IIML ASSET ADVISORS LTD (FORMERLY KNOWN AS SAFFRON ASSET ADVISORS P.LTD), MUMBAI V. ASST CIT 7(2), MUMBAI

ITA 5173/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1776 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2008-2009
• Appeal Filed On: 14-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: HITEN JOSHI
• Keywords: Related party transaction; Depreciation; Transfer pricing; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH K, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO. 5173/MUM/2012 ASSESSMENT YEAR : 2008-09 IIML ASSET ADVISORS LTD. (FORMERLY KNOWN AS SAFFRON ASSET ADVISORS PVT. LTD. THE IL & FS FINANCIAL CENTRE PLOT C-22, G-BLOCK BANDRA KURLA COMPLEX MUMBAI-400 051. PAN NO.AAJCS 5304 B VS. THE ASSTT. COMMISSIONER OF INCOME TAX -7(2) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HITEN JOSHI RESPONDENT BY : SHRI AJIT KUMAR JAIN DATE OF HEARING : 17.01.2013 DATE OF PRONOUNCEMENT : 22.02.2013 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23.7.2012 OF THE AO PASSED IN PURSUANCE OF DIRECTIO N OF DISPUTE RESOLUTION PANELII (DRP-II). THE ASSESSEE IN THIS APPEAL HAS CHALLENGED THE DECISION OF AO MAKING TRANSFER PRICING ADJUSTME NT OF RS.1,43,00,432/- . 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPAN Y WHICH IS A SUBSIDIARY OF M/S. SAFFRON CAPITAL SECURITY LTD., M AURITIUS WAS INCORPORATED IN INDIA ON 28.12.2005 WITH THE MAIN OBJECT OF REND ERING PERIODICAL ADVISE FOR INVESTMENT, FINANCE MANAGEMENT CONSULTANCY OR A NY OTHER RELATED ITA NO.5173/M/12 A Y .08-09 2 ACTIVITY. M/S. SAFFRON CAPITAL SECURITIES LTD., MAU RITIUS ALSO HAD ANOTHER SUBSIDIARY NAMELY M/S. SAFFRON CAPITAL ADVISORY LTD . (SCAL) WHICH WAS A LEADING INDIAN REAL ESTATE ADVISORY MANAGEMENT COMP ANY . THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH M/S. SCAL IN JUN E 2006 AS PER WHICH THE ASSESSEE WAS APPOINTED AS INVESTMENT ADVISOR TO SCAL. THE DUTIES OF THE ASSESSEE WERE LISTED IN CLAUSE-3 OF THE AGREEME NT WHICH IS REPRODUCED BELOW :- (I) THE INDIAN ADVISER (I.E. THE ASSESSEE) SHALL RECOM MEND TO THE MAURITIAN ADVISER (I.E. M/S. SAFFRON ADVISORS LTD.) THE MANNER IN WHICH ANY MONIES RAISED BY A FUND SHOULD BE INVESTE D OR OTHERWISE DEALT WITH IN RESPECT OF PROPOSED INVESTM ENT IN INDIAN MARKETS. (II) THE INDIAN ADVISOR SHALL CARRY OUT REVIEW OF THE PO RTFOLIO OF ANY FUND AT REGULAR INTERVALS OR WHENEVER THE MAURITIAN ADVISER OR ANY DELEGATE OF THE MAURITIAN ADVISER SHALL REASONA BLY REQUIRE. (III) THE INDIAN ADVISER SHALL RECOMMEND TO THE MAURITIAN ADVISER THE MANNER IN WHICH MONIES REQUIRED FOR PURPOSE OF A FU ND SHOULD BE REALIZED. (IV) THE INDIAN