THE COMPANY OP/TC 1 APITCO LTD. 49.35% 5 ITA NO. 252/DEL/2013 2 BEST MULYANKAN CONSULTANTS LTD. 12.85% 3 CHOKSI LABORATORIES LTD. 29.20% 4 ICRA MANAGEMTN CONSULTING LTD. 4.18% 5 TECHNICOM - CHEMIE (INDIA) LTD. 7.32% 6 I D C (INDIA) LTD. 15.48% 7 INDUS TECHNICAL & FINANCIAL CONSULTANTS LTD. 14.56% 8 WAPCOS LTD. (SEG) (SEGMENT) 40.37% 9 INDIACOM LTD. 49.35% MEAN 21.66% THE ASSESSMENT ORDER WAS PASSED ON 22.10.2012 BY AS SESSING THE INCOME OF THE ASSESSEE AT RS. 21,44,07,570/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER/TPO, THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. 5. THE LD. AR SUBMITTED THAT GROUND NO. 3 I.E. CORP ORATE TAX DISALLOWANCE IS NOT PRESSED BY THE ASSESSEE. THEREFORE, GROUND N O. 3 IS DISMISSED. 6. THE LD. AR SUBMITTED THAT THE ASSESSEE COMPANY I S CHALLENGING CERTAIN COMPARABLES BEFORE US AS REGARDS EXCLUSION AND INCL USION OF COMPARABLES. THE EXCLUSION OF COMPARABLES ARE AS FOLLOWS: (I) APITCO LIMITED (II) CHOKSI LABORATORIES LTD. (III) WAPCOS LTD. (SEGMENT) (IV) IDC INDIA LIMITED THE LD. AR ALSO SUBMITTED FOR INCLUSION OF ONE COMP ARABLE I.E. REDIFF.COM 6.1 APITCO LIMITED :- THE LD. AR SUBMITTED THAT THIS COMPARABLE COMPAN Y IS 6 ITA NO. 252/DEL/2013 FUNCTIONALLY DISSIMILAR AS IT IS ENGAGED IN HIGHLY TECHNICAL SERVICES WHICH INCLUDES ASSET RECONSTRUCTION AND MANAGEMENT SERVI CES, PROJECTS RELATED SERVICES, MICRO ENTERPRISE DEVELOPMENT, INFRASTRUCT URE, PLANNING AND DEVELOPMENT, RESEARCH STUDIES & TOURISM, SKILL DEVE LOPMENT, ENVIRONMENT MANAGEMENT, ENTREPRENEURSHIP DEVELOPMENT & TRAINING , CLUSTER DEVELOPMENT, ENERGY RELATED SERVICES, EMERGING AREA S ETC. THE LD. AR SUBMITTED THAT THE MARKETING SUPPORT AGREEMENT CLEA RLY SETS OUT THE SCOPE OF SERVICES RENDERED BY THE ASSESSEE COMPANY. THE SERV ICES ARE RESTRICTED TO PROVISION OF MARKETING SUPPORT TO ASSIST IN THE DUT Y FREE SALES DIVISION OF THE ASSESSEE COMPANY. THE LD. AR SUBMITTED THAT IT HAS BEEN HELD IN A PLETHORA OF CASE OF VARIOUS TRIBUNALS THAT THE INSTANT COMPARAB LE IS ENGAGED IN RENDERING HIGH END TECHNICAL CONSULTANCIES AND THEREFORE NOT COMPARABLE TO COMPANIES ENGAGED IN THE RENDERING MERE SUPPORT SERVICES. THE LD. AR RELIED UPON THE FOLLOWING DECISIONS: A) AVAYA INDIA P. LTD. VS. DCIT (ITA NO. 146/DEL/ 2013) B) CIENA INDIA P. LTD. VS. DCIT (ITA NO. 3324/DEL/ 2013) 6.2 THE LD. DR RELIED UPON THE ORDER OF THE TPO AND THE DIRECTIONS OF THE DRP. 6.