ADVISER SHALL ADVISE THE MAURITIAN ADVIS ER CONCERNING ALL ACTIONS, WHICH IT APPEARS TO THE INDIAN ADVISER THAT THE MAURITIAN ADVISER SHOULD TAKE TO CARRY INTO EFFECT THE PURCHASE AND SALE OF INVESTMENTS AND GENERALLY THE DISCHARGE OF THE DUTIES OF THE MAURITIAN ADVISER UNDER ANY INVESTMEN T ADVISER AGREEMENT. (V) THE INDIAN ADVISER SHALL PREPARE SUCH REPORTS AS TH E MAURITIAN ADVISER MAY REASONABLY REQUEST FOR INCLUSION IN ANN UAL OR OTHER REPORTS OF ANY FUND. (VI) THE INDIAN ADVISER SHALL, IF APPROPRIATE, ADVISE WH ETHER AND IN WHAT MANNER ALL RIGHTS CONFERRED BY THE INVESTMENTS OF ANY FUND SHOULD BE EXERCISED. (VII) THE INDIAN ADVISER SHALL ADVISE THE MAURITIAN ADVIS ER ON OBTAINING RELEVANT DATA TO CALCULATE ANY NET ASSET VALUE CALCULATION REQUIRED BY ANY FUND AND (VIII) THE INDIAN ADVISER SHALL PROVIDE SUCH OTHER SERVICE S AS MAY BE AGREED BETWEEN THE MAURITIAN ADVISER AND THE INDIAN ADVISER FROM TIME TO TIME. 2.1 THE ASSESSEE IN TERMS OF THE AGREEMENT WAS REMU NERATED AT COST PLUS 15%. THE ASSESSEE THEREFORE IN THE ASSESSMENT YEAR UNDER CONSIDERATION HAD RECEIVED INVESTMENT ADVISORY FEES OF RS.5,01,91,667/-. SINCE THE ASSESSEE HAD INTERNATIONAL TRANSACTIONS W ITH AN ASSOCIATE ENTERPRISE, THE AO REFERRED THE MATTER OF DETERMINI NG THE ARMS-LENGTH ITA NO.5173/M/12 A Y .08-09 3 PRICE OF INTERNATIONAL TRANSACTION TO THE TPO WHO A SKED THE ASSESSEE TO SUBMIT DETAILS OF TP STUDY FOR COMPUTATION OF ARMS -LENGTH PRICE. THE ASSESSEE SUBMITTED THAT IT HAD USED CAPITAL ALINE P LUS DATA BASE AND APPLIED PRODUCT CRITERIA I.E., PROJECT CONSULTANCY, CONSULTANCY AND ADVISORY SERVICES FOR THE SEARCH OF COMPARABLES APPLYING THE FILTER OF TURNOVER IN EXCESS OF RS.8.00 CRORES BUT THEY COULD NOT FIND AN Y COMPARABLE COMPANY. THE ASSESSEE HAD ALSO SEARCHED BPO COMPANIES RUNNIN G ONLY BACK-OFFICE SERVICES AND IN THE PROCESS IDENTIFYING ONE COMPARA BLE I.E. COLEWELL & SALMON COMMUNICATION (INDIA) LTD. THE ASSESSEE SELE CTED TWO COMPARABLES FROM THE LAST YEARS RECORDS I.E., SPARS H BPO AND WATER & POWER CO. LTD. (CONSULTANCY SEGMENT) AND ADVISORY S EGMENT OF CRISIL. IT WAS POINTED OUT THAT ICRA WHICH HAD ALSO BEEN SELEC TED LAST YEAR BUT IT WAS NOT CONSIDERED THIS YEAR BECAUSE DATA WAS NOT A VAILABLE. THE ASSESSEE THUS COMPUTED OPERATING MARGIN OF THESE FO UR COMPARABLES AT 13.50% ON INCOME AND 16.72% ON EXPENSES AS PER DETA ILS GIVEN BELOW: SR. NO. NAME OF COMPANY OP/INCOME (%) OP/EXPENSES (%) 1 SPARSH BPO 6.29 6.71 2 COLWELL & SALMON COMMUNICATION (INDIA) LTD. (-) 3.98 3.83 3 WATER & POWER CO. LTD. (CONSULTANCY) 20.62 25.98 4 CRISIL ADVISOR SEGMENT 10.15 11.29 AVERAGE MEAN 8.27 10.04 ASSESSEES MARGIN 13.58 15.72 2.2 THE ASSESSEE SUBMITTED THAT IT WAS BEING REMUNE RATED AT COST PLUS 15% MARK UP AND, THEREFORE, THE INTERNATIONAL TRANS ACTION WITH ASSOCIATE ENTERPRISE WAS AT ARMS-LENGTH AS MARGIN OF COMPARAB LE WAS SIMILAR I.E. 15.72% . THE TPO, HOWEVER, ASKED THE ASSESSEE TO EX PLAIN AS TO WHY THE RESEARCH SEGMENT OF CRISIL SHOULD NOT BE CONSIDERED . THE ASSESSEE SUBMITTED THAT RESEARCH SEGMENT WAS NOT COMPARABLE AS THE ASSESSEE WAS NOT DOING ANY RESEARCH ACTIVITY. THE ASSESSEE T HEREAFTER WAS ASKED TO DO A SEARCH ON INVESTMENT ADVISORY FEES ON THE CA PITAL ALINE DATA BASE. ITA NO.5173/M/12 A Y .08-09 4 THE ASSESSEE AFTER CONDUCTING SEARCH SUBMITTED THAT IT HAD ANALYZED 15 COMPANIES BUT NONE OF THEM WAS COMPARABLES BECAUSE THEY WERE ALSO DOING SOME OTHER SERVICES. THE TPO HOWEVER DID NOT ACCEPT THE REPORT GIVEN BY THE ASSESSEE. HE ANALYSED ANNUAL REPORTS O F THE COMPANIES AND FOUND THAT M/S. FUTURE CAPITAL HOLDING LTD. HAD SHO WN INVESTMENT ADVISORY ACTIVITY AS SEPARATE SEGMENT AND THEREFORE , IT WAS COMPARABLE . TPO ALSO NOTED THAT DEUTCHE ASSET MANAGEMENT INDIA PVT. LTD., SUNDARAM BNP PARIBAS ASSET MANAGEMENT LTD. AND URBA N INFRASTRUCTURE VENTURE CAPITAL LTD. HAD INVESTMENT ADVISORY INCOME APART FROM INVESTMENT MANAGEMENT FUNDS. THE TPO NOTED THAT EXP ENSES RELATED TO FUND MANAGEMENT WERE CLEARLY IDENTIFIABLE AND AFTER EXCLUDING THE SAME THE CORRESPONDING REVENUE AND THE PROFIT FROM INVES TMENT ADVISORY ACTIVITY COULD BE DERIVED. THE TPO, THEREFORE, SELE CTED THESE FOUR COMPANIES ALONG WITH CRISIL (BOTH ADVISORY AND RESE ARCH) AND COMPUTED THE MEAN MARGIN AT 57.06% AS PER DETAILS GIVEN IN T HE TABLE BELOW :- SR. NO. NAME OF THE COMPARABLE OP/TC 1 FUTURE CAPITAL HOLDING LTD. SEGMENT, CONSOLIDATED 23.31 2 DEUTCHE ASSET MANAGEMENT LTD. 45.74 3 SUNDARAM BNP PARIBAS ASSET MANAGEMENT LTD. 82.27 4 URBAN INFRASTRUCTURE VENTURE CAPITAL 90.72 5 CRISIL (BOTH ADVISOR AND RESEARCH) 43.27 AVERAGE MEAN 57.06 2.3 TPO, THEREFORE APPLIED MARGIN OF 57.07% ON THE OPERATING COST OF RS.12,95,92,767/- OF THE ASSESSEE AND AFTER ADDING SAME TO THE OPERATING COST COMPUTED ALP REVENUE AT RS.20,35,38,399/- AND THUS MADE ADJUSTMENT OF RS.5,33,46,732/- (203538399 1501916 67).THE ASSESSEE FILED OBJECTION AGAINST REPORT OF TPO TO DRP-II WHO AFTER EXAMINATION OF RECORDS NOTED THAT SUNDARAM BNP PARIBAS ASSET MANAG EMENT LTD., DEUTCHE ASSET MANAGEMENT LTD. AND URBAN INFRASTRUCT URE VENTURE CAPITAL HAD RELATED PARTY TRANSACTIONS AT 90.55%, 88.49% & 100% RESPECTIVELY. THE DRP THEREFORE HELD THAT IN VIEW OF SUBSTANTIAL RELATED PARTY ITA NO.5173/M/12 A Y .08-09 5 TRANSACTIONS THESE COMPANIES