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE ANNUAL REPORTS IT CAN BE SEEN THAT THIS COMPARABLE COMPANY IS FUNCTIONALLY DISSIMILAR. THIS COMPARABLE COMPANY IS ENGAGED IN HIGHLY TECHNICAL SERVICES WHICH INCLUDES ASSET RECONSTRUCTION AND MANAGEMENT SERVICES, PROJECTS RELATED SERVICES, MIC RO ENTERPRISE DEVELOPMENT, INFRASTRUCTURE, PLANNING AND DEVELOPME NT, RESEARCH STUDIES & TOURISM, SKILL DEVELOPMENT, ENVIRONMENT MANAGEMENT, ENTREPRENEURSHIP DEVELOPMENT & TRAINING, CLUSTER DEVELOPMENT, ENERGY RELATED SERVICES, EMERGING AREAS ETC. WHEREAS UNDER THE MSS SEGMENT, THE ASSESSEE COMPANY IS ENGAGED IN PROVIDING MARKETING SUPPORT SERVICES TO JBB U.S TO PROMOTE THE 7 ITA NO. 252/DEL/2013 DUTY-FREE SALES OF INTERNATIONAL BRANDS OF LIQUOR P RODUCTS OF JBB U.S. THUS, THIS COMPANY IS FUNCTIONALLY DIFFERENT FROM THE ASS ESSEE COMPANY. THEREFORE, WE DIRECT THE TPO TO EXCLUDE THIS COMPARABLE. 6.4 CHOKSO LABORATORIES LTD. :- THE LD. AR SUBMITTED THAT THIS COMPARABLE COMPANY IS FUNCTIONALLY DISSIMILAR AS THE COMPANY I S A COMMERCIAL TESTING HOUSE ENGAGED IN TESTING OF VARIOUS PRODUCTS INCLUD ING CHEMICALS. IT ALSO OFFERS CONSULTANCY SERVICES IN THE FIELD OF POLLUTION CONT ROL AS AN ALLIED ACTIVITY. THE ASSESSEE COMPANY, ON THE CONTRARY IS ENGAGED IN PRO VIDING MERE SUPPORT SERVICES TO ITS AE. THE TWO COMPANIES ARE THUS IN C OMPLETELY DIFFERENT DOMAINS AND ACCORDINGLY, NOT FUNCTIONALLY COMPARABLE. DURIN G THE RELEVANT YEAR, CHOKSI INCURRED SIGNIFICANT EXPENDITURE ON PURCHASE OF INV ENTORY, SUCH AS GLASSWARE AND CHEMICALS USED FOR TESTING PURPOSES. 55% OF THE ASSET BASE ARE INSTRUMENTS THAT ARE USED FOR CHEMICAL TESTING PURP OSES. HOWEVER, IN THE CASE OF THE ASSESSEE THE ASSETS ARE OF ROUTINE NATURE NAMEL Y COMPUTER AND OFFICE EQUIPMENT ETC. THE LD. AR RELIED UPON THE FOLLOWING DECISIONS: A) AVAYA INDIA P. LTD. VS. DCIT (ITA NO. 146/DEL/ 2013) B) CIENA INDIA P. LTD. VS. DCIT (ITA NO. 3324/DEL/ 2013) 6.5 THE LD. DR RELIED UPON THE ORDER OF THE TPO AND THE DIRECTIONS OF THE DRP. 6.6 WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE ANNUAL REPORTS IT CAN BE SEEN THAT THIS COMPARABLE COMPANY IS FUNCTIONALLY DISSIMILAR. THIS COMPARABLE COMPANY IS A COMMERCIAL TESTING HOUSE ENGAGED IN TESTING OF VARI OUS PRODUCTS INCLUDING CHEMICALS AND ALSO OFFERS CONSULTANCY SERVICES IN T HE FIELD OF POLLUTION CONTROL AS AN ALLIED ACTIVITY. ON THE CONTRARY, THE ASSESSE E COMPANY, UNDER THE MSS SEGMENT, IS ENGAGED IN PROVIDING MARKETING SUPPORT SERVICES TO JBB U.S TO 8 ITA NO. 252/DEL/2013 PROMOTE THE DUTY-FREE SALES OF INTERNATIONAL BRANDS OF LIQUOR PRODUCTS OF JBB U.S. THUS, THIS COMPANY IS FUNCTIONALLY DIFFERENT FROM T HE ASSESSEE COMPANY. THEREFORE, WE DIRECT THE TPO TO EXCLUDE THIS COMPAR ABLE. 6.7 WAPCOS LTD. (SEGMENT) :- THE LD. AR SUBMITTED THAT THIS COMPARABLE COMPANY IS FUNCTIONALLY DISSIMILAR AS THE COMPANY I S ENGAGED IN HIGH-END CONSULTANCY AND WORKS ON ENGINEERING PROJECTS. ACC ORDINGLY, THE SEGMENT OF THE COMPANY IS FUNCTIONALLY NOT COMPARABLE AS IT UN DERTAKES HIGH-END TECHNICAL CONSULTANCY SERVICES, AS AGAINST THE ROUT INE SUPPORT SERVICES UNDERTAKEN BY THE ASSESSEE COMPANY. THE COMPANY IS A GOVERNMENT OF INDIA UNDERTAKING. IT HAS THE SUPPORT AND BACKING OF THE GOVERNMENT