COULD NOT BE CONSIDERE D AS COMPARABLES. THE DRP-II, HOWEVER, UPHELD THE DECISION OF TPO TO CONSIDER BOTH ADVISORY AND RESEARCH SEGMENT OF CRISIL AND DIRECTE D AO TO ALLOW DEPRECIATION IN CASE OF CRISIL WHICH HAD NOT BEEN A LLOWED. THE DRP-II THUS COMPUTED THE MARGIN OF 20.56% IN CASE OF FUTUR E CAPITAL HOLDING LTD. (INVESTMENT ADVISORY SEGMENT) AND MARGIN OF 33 .3% IN CASE OF CRISIL (ADVISORY AND RESEARCH SEGMENT) ON OPERATING COST, GIVING A MEAN MARGIN OF 26.93% AND ON THIS BASIS ADJUSTMENT WAS C OMPUTED AT RS.1,43,00,432/- AGAINST THE ADJUSTMENT OF RS.53366 732/- MADE BY TPO. THE DRP GAVE RELIEF OF RS.3,90,46,300/-. THE AO THE REFORE FOLLOWING THE ORDER OF DRP-II MADE ADDITION OF RS.1,43,00,433/- O N ACCOUNT OF TRANSFER PRICING ADJUSTMENT IN THE ASSESSMENT ORDER, AGGRIEV ED BY WHICH, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 3. BEFORE US, THE LD. AR FOR THE ASSESSEE RAISED NO OBJECTION AGAINST SELECTION OF FUTURE CAPITAL HOLDING LTD. (INVESTMEN T ADVISORY SEGMENT) AS COMPARABLE. HOWEVER HE RAISED SERIOUS OBJECTIONS AG AINST INCLUSION OF RESEARCH SEGMENT OF CRISIL LTD. IT WAS SUBMITTED TH AT THE ASSESSEE WAS ON INVESTMENT ADVISORY AND THOUGH AS PART OF INVEST MENT ADVISORY WORK, THE ASSESSEE DOES REQUIRE SOME RESEARCH BUT THE RES EARCH DONE BY THE ASSESSEE WAS NOT COMPARABLE TO CRISIL WHICH WAS DOI NG LARGE SCALE HIGH END RESEARCH WHEREAS THE ASSESSEE WAS A LOW END RES EARCH ENTITY LIMITED ONLY TO ONE CLIENT. THE LD. AR REFERRED TO THE ANNU AL REPORT OF CRISIL AT PAGE 56 OF THE PAPER BOOK IN WHICH IT WAS MENTIONED THAT CRISIL WAS INDIAS LEADING RESEARCH HOUSE WHICH MEETS RESEARCH NEEDS OF MORE THAN 600 DOMESTIC AND INTERNATIONAL CLIENTS OFFERING UNP ARALLELED WIDTH AND DEPTH OF RESEARCH SPANNING THE ENTIRE ECONOMY INCLU DING EQUITY RESEARCH. HE ALSO REFERRED TO DIRECTORS REPORT AT PAGE-60 OF THE PAPER BOOK IN WHICH IT WAS MENTIONED THAT CRISIL COLLABORATED WITH STAN DARD & POOR IN SELLING S&PS DATA AND INFORMATION PRODUCTS IN INDIA . THE R EPORT ALSO MENTIONED ITA NO.5173/M/12 A Y .08-09 6 THAT CRISIL HAD PENETRATION RATES IN THE BANKING SE GMENT EXCEEDING 90%. CRISIL HAD ALSO LARGE NUMBER OF EMPLOYEES WHIC H HAD INCREASED TO 1750 AS ON 31.3.2007. THE LD. AR POINTED OUT THAT I N CASE OF ASSESSEE, NUMBER OF EMPLOYEES EXCLUDING THE DIRECTORS WAS 18 WHICH INCLUDED ONLY 4 ANALYSTS AND ONE TRAINEE WHO WERE DOING RESEARCH. HE ALSO REFERRED TO SEGMENT WISE REVENUE IN CASE OF CRISIL GIVEN AT PAG E-99 OF THE PAPER BOOK WHICH SHOWS REVENUE OF RS.116.4 CRORES FROM TH E RESEARCH, RS.130 CRORES FROM RATING AND ONLY RS.8.76 CRORES FROM ADV ISORY. IT WAS THEREFORE URGED THAT ADVISORY SEGMENT OF CRISIL SHOULD BE EXC LUDED AS THE SAME WAS NOT COMPARABLE TO THE LOW END AND LIMITED RESEA RCH IN CASE OF THE ASSESSEE. THE LD. CIT-DR ON THE OTHER HAND SUPPORTE D THE ORDER OF DRP-II FOR INCLUSION OF RESEARCH SEGMENT AND PLACED RELIAN CE ON THE FINDINGS GIVEN BY THE DRP-II AND TPO. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING TP ADJUSTMENT I N RESPECT OF INTERNATIONAL TRANSACTION BEING THE INVESTMENT ADVI SORY FEES RECEIVED BY THE ASSESSEE FROM THE ASSOCIATE ENTERPRISE. THE TOT AL ADVISORY FEES RECEIVED WAS RS .15,01,91,667/- . THE AO HAD REFERRED THE TP ADJUST MENT IN RELATION TO INTERNATIONAL TRANSACTION TO THE TPO WHO SELECTED THE TNMM METHOD FOR COMPUTATION OF ARMS-LENGTH PRICE ON WHI CH THERE IS NO DISPUTE. THE ASSESSEE HAD SELECTED 4 COMPARABLES IN CLUDING CRISIL (ADVISORY SEGMENT) WHICH GAVE MEAN MARGIN OF 15.27% WHICH WAS COMPARABLE TO THE MARGIN OF 15% IN CASE OF THE ASSE SSEE. THE TPO HOWEVER REJECTED THREE COMPARABLES OTHER THAN CRISI L ON THE GROUND THAT THESE WERE NOT COMPARABLE AND IN CASE OF CRISI L ADOPTED BOTH ADVISORY AND RESEARCH SEGMENT FOR THE PURPOSE OF CO MPARISON. THE TPO ALSO SELECTED THREE MORE COMPARABLES, AFTER CONDUCT ING A FURTHER SEARCH ON THE BASIS OF INVESTMENT ADVISORY FEES AND IDEN TIFIED THREE COMPARABLES I.E. SUNDARAM BNP PARIBAS ASSET MANAGEM ENT LTD., DEUTCHE ITA NO.5173/M/12 A Y .08-09 7 ASSET MANAGEMENT LTD. AND URBAN INFRASTRUCTURE VENT URE CAPITAL THE MEAN MARGIN OF THE FOUR COMPARABLES SELECTED BY TPO WAS 57.06% AND ON THIS BASIS THE TPO RECOMMENDED TP ADJUSTMENT OF RS.5,33,46,732/-. ON OBJECTIONS FILED BY THE ASSESSEE, THE DRP-II FOU ND THAT THE THREE COMPARABLES OTHER THAN CRISIL SELECTED BY TPO HAD S UBSTANTIAL RELATED PARTY TRANSACTIONS IN EACH CASE AND THEREFORE THESE WERE NOT COMPARABLE. DRP-II HOWEVER AGREED WITH THE TPO TO CONSIDER BOTH THE ADVISORY AND RESEARCH SEGMENT OF CRISIL FOR THE PURPOSE OF COMPA RISON AND ALSO AGREED ON FUTURE CAPITAL HOLDING LTD. AS A COMPARAB LE. HE ALSO DIRECTED THE TPO TO ALLOW DEPRECIATION IN CASE OF CRISIL. TH E NEW MARGIN COMPUTED BY DRP IN CASE OF FUTURE CAPITAL HOLDING L TD. (INVESTMENT ADVISORY SEGMENT) AND IN CASE OF CRISIL (ADVISORY A ND RESEARCH SEGMENTS) CAME TO 20.56% AND 33.3% RESPECTIVELY. 