WHICH MAKES IT INCOMPARABLE TO THE ASSESSEE COMPANY AS THE FUNC TIONS PROFILES OF THE ENTITIES IS COMPLETELY DIFFERENT. THE BUSINESS PROF ILE OF GOVERNMENT OWNED UNDERTAKINGS IS DISSIMILAR TO THAT OF THE ENTITIES OPERATING IN FREE MARKET/ UNCONTROLLED ENVIRONMENT. THEREFORE, SUCH UNDERTAKI NGS CANNOT BE SELECTED AS COMPARABLES FOR DETERMINING ARM'S LENGTH PRICE OF T HE MARKETING SUPPORT SERVICES RENDERED BY THE ASSESSEE COMPANY WHO IS A CAPTIVE SERVICE PROVIDER TO ITS AES. SIMILAR PRINCIPLES WERE LAID DOWN BY THE H ON'BLE BOMBAY HIGH COURT IN THE CASE OF THYSSEN KRUPP INDUSTRIES INDIA (P.) LTD. [ITA NO. 2218 OF 2013]. IN THIS CASE, THE ASSESSEE COMPANY ASSESSEE WAS ENG AGED IN THE BUSINESS OF PROVIDING TURNKEY SERVICES FOR DESIGN, MANUFACTURE, SUPPLY, ERECTION AND COMMISSIONING OF SUGAR PLANTS, CEMENT PLANTS, BULK MATERIAL HANDLING ETC,. THE HON'BLE HIGH COURT EXCLUDED GOVERNMENT COMPANIES AS COMPARABLES CITING THE REASON THAT WHEREIN IT WAS HELD THAT THE CONTRACTS BETWEEN PUBLIC SECTOR UNDERTAKINGS ARE DRIVEN BY SOCIAL OBLIGATIONS RATHE R THAN PROFIT MOTIVE. THE LD. AR RELIED UPON THE FOLLOWING DECISIONS: A) AVAYA INDIA P. LTD. VS. DCIT (ITA NO. 146/DEL/ 2013) B) CIENA INDIA P. LTD. VS. DCIT (ITA NO. 3324/DEL/ 2013) 6.8 THE LD. DR RELIED UPON THE ORDER OF THE TPO AND THE DIRECTIONS OF THE 9 ITA NO. 252/DEL/2013 DRP. 6.9 WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE ANNUAL REPORTS IT CAN BE SEEN THAT THIS COMPARABLE COMPANY IS FUNCTIONALLY DISSIMILAR. THIS COMPARABLE COMPANY IS ENGAGED IN HIGH-END CONSULTANCY AND WORKS ON ENGINE ERING PROJECTS AND ALSO A GOVERNMENT COMPANY. THE ASSESSEE COMPANY, UNDER THE MSS SEGMENT, IS ENGAGED IN PROVIDING MARKETING SUPPORT SERVICES TO JBB U.S TO PROMOTE THE DUTY-FREE SALES OF INTERNATIONAL BRANDS OF LIQUOR P RODUCTS OF JBB U.S. THUS, THIS COMPANY IS FUNCTIONALLY DIFFERENT FROM THE ASS ESSEE COMPANY. THEREFORE, WE DIRECT THE TPO TO EXCLUDE THIS COMPARABLE. 6.10 IDC INDIA LIMITED .:- THE LD. AR SUBMITTED THAT THIS COMPARABLE COMPANY IS FUNCTIONALLY DISSIMILAR AS THE INSTANT C OMPARABLE IS ENGAGED IN THE BUSINESS OF RENDERING MARKET RESEARCH AND MANAGEMEN T CONSULTING SERVICES IN THE FIELD OF IT, TELECOMMUNICATIONS AND CONSUMER TE CHNOLOGY. THE LD. AR RELIED UPON THE DECISION IN CASE OF MICROSOFT CORPORATION INDIA [2015] 63 TAXMANN.COM 178 (DELHI - TRIB.) WHEREIN THE TRIBUNAL ANALYZED THE FUNCTIONAL PROFILE OF IDC INDIA VIS-A-VIS THE MARKETING SUPPOR T SEGMENT OF MICROSOFT AND HELD THAT IDC IS A RESEARCH AND ADVISORY FIRM WHICH IS NO MATCH FOR A MARKETING SUPPORT SERVICE PROVIDER SUCH AS THE ASSE SSEE COMPANY. 