4.1 THE ASSESSEE HAS RAISED NO OBJECTION BEFORE US AGAINST SELECTION OF FUTURE CAPITAL HOLDING LTD. (INVESTMENT ADVISORY SE GMENT) AS COMPARABLE AND ITS MARGIN COMPUTED BY DRP OF 20.56%. STRONG O BJECTIONS HAVE HOWEVER BEEN RAISED AGAINST INCLUSION OF RESEARCH S EGMENT IN CASE OF CRISIL WHICH IT HAS BEEN ARGUED, IS NOT COMPARABLE. IT HAS BEEN REQUESTED THAT ONLY ADVISORY SECTION SHOULD BE CONS IDERED WHEREAS AUTHORITIES BELOW HAVE CONSIDERED BOTH THE SEGMENTS I.E., RESEARCH AND ADVISORY. WE HAVE CONSIDERED THE MATTER CAREFULLY. CRISIL HAS SUBSTANTIAL REVENUE FROM RESEARCH I.E. RS.116.4 CRORES COMPARED TO ADVISORY REVENUE OF ONLY RS.8.76 CRORES. THE RATING REVENUE IS ALSO HIGH AT 130 CRORES. THE ANNUAL REPORT OF CRISIL FOR THE YEAR 2007 SHOWS THA T IT IS INDIAS LEADING INDEPENDENT AND INTEGRATED RESEARCH HOUSE WHICH MEE TS THE BUSINESS RESEARCH REQUIREMENTS OF MORE THAN 600 DOMESTIC AND INTEGRATED CLIENTS HAVING UNPARALLELED WIDTH AND BREADTH SPANNING THE ENTIRE ECONOMY. IT HAS PENETRATION RATE OF MORE THAN 90% IN THE BANKIN G SEGMENT AND HAS COLLABORATED WITH S&P IN SELLING DATA AND INFORMATI ON PRODUCTS IN INDIA. IT ITA NO.5173/M/12 A Y .08-09 8 HAS A HEAD COUNT OF 1750. IN CONTRAST, THE RESEARC H DONE BY THE ASSESSEE IS LIMITED TO THE ADVISORY WORK DONE FOR ONLY ONE C LIENT AND IT HAS ONLY 18 EMPLOYEES OUT OF WHICH THERE ARE ONLY FOUR ANALYSTS AND ONE TRAINEE ENGAGED IN RESEARCH. THEREFORE RESEARCH DIVISION OF CRISIL IN OUR VIEW IS NOT COMPARABLE TO THE LIMITED RESEARCH DONE BY THE ASSESSEE. HOWEVER IT IS ALSO TRUE THAT THE ASSESSEE AS ADMITTED BY THE L D. AR IS ALSO DOING SOME RESEARCH AS PART OF ITS ADVISORY DUTIES. THEREFORE, RESULTS OF ADVISORY SEGMENT OF CRISIL ALONE COULD NOT BE COMPARABLE TO THAT OF THE ASSESSEE WHICH HAS BOTH ADVISORY AND RESEARCH FUNCTIONS. FUR THER, IN THE ABSENCE OF ADEQUATE INFORMATION, IT IS NOT POSSIBLE TO ESTI MATE AS TO HOW MUCH OF THE RESEARCH REVENUE IS RELATED TO THE ADVISORY SEG MENT. IN SUCH A SITUATION, IN OUR VIEW, IT WILL BE APPROPRIATE TO E XCLUDE CRISIL AS A COMPARABLE. WE ARE THUS, LEFT WITH ONLY ONE COMPARA BLE I.E., FUTURE CAPITAL HOLDING LTD. (ADVISORY SEGMENT) WHICH IS AC CEPTABLE TO BOTH THE PARTIES. IT IS POSSIBLE TO COMPUTE ARMS LENGTH PRI CE ON THE BASIS OF EVEN ONE COMPARABLE BUT IN SUCH A CASE THE ASSESSEE WILL NOT BE ENTITLED TO BENEFIT OF 5% RANGE AS PER THE PROVISIO TO SECTION 92C(2). THIS VIEW IS SUPPORTED BY THE DECISION OF DELHI BENCH OF THE TR IBUNAL IN THE CASE OF HAWORTH (INDIA) (P.) LTD. VS DEPUTY COMMISSIONER OF INCOME-TAX (131 ITD 215). WE, DIRECT THE AO TO COMPUTE THE ARMS LE NGTH PRICE ON THE BASIS OF INCOME OF THE COMPARABLE FUTURE CAPITAL HO LDING LTD. (ADVISORY SEGMENT), WITHOUT GIVING THE BENEFIT OF 5% RANGE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/02/2013. SD/- SD/- ( I.P. BANSAL ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 22/02/2013. JV. ITA NO.5173/M/12 A Y .08-09 9 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.