6.11 THE LD. DR RELIED UPON THE ORDER OF THE TPO AN D THE DIRECTIONS OF THE DRP. 6.12 WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE ANNUAL REPORTS IT CAN BE SEEN THAT THIS COMPARABLE COMPANY IS FUNCTIONALLY DISSIMILAR. THIS COMPARABLE COMPANY IS ENGAGED IN THE BUSINESS OF RENDERING MARKET RESEARC H AND MANAGEMENT CONSULTING SERVICES IN THE FIELD OF IT, TELECOMMUNI CATIONS AND CONSUMER TECHNOLOGY. WHEREAS UNDER THE MSS SEGMENT, THE ASSE SSEE COMPANY IS 10 ITA NO. 252/DEL/2013 ENGAGED IN PROVIDING MARKETING SUPPORT SERVICES TO JBB U.S TO PROMOTE THE DUTY-FREE SALES OF INTERNATIONAL BRANDS OF LIQUOR P RODUCTS OF JBB U.S. THUS, THIS COMPANY IS FUNCTIONALLY DIFFERENT FROM THE ASS ESSEE COMPANY. THEREFORE, WE DIRECT THE TPO TO EXCLUDE THIS COMPARABLE. 6.13 REDIFF.COM :- THE LD. AR SUBMITTED THAT THIS COMPARABLE COMPA NY IS FUNCTIONALLY COMPARABLE AS THE COMPANY IS AN INTERNET DESTINATIONS FOCUSING ON INDIA AND THE GLOBAL INDIAN COMMUNITY. ITS WEBSI TES CONSIST OF INTEREST SPECIFIC CHANNELS RELEVANT TO INDIAN INTERESTS SUCH AS CRICKET, ASTROLOGY, MOVIES, CONTENT ON VARIOUS MATTERS LIKE NEWS AND FI NANCE, SEARCH FACILITIES, E- COMMERCE, BROADBAND WIRELESS CONTENT ETC. IT IS ENG AGED IN THE BUSINESS OF ONLINE ADVERTISING AND FEE BASED SERVICES. THE SERV ICES RENDERED BY REDIFF.COM ARE THUS BROADLY SIMILAR TO THE SERVICES OF SALES P ROMOTION THROUGH MARKETING SUPPORT RENDERED BY THE ASSESSEE COMPANY. THE LD. A R RELIED UPON THE DECISION IN CASE OF MICROSOFT CORPORATION INDIA (20 15) 63 TAXMANN.COM 178 (DELHI-TRIB.) 6.14 THE LD. DR RELIED UPON THE ORDER OF THE TPO AN D THE DIRECTIONS OF THE DRP. 6.15 WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CONTENTIONS OF THE LD. AR THAT THIS COMPARABLE COMPANY IS A GOOD COMPARABLE AS IT IS ENGAGED IN TH E BUSINESS OF ONLINE ADVERTISING AND FEE BASED SERVICES WHICH ARE BROADL Y SIMILAR TO THE SERVICES OF SALES PROMOTION THROUGH MARKETING SUPPORT RENDERED BY THE ASSESSEE COMPANY. BUT THE SAME APPEARS NOT TO BE SIMILAR AS THE ANNUAL REPORT DESCRIBES THAT REVENUES COMPRISE OF REVENUES FROM O NLINE ADVERTISING AND FEE BASED SERVICES WHICH IS NOT AT PAR WITH THE MARKETI NG SUPPORT SERVICES TO JBB U.S TO PROMOTE THE DUTY-FREE SALES OF INTERNATIONAL BRANDS OF LIQUOR PRODUCTS OF JBB U.S. BESIDES THAT THERE IS NO SEGMENTAL BIFURCA TION AVAILABLE IN THE 11 ITA NO. 252/DEL/2013 FINANCIALS OF REDIFF.COM. THUS, WE ARE REJECTING TH E CONTENTION OF THE LD. AR TO INCLUDE THIS COMPARABLE. 7. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH DECEMBER , 2018 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 11/12/2018 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 12 ITA NO. 252/DEL/2013 DATE OF DICTATION 27.11.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28.11.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 1 .1 2 .2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 1 .1 2 .2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 1 .1 2 .2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER