Appeal Details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 8943 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
10 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-01-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
Not Allotted
Assessment Year
2011-2012
Appeal Filed On
24-02-2016
Judgement Text
INCOME-TAX APPELLATE TRIBUNAL -KBENCH MUMBAI , ,, , , , , , , ,, , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND SAKTIJIT DEY,JUDICIAL MEMBER / ITA (TP)/NO.927/MUM/2016 : /ASSESSMENT YEAR-2011-12 GOLDMAN SACHS (INDIA) SECURITIES PRIVATE LIMITED,951 A, RATIONAL HOUSE, APPASAHEB MARATHE MARG, PRABHADEVI, MUMBAI-400 025. PAN:AAFCA 6819 F VS. ACIT-CIRCLE-7(1)(1) ROOM NO.576,AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT) / ITA (TP)NO.902/MUM/2016 : /ASSESSMENT YEAR-2011-12 DCIT-CIRCLE-7(1)(1) 576, AAYAKAR BHAVAN, M.K.,MUMBAI-20. VS. GOLDMAN SACHS (INDIA) SECURITIES PRIVATE PRABHADEVI,MUMBAI-400 025. ( /APPELLANT ) ( / RESPONDENT) REV ENUE BY: SHRI N.K. CHAND-CIT ASS ESSEE BY: SHRI MADHUR AGARWAL / DATE OF HEARING: 20.10.2016 / DATE OF PRONOUNCEMENT:11.01.201 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE DIRECTIONS OF THE DISPUTE RESOLUTIO N PANEL(DRP),MUMBAI THE ASSESSEE AND THE ASSESSING OFFICER(AO)HAVE FILED CROSS-APPEALS F OR THE YEAR UNDER CONSIDERATION.ASSESSEE- COMPANY,ENGAGED IN PROVIDING NON-BINDING INVESTMENT ADVISORY SERVICES AND IT-ENABLED SERVICES(IT-E)TO ITS ASSOCIATED ENTERPRISE(AE),FILE D ITS RETURN OF INCOME,DECLARING INCOME OF RS.2,78,39,46,973/-.DURING THE ASSESSMENT PROCEEDIN GS,THE ASSESSING OFFICER(AO)MADE A REFERENCE TO THE TRANSFER PRICING OFFICER(TPO)TO DE TERMINE ARMS LENGTH PRICE(ALP)OF THE INTERNATIONAL TRANSACTIONS(IT.S)ENTERED INTO BY IT WITH IT AE.S. AFTER RECEIVING THE ORDER OF THE TPO,THE AO PROPOSED TP-ADDITION IN HIS DRAFT ORDER. THE ASSESSEE FILED OBJECTIONS BEFORE THE DRP.IN PURSUANCE OF THE DIRECTIONS OF THE DRP,THE A O COMPLETED THE ASSESSMENT U/S. 143 (3) R.W.S. 144C OF THE ACT,ON 27.10.2016, DETERMINING T HE INCOME OF THE ASSESSEE AT RS. 2,97, 58, 29,725/-. NON-BINDING INVESTMENT ADVISORY SERVICES: 2. FIRST GROUND OF APPEAL IS ABOUT INCLUSION/EXCLUSION OF CERTAIN COMPARABLES.DURING THE TRANSFER PRICING PROCEEDINGS,THE TPO FOUND THAT FOR THE YEAR UNDER CONSIDERATION THE ASS ESSEE HAD PROVIDED NON-BINDING INVESTMENT ADVISORY SERVIC ES TO ITS AES WORTH RS. 41.94 CRORES, THAT THE SERVICES WERE BENCHMARK USING THE TNMM , THAT THE PLI USED WAS OP/OC,THAT THE ASSESSEE WAS REMUNERATED WITH THE MARKUP OF 22% ON THE TOTAL OPERATING COSTS,THAT THE ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 2 ARITHMETIC MEAN OF THE COMPARABLES SELECTED BY THE ASSESSEE WAS DETERMINED AT 12.59% AND THEREFORE IT WAS CLAIMED THAT SAME WAS AT ARMS LEN GTH PRICE(ALP).HE FOUND THAT THE ASSESSEE HAD SELECTED SEVEN COMPARABLES FOR DETERMI NING THE ALP:HE REJECTED ALL THE COMPARABLES SELECTED BY THE ASSESSEE AND APPLIED TW O NEW COMPARABLES NAMELY MOTILAL OSWAL ADVISERS INDIA PRIVATE LTD.(MOIALP)AND LADDER UP CORPORATE ADVISORY PRIVATE LTD. (LCAPL).HE ARRIVED AT THE MARKUP OF 67.49% ON TOTAL COST OF BENCH-MARK.IN DOING SO,HE USED ONLY CURRENT YEARS DATA AND REJECTED THE USE OF MULTIPLE YEAR DATA. 3. DURING THE COURSE OF HEARING BEFORE THE DRP,THE ASS ESSEE OBJECTED TO EXCLUSION OF THE COMPARABLES SELECTED BY IT NAMELY ICRA MANAGEMENT C ONSULTING SERVICES LIMITED(ICRA), IDC INDIA LIMITED(IDCL),INFORMED TECHNOLOGIES LIMIT ED(ITL)AND INTEGRATED CAPITAL SERVIC -ES LIMITED (ICSL).IT ALSO OBJECTED TO INCLUSION OF THE MOIALP AND LCAPL IN THE FINAL LIST OF COMPARABLES. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ORDERS OF THE AO/TPO,THE DRP,IN THE CASE OF ICRA,HELD THAT THE ACTION OF THE TPO WA S IN ORDER,THAT THE FUNCTIONS PERFORMED BY ICRA WERE DIFFERENT FROM THE FUNCTIONS CARRIED OUT BY THE ASSESSEE, THAT ICRA WAS PROVIDING CONSULTING SERVICES AND WAS ENGAGED IN MANAGEMENT C ONSULTANCY,THAT THE ACTIVITIES PERFORM- ED BY THE ASSESSEE AND ICRA WERE FUNCTIONALLY DIFFE RENT,THAT BOTH COULD NOT BE CONSIDERED AS COMPARABLES.AFTER CONSIDERING THE ORDER OF THE TRIB UNAL IN THE CASE OF TEMASEK HOLDINGS ADVISERS INDIA LTD.(TEMASEK),THE DRP HELD THAT ICRA WAS NOT A GOOD COMPARABLE TO THE ASSESSEE. 3.I. REFERRING TO THE WEBSITE OF THE IDCL,THE DRP HELD T HAT IT WAS NOT ENGAGED IN THE ACTIVITIES OF PROVIDING INVESTMENT ADVISORY SERVICES,THAT ITS ACTIVITIES WERE FUNCTIONALLY ABSOLUTELY DIFFERENT FROM THE FUNCTIONS OF THE ASSESSEE,THAT T HE ACTIVITIES OF IDCL WERE IN AND ABSOLUTELY DIFFERENT SEGMENT FROM THE SEGMENT TO WHICH THE ACT IVITIES OF THE ASSESSEE BELONGED TO,THAT THOSE FACTORS WERE NOT AVAILABLE TO THE HIGHER APPE LLATE AUTHORITIES IN THE APPEALS FOR THE EARLIER ASSESSMENT YEARS.REFERRING TO THE DECISION OF THE TRIBUNAL DELIVERED IN THE CASES OF TEMASEK AND CARLISLE INDIA ADVISERS PRIVATE LTD.(IT A/7901/MUM/2011),THE DRP HELD THAT THE TPO/AO HAD RIGHTFULLY REJECTED THE COMPARABLE F ROM THE FINAL LIST. 3.II. DRP REFERRED TO THE ANNUAL REPORT OF THE ITIL AND H ELD THAT IT WAS NOT INVOLVED IN INVESTMENT ADVISORY SERVICES, THAT IT WAS NOT FUNCT IONALLY COMPARABLE WITH THE ASSESSEE. 3.III. SIMILARLY,IT REFERRED TO THE ANNUAL REPORT OF THE I CSL AND HELD THAT IT WAS ADVISING CORPORATE ENTITIES INTO BUSINESS RESTRUCTURING AND INBOUND DOMESTIC AND MERGERS AND ACQUISI - ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 3 TIONS,THAT THOUGH SERVICES WERE VERY DISTINCT FROM INVESTMENT ADVISORY SERVICES, THAT THE TPO HAD RIGHTFULLY REJECTED IT AS A VALID COMPARABLE. 3.IV. WITH REGARD TO MOIAPL,THE DRP HELD THAT IT SHOULD B E TAKEN OUT FROM THE LIST OF THE VALID COMPARABLES, AS IT WAS ENGAGED IN MERCHANT BA NKING AND OTHER ACTIVITIES, THAT THE FUNCTIONS PERFORMED BY IT WERE DIFFERENT FROM THE F UNCTIONS OF THE ASSESSEE. 3.V. ABOUT LCAPL,THE DRP OBSERVED THAT IT WAS A BOUTIQUE INVESTMENT BANKING FIRM THAT OFFERED FINANCIAL ADVISORY SERVICES NAMELY RE-CAPIT ALISATION, JOINT VENTURES, THAT SYNDICATE, PROJECT AND ACQUISITION FINANCING,IP OFFERINGS,MERG ERS AND ACQUISITIONS, STRATEGIC MANAGE - MENT ACCOUNTING, THAT AS PER THE ANNUAL REPORT IT H AD EARNED RS. 11.18 CRORES FROM FINANCIAL AND MANAGEMENT CONSULTING SERVICES, THAT IT HAD ACQ UIRED MERCHANT BANKING LICENCE IN JULY, 2010,THAT THERE WAS NO EVIDENCE THAT DURING THE YEA R 2010-11 ANY INCOME HAD BEEN RECEIVED FROM MERCHANT BANKING, THAT MERELY BEING A SEBI REG ISTERED MERCHANT BANKER DID NOT MEAN THAT COMPANY HAD EARNED ITS INCOME OR ANY PART OF I T FROM MERCHANT BANKING, THAT AO HAD RIGHTLY INCLUDED IT IN THE LIST OF VALID COMPARABLE S. 3.1. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE(AR)ARGUED THAT IF ICRA AND IDCL WERE INCLUDED IN THE FINAL LIST OF TH E COMPARABLES AND MOIALP WAS EXCLUDE -ED AS A VALID COMPARABLE,THE MARGIN WILL BE IN THE RANGE OF PLUS/MINUS 5% OF THE PERMISSIBLE LIMIT.HE RELIED UPON THE CASES OF AGM INDIA ADVISOR S PRIVATE LTD.(ITA/4757/ MUM/2015& 4801/MUM/2015),3I INDIA PRIVATE LTD.(ITA/581/MUM/20 15)AND TAMESEK(ITA/ 776/MUM/ 2015). THE DEPARTMENTAL REPRESENTATIVE(DR)ARGUED THAT IN T HE CASE OF IDCL THE DRP HAD TAKEN NOTE OF THE CONTENTS OF THE WEBSITE OF THE ASSESSEE , ADDITIONAL FACTS FOR THE YEAR UNDER CONSIDERATION WERE BROUGHT ON RECORD, THAT THE CASE S RELIED UPON BY THE AR WERE NO HELP TO THE ASSESSEE,THAT SUBSCRIPTION SERVICES WAS PART OF E- PRODUCT, THAT MARKET SERVICES AND EVENT MANAGEMENT SERVICES WERE RENDERED BY IDCL,IT WAS A PRODUCT COMPANY AND WOULD NOT BE COMPARED WITH THE ASSESSEE,THAT IT DID NOT HAVE ANY INVENTORY,THAT IDCLOPERATED UNDER SINGLE SEGMENT,THAT THE MAIN FOCUS OF THE COMPANY W AS ON MARKETING AS EVIDENT FROM THE GO TO MARKET SERVICES SEGMENT IS CONCERNED. HE REFERRE D TO PAGES 38, 861, 874, 875, 879 OF THE PAPER BOOK AND CONTENDED THAT PRINCIPLES OF RES-JUD ICATA WERE NOT APPLICABLE TO INCOME TAX PROCEEDINGS. ABOUT ICRA, HE ARGUED THAT NOTICE U/S. 133 (6) WAS ISSUED BY THE TPO, THAT ADDITIONAL FACTS WERE CONSIDERED BY HIM DURING TP P ROCEEDINGS, THAT THERE WAS DIFFERENCE IN QUALITY OF MANPOWER OF THE ASSESSEE AND ICRA, THAT THERE WAS DIFFERENT IN FAR ANALYSIS OF BOTH THE COMPANIES. ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 4 THE DR ARGUED THAT THE AUDITOR HAD FILED REPORT ABO UT THE ACTIVITIES OF MOIALP, THAT AUDIT REPORT HAD NOT BEEN DISCREDITED,THAT IF ICRA WAS TO BE INCLUDED AS VALID COMPARABLE THAN MOIALP COULD NOT BE EXCLUDED. ABOUT INFOSYS,THE DR ARGUED THAT TURNOVER FILTER WA S A VALID CRITERIA, IN THE CASE OF PENTAIR THE TRIBUNAL HAD UPHELD THE PROPOSITION THAT TURNOVER F ILTER SHOULD BE CONSIDERED WHILE DETERMINING THE ALP OF AN IT. WITH REGARD TO OTHER COMPARABLES,HE RELIED UPON THE ORDER OF THE TPO/DRP. IN HIS REJOINDER,THE AR STATED THAT DR HAD ADVANCED THE SAME ARGUMENTS THAT WERE RAISED BEFORE THE TRIBUNAL IN THE CASE OF AGM INDIA,THAT N OTHING NEW HAD HAPPENED DURING THE YEAR UNDER CONSIDERATION,THAT ICRA HAD CLAIMED THAT IT W AS IN THE FIELD OF MANAGEMENT CONSULT - ANCY.ABOUT IDCL,HE CONTENDED THAT THE DRP HAD NOT B ROUGHT ON RECORD THAT THE MATTER REFERRED TO IT WAS RELEVANT FOR THE YEAR UNDER CONS IDERATION,THAT THE COST OF MANUFACTURING FOR THE YEAR UNDER CONSIDERATION WAS SIMILAR,THAT ROYAL TY WAS THERE IN THE EARLIER YEARS ALSO, THAT SUBSCRIPTION WOULD NOT MAKE THE ASSESSEE PRODUCT CO MPANY. 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN THE CASE OF AGM INDIA ADVISORS PRIVATE LTD.(SUPRA), THE TRIBUNAL HAS DEALT WITH INCLUSION/ EXCLUSION OF ICRA AND IDCL AND MOIALP AS VALID COMP ARABLES FOR INVESTMENT ADVISORY SERVICES,THAT IT HAD CONSIDERED ALL THE ARGUMENTS T HAT HAVE BEEN RAISED BY THE DR.WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTIONS OF THE ORDE R OF AGM INDIA ADVISORS PRIVATE LTD.AND SAME READ AS UNDER: 6.A. FIRST WE WOULD TAKE UP THE MATTER OF ICRA.IN THAT R EGARD,THE DR ARGUED THAT PAGE 437,438 AND 462 OF THE PB SHOWED THAT ICRA WAS ENGA GED IN RENDERING CONSULTANCY SERVICES TO COMPANIES OTHER THAN IN FINANCIAL SECTOR I.E.URB AN DEVELOPMENT,WATER SECTOR ETC.,THAT IT WAS ALSO ENGAGED IN CROSS BORDER MERGERS AND ACQUISITIO NS TRANSACTIONS(PG.493 OF THE PB),THAT THE ANNUAL REPORT OF ICRA(PG.432-461 OF THE PB)DID NOT PROVIDE FOR ANY SEGMENTAL INFORMATION,THAT IF MOIAPL WAS REJECTED AS A COMPAR ABLE ON THAT GROUND ICRA SHOULD ALSO BE REJECTED,THAT THE TRIBUNAL ORDER OF TEMASEK(SUPR A)RELIED UPON BY THE FAA PERTAINED TO AY.2007-08 AND 2008-09,THAT SAME SHOULD NOT BE APPL IED TO THE YEAR UNDER CONSIDERATION.HE PLACED RELIANCE ON THE KERALA HIGH COURT DECISION O F KALPETTA ESTATES LTD.(211 ITR 635)TO SAY THAT RES-JUDICATA DID NOT APPLY TO INCOME-TAX P ROCEEDINGS. THE AR ARGUED THAT THE ISSUE IS DIRECTLY COVERED BY THE ORDER OF THE TRIBUNAL DELIVERED IN THE CASE OF TEMASEK(ITA/7761MUM/2015-AY.2010-11),THAT I CRA'S COMPARABILITY TO COMPANIES ENGAGED IN INVESTMENT ADVISORY WAS NO LONGER RES-IN TEGRA,THAT IT HAD BEEN RE-CONFIRMED BY THE ITAT IN THE CASE OF TEMASEK (SUPRA),THAT THE VE RY ARGUMENTS OF THE DR NARRATED ABOVE ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 5 WERE URGED BEFORE THE ITAT IN THAT MATTER, THAT ALT HOUGH THE ASSESSEE WAS OPERATING UNDER FINANCIAL SERVICES SECTOR IT WOULD PROVIDE INVESTME NT ADVISORY SERVICES WHICH INVOLVED UNDERTAKING RESEARCH,ANALYSIS TO ITS AE IN DIVERSE FIELD SUCH AS CHEMICALS, COMMODITIES AND RETAIL, DISTRIBUTION AND TRANSPORTATION, FINANCIAL AND BUSINESS SERVICES, MANUFACTURING AND INDUSTRIAL, MEDIA, ETC.WHICH INCLUDES FINANCIAL SER VICES SECTOR,THAT THE UNDERLYING FUNCTIONS /ACTIVITIES PERFORMED WITH RESPECT TO MANAGEMENT CO NSULTANCY SERVICES INVOLVED THE ANALYSIS OF THE BUSINESS AND OPERATIONS OF A COMPANY, ITS PR OFITABILITY,OPERATIONAL EFFICIENCIES,FUTURE OUTLOOK,ETC.BASED ON WHICH CONSULTANCY OR ADVISE WO ULD GIVEN TO THE MANAGEMENT OF A COMPANY WHICH WERE FUNCTIONALLY SIMILAR TO THE ACTI VITIES PERFORMED BY THE ASSESSEE FOR RENDERING INVESTMENT ADVISORY SERVICES,THAT NOTE 12 OF THE ANNUAL REPORT OF ICRA CLEARLY MENTIONED THAT IT HAD ONLY ONE BUSINESS SEGMENT I.E . CONSULTING SERVICES AND HAD NO OTHER PRIMARY REPORTABLE SEGMENT (PG.460 OF THE PB).MOREO VER,THE PRODUCT DESCRIPTION PROVIDED IN THE ANNUAL REPORT SPECIFIES MANAGEMENT CONSULTANCY SERVICES AS THE ONLY PRODUCT OFFERED BY THE COMPANY (PG.461 OF THE PB). WITH REGARD TO THE PG.439 OF THE PB,THE AR STATED T HAT ICRA HAD ONLY RENDERED ADVISORY SERVICES IN CASE OF ASIA'S LEADING COMPANY IN THE M ETALS AND ENERGY SECTOR CROSS BORDER M&A TRANSACTION.HE FURTHER ARGUED THAT MOIAPL HAD B EEN REJECTED ON THE GROUND THAT IT WAS ENGAGED IN MERCHANT BANKING INVESTMENT BANKING SERVICES WHICH WERE FUNCTIONALLY NOT COMPARABLE TO THE INVESTMENT ADVISORY SERVICES REND ERED BY THE ASSESSEE,THAT DESPITE SUCH DISSIMILARITY THE ACCOUNTS IT DID NOT GIVE BREAK-UP OF RESULTS FROM THE SAID TWO ACTIVITIES SEPARATELY, THAT IT COULD NOT BE TREATED AS A VALID COMPARABLE,THAT ICRA DID NOT HAVE SEPARATE SEGMENALS,THAT IT RENDERED ONLY ADVISORY SERVICES I N VARIED FIELDS,THAT HENCE THE ARGUMENT THAT BECAUSE ICRA HAD NO SEGMENTALS IT MUST BE REJE CTED AS MOIAPL IS LIABLE TO BE REJECTED WAS DEVOID OF MERITS,THAT THE DR,DURING HIS ARGUMEN T,FAILED TO MENTION THAT THE TRIBUNAL HAD UPHELD THE ACCEPTANCE OF ICRA AS A COMPARABLE IN TH E CASE OF TEMASEK FOR AY.2010-11 AS WELL,WHICH HAD BEEN ARGUED BY THE DR HIMSELF,THAT T HE TRIBUNAL HAD TAKEN A NOTE OF THE FACT THAT ICRA WAS RENDERING CONSULTANCY/ADVISORY SERVIC ES IN VARIOUS SECTORS AND AFTER CONSIDERING THESE FACTS,IT ADJUDGED ICRA TO BE A GO OD COMPARABLE, THAT ICRA SHOULD BE ACCEPTED AS A FUNCTIONALLY COMPARABLE COMPANY TO TH E NON-BINDING INVESTMENT ADVISORY SERVICES PROVIDED BY THE ASSESSEE. HE REFERRED TO T HE CASES OF TEMASEK HOLDINGS ADVISORS PRIVATE LIMITED(ITA/4203/MUM/2012 &6504/SSMUM/2012- AY.S.2007-08&2008-09), M/S BLACKSTONE ADVISORS PRIVATE LTD.(ITA/1581/MUM/2016- AY.2008-09). 6.A.I. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. BEFORE PROCEEDING FUTHER,WE WOULD LIKE TO MENTION THAT THE ASSESSEE IS ENGAGED IN PROVIDING NON- BINDING INVESTMENT ADVISORY SERVICES TO ITS AE.AS P ER THE AGREEMENT DATED 08.06.2009 THE ASSESSEE WAS TO PROVIDE REPORTS ON A TIMELY BASIS C ONTAINING NEWS AND INFORMATION ON ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 6 INVESTMENT AREAS INCLUDING INDUSTRIES AND/OR OTHER SPECIFIED AREAS THAT MAY INTEREST THE INVESTMENT MANAGER,TO PROVIDE NON-BINDING ADVISORY SERVICES TO THE INVESTMENT MANAGER IN RESPECT OF POTENTIAL INVESTMENT AND DIVESTMENT OPPO RTUNITIES IN INDIA OR ELSEWHERE,INCLUDING ADVICE ON THE STRUCTURING OF SUCH OPPORTUNITIES TO CARRY OUT RESEARCH AND ANALYSE AND IDENTIFY INVESTMENT OPPORTUNTI-ES AND TO CONDUCT DUE DILIGEN CE OF SUCH OPPORTUNITIES AND PROVIDE REPORTS,TO PROVIDE THE INVESTMENT MANAGER THE NECES SARY REPORTS, INFORMA -TION AND FEEDBACK IN CONNECTION WITH THE PERFORMANCE OF INVESTMENTS I N INDIA,THAT THE FAA HAD,AFTER CONSIDERING THE ACTIVITIES PERFORMED IT AND FOLLOWI NG THE ORDER OF THE ITAT IN THE CASES OF TEMASEK,HELD THAT THE COMPANY IS A VALID COMPARABLE . WE FIND THAT WHILE DECIDING THE APPEAL OF TAMASEK FOR THE AY.2010-11(SUPRA),THE TRIBUNAL H AD DEALT WITH ALL THE ARGUMENT THAT WERE ADVANCED BY THE DR BEFORE US.WE WOULD LIKE TO REPRO DUCE THE RELEVANT PORTION OF THE SAID ORDER AND SAME READS AS UNDER: 'ICRA MANAGEMENT CONSULTANCY SERVICES LTD. 10. LD. DR SUBMITTED THIS COMPARABLE WAS CHOSEN BY THE APPELLANT AND REJECTED BY THE TPO.MERELY BECAUSE THE REVENUE OF THIS COMPANY IS F ROM CONSULTING FEE THAT DOES NOT MEAN, IT IS FUNCTIONALLY COMPARABLE ALSO. THE TPO HAD CAR RIED OUT DETAILED COMPARABILITY ANALYSIS ON FAR BASIS WITH THIS COMPANY VIS-A-VIS THE APPELLANT . SUCH A COMPARISON HAD BEEN GIVEN IN TABULAR FORM IN PARA 11.1 OF THE TPO'S ORDER. THUS ON THE BASIS OF SUCH AN ANALYSIS, IT IS AMPLY CLEAR THAT, FUNCTIONS PERFORMED BY ICRA ARE DIFFERE NT FROM THAT OF THE ASSESSEE AND SO ALSO THE ASSETS EMPLOYED TO PERFORM THE FUNCTIONS AS WELL AS THE RISK INVOLVED. IF A CRITERION OF THE REVENUE FROM CONSULTANCY FEE IS TO BE TAKEN INTO CO NSIDERATION, THEN ON SAME LOGIC, MOTILAL OSWAL SHOULD ALSO BE INCLUDED IN THE LIST AS IT HAD ALSO SHOWN THE INCOME FROM CONSULTANCY AND SO ALSO IN OTHER CASES ALSO. THUS, THIS COMPARA BLE CANNOT BE INCLUDED ON ACCOUNT OF SINGLE SEGMENT OF REVENUE ALONE, THAT IS, FROM CONSULTANCY FEE BUT HAD TO BE ANALYSE ON FAR ANALYSIS WHICH THE TPO HAD DONE IN A VERY ELABORATE MANNER A T PAGES 9 TO 11 OF THE ORDER. THUS, THIS COMPARABLE HAD RIGHTLY BEEN REJECTED BY THE TPO.THE REAFTER, HE POINTED OUT VARIOUS OTHER ASPECTS AS GIVEN IN THE DIRECTORS REPORT OF ICRA FR OM PAGES 162 TO 164 AND SUBMITTED THAT THE FIELDS IN WHICH IT IS OPERATING IS VERY DIVERSE AND HAD ALSO ADVISED IN CROSS BORDER M&A. FURTHER, IF THE SKILL SET OF THE EMPLOYEES OF THE A PPELLANT IS TAKEN INTO CONSIDERATION, THEN IT WOULD BE SEEN THAT THE AVERAGE SALARY IS VERY HIGH WHICH IS EVIDENT FROM THE FACT THAT 22 TO 25 EMPLOYEES SALARY PAID WAS MORE THAN RS.20 CRORES AS COMPARED TO THE AVERAGE SALARY COST OF ICRA. THUS, GOING BY THE QUALITATIVE HUMAN ASSET, T HEN THERE IS A HUGE VARIATION, WHICH FAILS THE COMPARABILITY TESTS.ACCORDINGLY,THIS COMPANY SH OULD NOT BE INCLUDED. XXXXXXX '20.AT THE OUTSET, THIS COMPARABLE WAS SUBJECT MATT ER OF CONSIDERATION BEFORE THE TRIBUNAL IN AY 2008-09 & 2009-10, WHEREIN THIS COMPANY WAS HELD TO BE GOOD COMPARABLE BOTH ON THE GROUND OF FUNCTIONAL SIMILARITY AND IN VIEW OF PRIN CIPLES OF CONSISTENCY AS IT WAS HELD TO BE A ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 7 GOOD COMPARABLE BY THE TPO IN THE EARLIER YEARS. FR OM THE PERUSAL OF THE ANNUAL REPORT, WHICH IS APPEARING FROM PAGES 156 TO 187 OF THE PAP ER BOOK, WE FIND THAT IT IS ESSENTIALLY PROVIDING CONSULTANCY SERVICES IN DIVERSIFIED AREAS , LIKE IN GOVERNMENT SECTORS,INFRASTRUCTURE, ENERGY, CORPORATE ADVISORY, BANKING AND FINANCIAL S ERVICES, ETC. IT FOCUSES ON CONSULTANCY AND ADVISORY WHICH IS ITS CORE AREA AND COMPETENCY. THE REVENUE GENERATION IS PURELY FROM CONSULTANCY FEES WHICH IS EVIDENT FROM PROFIT AND L OSS ACCOUNT AS ON 31ST MARCH 2010 (APPEARING AT PAGE 176 OF THE PAPER BOOK). THE TPO IN HIS ORDER HAD NOTED THAT ITS CONSULTATION OR ADVISORY OPERATIONS RANGES IN VARIO US FIELDS WHICH HAVE BEEN TABULATED BY HIM AT PAGES 9 TO 11 OF THE ORDER, WHICH ACCORDING TO H IM APPELLANT IS NOT PERFORMING. ON THE PERUSAL OF THE DIRECTORS' REPORT AND ALSO THE REMAR KS OF THE TPO, WE FIND THAT THE ICRA MANAGEMENT IS PROVIDING CONSULTANCY SERVICES IN A M YRIAD AREAS RANGINGFROM DEVELOPMENT, TRANSPORTATION, URBAN INFRASTRUCTURE, ENERGY SECTOR , BANKING AND FINANCIAL SERVICES AND ADVISING CROSS BORDER M&A TRANSACTION ETC. SOME OTH ER OBSERVATION MADE BY THE TPO IS THAT ICRA HAD PARTICIPATED IN VARIOUS INTERNATIONAL FORU MS, PARTNERED WITH FOREIGN COMPANY IN MULTIPLE PROJECTS AND HAD A VERY BIG CLIENT BASE UN LIKE APPELLANT. HOWEVER ALL THESE FACTS DO NOT AFFECT THE CORE COMPETENCY AND FUNCTIONS OF THE SAID COMPANY, WHICH IS ADVISORY, BECAUSE IN ALL THE FIELDS IT IS RENDERING ONLY ADVISORY AND CONSULTANCY SERVICES. THE WHOLE REVENUE IS AGAIN FROM' CONSULTANCY/ADVISORY FEES. IN THE INSTA NT CASE ALSO THE APPELLANT IS PROVIDING INVESTMENT ADVISORY SERVICES TO ITS AE IN DIVERSE I NDUSTRIES LIKE, INFRASTRUCTURE, TELECOM, MEDIA, BANKING ETC. TO ENABLE THE AE TO TAKE DECISI ON FOR MAKING INVESTMENTS.THE FUNCTIONS OF CONSULTANCY/ADVISORY HAVE TO BE SEEN AS ITS CORE COMPETENCE AREA AND NOT IN THE FIELD IN WHICH SUCH CONSULTANCY IS GIVEN.UNDER THE TNMM, ONE HAD TO SEE THE TRANSACTION UNDERTAKEN ARE COMPARABLE OR NOT AND WHETHER ANY ADJUSTMENT IS REQUIRED TO OBTAIN A RELIABLE RESULT, BECAUSE UNDER TNMM THE NET MARGIN ARE LESS AFFECTED BY TRANSACTIONAL DIFFERENCES AND IS MORE TOLERANT TO SOME MINOR FUNCTIONAL DIFFERENCES BETWEEN CONTROLLED AND UNCONTROLLED TRANSACTIONS. HOWEVER, IF ANY UNIQUE FUNCTION OR PR OPERTY SIGNIFICANTLY AFFECTS THE OPERATING COSTS OR NET MARGIN OR HAD A BEARING IN THE GENERAT ION OF REVENUE ITSELF, THEN IT CANNOT BE CONSIDERED TO BE A FIT COMPARABLE FOR BENCHMARKING THE NET MARGINS. HERE IT IS NOT THE CASE WHERE THERE IS ANY UNIQUE FUNCTIONS MATERIALLY AFFE CTING THE REVENUE OR NET MARGINS VIS-A-VIS THE FUNCTIONS PERFORMED BY ICRA.HENCE ON FUNCTIONAL LEVEL IT IS A GOOD COMPARABLE. AS STATED EARLIER, IN THE EARLIER YEARS, THE TPO HAD A CCEPTED ICRA TO BE A COMPARABLE AND IN LATER YEARS THE TRIBUNAL IN AY 2008-09 & 2009-10 HAD HELD ICRA MANAGEMENT TO BE GOOD COMPARABLE QUA THE FUNCTIONS OF THE APPELLANT AND T HERE BEING NO MATERIAL CHANGE ON FACTS, FUNCTIONAL PROFILE OR ANY OTHER FACTOR IN THIS YEAR , THEN AS MATTER OF CONSISTENCY, WE DO NOT WANT DO DEVIATE FROM OUR FINDINGS GIVEN IN THE EARL IER YEARS. THERE CANNOT BE A PICK AND CHOOSE OF COMPARABLES EVERY YEAR UNLESS THERE ARE S OME MATERIAL DIFFERENCE IN FACTS AND ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 8 CIRCUMSTANCES COMPELLING TO TAKE A DIFFERENT CONCLU SION. THUS, WE HOLD THAT ICRA MANAGEMENT IS A GOOD COMPARABLE AND SHOULD BE INCLU DED IN THE LIST OF FINAL COMPARABLES. ' IT IS FURTHER PERTINENT TO NOTE HERE THAT IT IS NOT IN DISPUTE THAT THE FUNCTIONAL PROFILE OF TEMASEK(SUPRA)WAS COMPARABLE WITH THE ASSESSEE.WE H AVE COMPARED THE FUNCTIONAL PROFILES OF BOTH THE COMPANIES FOR THE AY.2010-11 AND HAVE FOUND THE M ALMOST SAME,THAT ICRA WAS ACCEPTED AS A COMPARABLE IN THE ASSESSEE 'S OWN CASE IN SUBSEQUEN T YEARS I.E.IN THE AY.S.2012-13 AND 2013-14,THAT THE TRIBUNAL HAD CONSISTENTLY ACCEPTED ICRA A VALID COMPARABLE IN OTHER INVESTMENT ADVISORY CASES.WHILE DECIDING THE APPEALS OF TAMASEK FOR THE AY.S.2007-08 AND 2008-09,THE TRIBUNAL HAS HELD AS UNDER: '51(I) THIS COMPANY IS ENGAGED IN OPERATIONS OF ADVISORY SERVICES AND IS OFFERING CONSULTATION SERVICE IN THE AREA OF STRATEGY, RISK MANAGEMENT, OPERATIONS, IMPROVEMENT REGULATORY ECONOMICS AND TRANSACTIONS ADVISORY. FRO M THE VARIOUS FIELDS OF ACTIVITIES AS SEEN FROM THE DIRECTORS' REPORT, IT IS SEEN THAT THIS CO MPANY IS PROVIDING MANAGEMENT AND ADVISORY SERVICES FOR VARIOUS TYPES OF INDUSTRIES. ALL ITS R EVENUE IS GENERATED FROM CONSULTATION FEES. THUS, THIS COMPANY IS GIVING CONSULTATION IN VARIOU S TYPES OF INDUSTRIES THROUGH INVESTMENT ADVISORS. THUS, THIS COMPANY IS A GOOD COMPARABLE M ORE SO WHEN IT HAD BEEN ACCEPTED BY THE TPO IN THE EARLIER YEAR AS WELL AS IN THE SUCCEEDIN G YEAR; ' IN THE CASE OF M/S BLACKSTONE ADVISORS PRIVATE LIMI TED (SUPRA),THE TRIBUNAL HAS HELD AS FOLLOW: 'C)THIS COMPANY IS PROVIDING CONSULTANCY SERVICES I N DIVERSE AREAS LIKE, GOVERNMENT, INFRASTRUCTURE, ENERGY, BANKING AND FINANCIAL SERVI CES ETC. ITS CORE COMPETENCE IS MAINLY ADVISORY SERVICES IN VARIOUS INDUSTRIES. ITS REVENU E GENERATION IS FROM CONSULTANCY FEES. THUS,A COMPANY WHICH HAD PROVIDED MANAGEMENT, CONSU LTANCY SERVICES IN DIVERSE FIELDS CAN BE HELD AS COMPARABLE TO INVESTMENT ADVISORY COMPAN IES AS THE APPELLANT WHILE GIVING INVESTMENT ADVISORY SERVICES TOO ANALYSES THE VARIO US SECTORS OF INDUSTRIES WHILE RECOMMENDING FOR INVESTMENT. AT A FUNCTIONAL LEVEL THIS COMPANY CAN BE VERY WELL SAID TO BE A GOOD COMPARABLE AS IT IS PURELY ON ADVISORY SERVI CES RENDERING COMPANY. MOREOVER, THIS COMPANY HAD BEEN HELD TO BE TO THE INVESTMENT ADVIS OR LTD IN THE TEMASEK HOLDINGS ADVISORS (INDIA) PVT LTD (SUPRA) '. WE FURTHER FIND THAT THE VERY ARGUMENT OF THE DR TH AT WERE ADVANCED BEFORE US, WERE CONSIDERED AND REJECTED BY THE ITAT IN THE CASE OF TEMASEK FOR AY. 2010-11. WE FIND THAT THE ITAT RECORDS THE DR'S SUBMISSION AS UNDER: 'IF A CRITERION OF THE REVENUE FROM CONSULTANCY FEE IS TO BE TAKEN INTO CONSIDERATION, THEN ON SAME LOGIC, MOTILAL OSWAL SHOULD ALSO BE INCLUDED I N THE LIST AS IT HAD ALSO SHOWN THE INCOME FROM CONSULTANCY AND SO ALSO IN OTHER CASES ALSO. ' THE REFERENCE MADE BY THE DR TO THE KERALA HIGH COU RT DECISION OF KALPETTA ESTATES LTD.[211 ITR 635] TO SAY THAT RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS IS NOT RELEVANT IN THE SAID PROCEEDINGS AS THERE ARE NO NEW MATERIAL P LACED ON RECORDS BY THE DR WITH REGARDS TO ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 9 THE CHANGE IN FUNCTIONAL PROFILE OF ICRA OR TEMASEK HOLDINGS ADVISORS (INDIA) PRIVATE LIMITED. AFTER CONSIDERING THE SAME ARGUMENTS THE TRIBUNAL H AD HELD,AS STATED EARLIER,THAT ICRA WAS A VALID COMPARABLE FOR INVESTMENT ADVISORY COMPANY AND HAD EMPHASIZED ON FOLLOWING THE RULE OF CONSISTENCY.WE FIND THAT IN THE SUBSEQUENT YEARS IC RA HAS BEEN ACCEPTED A VALID COMPARABLE,THAT ALL THE ARGUMENTS RAISED BY THE DR IN THE MATTER OF TAM ASEK FOR THE AY.2010-11,HAVE BEEN DEALT EXTENSIVELY BY THE TRIBUNAL,THAT IT HAD REJECTED TH E ARGUMENTS RAISED BY THE DR.RESPECTFULLY FOLLOWING THE ORDERS OF THE TRIBUNAL DELIVERED IN THE CASES M ENTIONED IN EARLIER PARAGRAPHS,WE HOLD THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY.SO,CONFIRMING HIS ORDER WE HOLD THAT HE HAD RIGHTLY INCLUDED ICRA IN THE LIST OF VA LID COMPARABLES. 6.B. WITH REGARD TO IDCL THE DR ARGUED THAT IT WAS A PRO DUCT COMPANY,THAT IT WOULD FOLLOWS AS-9 TO RECOGNISE REVENUE,THAT THE PAYMENT OF COPYR IGHT REFLECTED THAT IDCL WAS BUYING COPYRIGHTED PRODUCTS AND SELLING THE SAME,THAT THAT IT HAD INCOME FROM BUSINESS CONVENTIONS, THAT THAT IT DEALT IN PRODUCTS..HE REFERRED TO THE PG. 469,475,481,484-486 OF THE PAPER BOOK . HE ALSO REFERRED TO WEBSITE PRINT OUTS TITLED 'IDC' S GO-TO-MARKET SERVICES... IN HIS REPLY,THE AR ARGUED THAT THE FAA HAD CONSIDE RED THE ACTIVITIES PERFORMED BY THE ASSESSEE,THAT HE HAD FOLLOWED THE ORDERS OF THE TRI BUNAL DELIVERED IN THE CASES OF SANDSTONE CAPITAL ADVISORS PRIVATE LIMITED (ITA/6315/MUM/2012 )AND TEMASEK (SUPRA)AND HAD HELD THAT THE COMPANY WAS A VALID COMPARABLE.THE AR STAT ED THAT MATTER OF ICDL WAS COVERED BY THE ORDER OF TEMASEK FOR THE AY.2010-11,THAT IDCL'S COMPARABILITY TO COMPANIES ENGAGED IN INVESTMENT ADVISORY WAS NO LONGER RES INTEGRA,THAT IT HAD BEEN RE-CONFIRMED BY THE ITAT IN THE CASE OF TEMASEK(SUPRA),THAT THE FUNCTIONAL PROF ILE OF TEMASEK FOR THE AY.2010-11WAS COMPARABLE WITH THE ASSESSEE,THAT IT WAS ACCEPTED A S A COMPARABLE IN THE ASSESSEE'S OWN CASE IN SUBSEQUENT YEARS,THAT THE TRIBUNAL HAS ACCEPTED IT A VALID COMPARABLE IN OTHER INVESTMENT ADVISORY CASES.HE REFERRED TO THE CASE OF SANDSTONE CAPITAL ADVISORS PRIVATE LIMITED(ITA/6315/MUM/2012-AY.2008-09),TEMASEK(SUPRA -AY. S.2007-08, 2008-09),THAT THE ACTIVITIES AND FUNCTIONS OF IDCL FROM THE AY.2008-0 9,HAVE REMAINED UNCHANGED INCLUDING THE DURING THE YEAR UNDER CONSIDERATION.HE REFERRED TO THE ANNUAL REPORT OF IDCL FOR THE YEAR ENDING 31.03.2008 AND STATED THAT PAGE 469 OF THE P B SHOWED THAT IDCL HAD INCOME FROM SALES AND SERVICES,THAT BECAUSE THE ANNUAL ACCOUNTS USED THE TERM SALES IT DID NOT MEAN THAT IDCL SOLD PRODUCTS AS ANY TRADER OR MANUFACTURER WO ULD,THAT THE PG.482 CLEARLY MENTIONED THAT THE COMPANY WAS ENGAGED IN RENDERING MARKET RE SEARCH AND MANAGEMENT CONSULTANCY SERVICES,THAT AS A SERVICE PROVIDER IS ALSO REQUIRE D TO FOLLOW AS-9,THAT IT WAS INCORRECT TO SAY THAT FOLLOWING AS WOULD SHOW THAT IDCL WAS A TRADER OR MANUFACTURER OF PRODUCTS, THAT EXPENSES INCURRED TOWARDS THE COPYRIGHT WERE CONSID ERED TO BE OPERATING IN NATURE AND FORMED ONLY 6.17% OF THE TOTAL EXPENDITURE INCURRED DURING THE YEAR,THAT PAYMENT FOR COPYRIGHT WOULD ONLY SHOW THAT IDCL USES CERTAIN CO PYRIGHTED MATERIAL WHILE RENDERING ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 10 SERVICES, THAT PG.486 OF THE PB MADE IT CLEAR THAT THE WORD PRODUCTS USED BY IDCL IN ITS ANNUAL ACCOUNTS REFERRED TO NOTHING BUT THE AREAS I N WHICH IT PROVIDES RESEARCH/ADVISORY VIZ. INFRASTRUCTURE TECHNOLOGY SEGMENT (GLOBAL IT),FINAN CE (INVESTMENT RESEARCH ADVISORY), MARKETING (CMO ADVISORY),THAT THE SALE INCOME REFER RED TO BY THE DR RELATED TO THE SALE OF VARIOUS RESEARCH REPORTS WHICH ARE PREPARED BY IDCL ON THE BASIS OF THE RESEARCH, ANALYSIS AND SURVEY UNDERTAKEN BY THEM,THAT IDCL COULD NOT B E CONCLUDED TO BE A PRODUCT COMPANY,THAT THE THREE PAGE HAND-OUT TITLED 'ABOUT IDC GO-TO-MARKET SERVICES', SUBMITTED BY THE DR PERTAINED TO AND PROVIDED INFORMATION IN CONNECTION WITH IDC INC. AND NOT IDCL,THAT THE WEB SITE PRINT OUTS TITLED 'IDC'S GO -TO-MARKET SERVICES INCLUDE'WERE PRINTS OF A WEB SITE TAKEN ON 16.12.2015,THAT THE INFORMATION DID NOT RELATE TO THE YEAR UNDER CONSIDERATION AND HENCE COULD NOT BE RELIED UPON, T HAT THERE WAS NOTHING IN THE PRINTOUTS WHICH SUGGESEDS THAT IDCL WAS A PRODUCT COMPANY OR THAT IT WAS NOT A VALID COMPARABLE TO THE ASSESSEE. 6.B.I. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE ADJUDICATING THE APPEAL OF TAMASEK FOR THE AY .2010-11 THE TRIBUNAL HAD HELD AS UNDER: 'THIS COMPARABLE THOUGH ACCEPTED BY THE TPO AS A GO OD COMPARABLE, HOWEVER, THE DRP HAS ADDITIONALLY REJECTED THIS COMPARABLE. IN ASSESSMEN T YEAR 2008-09, THE TRIBUNAL HAD HELD TO BE A GOOD COMPARABLE,ON THE GROUND THAT THIS COMPANY I S ALSO ENGAGED IN THE ADVISORY AND CONSULTANCY SERVICES FOR THE PURPOSE OF INVESTMENT MADE IN VARIOUS SECTORS AND SECONDLY,IT HAS BEEN FOUND TO BE GOOD COMPARABLE BY THE TPO IN THE ASSESSMENT YEAR 2007-08 AND 2009- 10. ONCE COMPANY HAS BEEN HELD TO BE GOOD COMPARABL E CONSISTENTLY FOR THREE YEARS THEN WITHOUT ANY CHANGE IN THE MATERIAL FACTS, IT CANNOT BE HELD THAT THIS COMPARABLE COULD BE REJECTED IN THIS YEAR. MOREOVER, IN THE CASE OF CAR LYLE ADVISORY INDIA LTD.,ITAT MUMBAI BENCH,REPORTED IN 43 TAXMAN. COM.184,THE TRIBUNAL H ELD THAT THIS COMPANY IS A GOOD COMPARABLE WITH THE COMPANIES RENDERING INVESTMENT ADVISORY SERVICES.THIS DECISION OF THE CARLYLE ADVISORS HAVE ALSO UPHELD BY THE HON 'BLE B OMBAY HIGH COURT.MOREOVER, WE HAVEALREADY DISCUSSED THE FUNCTIONS PERFORMED BY TH E 1DC INDIA LTD WHILE DEALING WITH LD. COUNSEL'S ARGUMENT THAT FUNCTIONS OF ADVISORY SERVI CES ARE QUITE SIMILAR TO THE FUNCTIONS OF THE APPELLANT AND, THEREFORE, WE ACCEPT THE APPELLANT'S CONTENTION THAT THIS COMPARABLE CANNOT BE REJECTED.ACCORDINGLY, SAME IS DIRECTED TO BE INCLUD ED IN THE COMPARABILITY LIST. ' WE FIND THAT IDCL HAD BEEN ACCEPTED BY THE TPO AS A VALID COMPARABLE TO THE ASSESSEE FOR THE AY.S. 2012-13 AND 2013-14.IT IS FOUND THAT THE VERY ARGUM ENTS OF THE DR NARRATED ABOVE WERE URGED BEFORE THE ITAT IN THE CASE OF SANDSTONE CAPITAL ADVISORS PRIVATE LIMITED(SUPRA)AS UNDER: '7.1.1 PER CONTRA, SHRI AJEET KUMAR JAIN,LD.CIT DR HAD SUBMITTED THAT IN THE CASE OF IDC INDIA LTD., THE INCOME HAD BEEN SHOWN IN THE P&L AC COUNT UNDER THE HEAD 'SALES AND SERVICES' INCOME. THE DESCRIPTION OF SALES HAD NOT BEEN GIVEN IN THE RECORDS. HE HAD FURTHER POINTED OUT THAT AS PER THE SCHEDULE TO THE BALANCE SHEET; THE GENERAL BUSINESS PROFILE OF [DC INDIA LTD IS ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 11 GIVEN AS (CONVERSION INCOME AND MANAGEMENT CONSULTA NCY) CONDUCT OF RESEARCH AND SURVEY, BUSINESS FUNCTIONS AND MANAGEMENT CONSULTANCY; THER EFORE,THIS COMPANY IS FUNCTIONALLY DIFFERENT FROM THE BUSINESS PROFILE OF THE APPELLAN T. WE FURTHER FIND THAT THE TRIBUNAL HAS DECIDED THE M ATTER AS FOLLOW: 8. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE MAIN BUSINESS OF THE ASSESSEE FROM WH ICH IT HAD DERIVED ITS INCOME IS CONDUCTING RESEARCH AND SURVEY, BUSINESS CONVERSION AND MANAGE MENT CONSULTANCY. THOUGH THE SEPARATE RESULTS IN RESPECT OF EACH ACTIVITY ARE NOT PROVIDE D; HOWEVER, PRIMA FACIE, IT APPEARS THAT THE COMPANY IS IN THE BUSINESS OF MARKETING RESEARCH AN D MANAGEMENT CONSULTANCY.THEREFORE,AS FAR AS THE FUNCTIONS OF IDC INDIA LTD ARE CONCERNED , THE SAME ARE SIMILAR TO THE ACTIVITY OF THE APPELLANT. THEREFORE, IN OUR CONSIDERED VIEW,IDC IN DIA LTD CAN BE CONSIDERED AS A GOOD COMPARABLE FOR THE PURPOSE OF DETERMINATION OF ALP. ' IT IS FOUND THAT THE ANNUAL REPORT OF IDCL(AT NOTE 13 ON PAGE 482 OF THE PB), MENTIONS THE FOLLOWING: 'THE COMPANY IS ENGAGED IN THE BUSINESS OF 'MARKET RESEARCH AND MANAGEMENT CONSULTANCY WHICH IS IDENTIFIED AS THE ONLY AND PRIMARY BUSINES S SEGMENT OF THE COMPANY' FURTHER ALL THE OPERATING FACILITIES LOCATED IN (INDIA) ' 6.B.II. WE ARE OF THE OPINION THAT IDCL WAS NOT A PRODUCT C OMPANY,THAT HAD IT BEEN A TRADER OF PRODUCTS IT WOULD HAVE 'STOCK' APPEARING IN ITS BAL ANCE SHEET,THAT IT WAS A FACT THAT NO SUCH OPENING OR CLOSING STOCK WAS APPEARING IN THE BALANCE SHEET ,THAT THE SAID FACT CLEARLY DEMONSTRATED THAT IDCL WAS NOT A PRODUCT COMPANY AS SUGGESTED BY THE DR.AN ALYSIS OF PAGE 469 OF THE PB REVEAL THAT IT WAS CLEAR THAT THERE IS NO INCOME FROM BUSINESS CONVENT ION EARNED BY IDCL DURING THE YEAR.IN THESE CIRCUMSTANCES,BY USING THE WORD PRODUCTS IDCL WOULD NOT BECOME A TRADER OR A MANUFACTURER OF PRODUCTS.THE UNDERLYING FUNCTIONS/ACTIVITIES PERFOR MED WITH RESPECT TO RESEARCH AND SURVEY SERVICES INVOLVES THE ANALYSIS OF THE BUSINESS AND OPERATION S OF A COMPANY/SECTOR.IDCLS PROFITABILITY, OPERATIONAL EFFICIENCIES,FUTURE OUTLOOK,ETC. WHICH WERE SIMILAR TO THAT OF THE FUNCTIONS AND ACTIVITIE S PERFORMED BY THE ASSESSEE FOR RENDERING INVESTMENT ADVISORY SERVICES.THE AR ALSO REFERRED TO THE NOTE (II) TO THE ANNEXURE TO THE AUDITOR'S REPORT,IN SUP PORT OF HIS ARGUMENT THAT IDCL WAS NOT A PRODUCT COMPANY(PG.466 OF THE PB.).THE NOTE READS AS UNDER: 'THE COMPANY IS A RESEARCH COMPANY, PRIMARILY DEALI NG IN RESEARCH AND SURVEY SERVICES AND PRODUCTS.IT DOES NOT HAVE ANY PHYSICAL INVENTORIES' . IN OUR OPINION,THE NOTE CLEARLY PROVES THAT IDCL WA S NOT A PRODUCT COMPANY. XXXXXX CONSIDERING THE ABOVE,WE HOLD THAT THE FAA WAS JUST IFIED IN HOLDING THAT IDCL SHOULD BE ACCEPTED AS A FUNCTIONALLY COMPARABLE COMPANY TO THE NON-BIN DING INVESTMENT ADVISORY SERVICES PROVIDED BY THE ASSESSEE. WITH REGARD TO MOIALP THE TRIBUNAL HAS HELD AS UNDE R: ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 12 4.B. IN THE CASE OF TAMASEK(SUPRA)FOR THE AY.2010-11,THE TRIBUNAL HAS HELD THAT MOIAPL CANNOT BE CONSIDERED A VALID COMPARABLE,AS FAR AS I NVESTMENT ADVISORY SERVICES ARE CONCERNED. PARA 25 OF THE ORDER READS AS FOLLOW: 25. THIS COMPARABLE HAS BEEN INCLUDED BY THE TPO AN D WHILE INCLUDING THE SAID COMPARABLE HE HAS OBSERVED THAT ITS INCOME IS ONLY FROM ADVISORY FEES DURING THE YEAR AND IT IS PERFORMING ADVISORY SERVICES IN THAT FIELD OF INVESTMENT LIKE ASSESSEE. BEFORE US, LD. CIT DR ARGUING FOR ITS INCLUSION SUBMITTED THAT, IF THE ICRA MANAGEMENT SERVICES CAN BE INCLUDED FOR HAVING REVENUE FROM ADVISORY SERVICES THEN ON SAME ANALOGY THIS COMPANY SHOULD A LSO BE GIVEN THE SAME TREATMENT. FROM THE PERUSAL OF THE DIRECTORS REPORT, IT IS SEEN THAT T HIS COMPANY DERIVES ITS BUSINESS INCOME FROM FOUR DIFFERENT BUSINESS VERTICALS, I.E. EQUITY CAPITAL M ARKETS, MERGER AND ACQUISITIONS, PROFIT EQUITY SYNDICATIONS AND STRUCTURED DEBT. IT ALSO GIVE ADVI SES ON CROSS BORDER ACQUISITION. ITS CORE COMPETENC E IS IN THE FIELD OF MERCHANT BANKING. IT ALSO PROVID ES COMPREHENSIVE INVESTMENT BANKING SOLUTIONS AND TRANSACTION EXPERTISE COVERING PRIVATE PLACEMENT OF EQUITY, DEBT AND CONVERTIBLE INSTRUMENTS IN INTERNATIONAL AND DOMESTIC CAPITAL MARKETS, MONITOR ING MERGERS AND ACQUISITIONS AND ADVISING M&A AS PROFESSIONAL AND RESTRUCTURING ADVISORY AND IMPL EMENTATIONS. IT IS ALSO INVOLVED IN VARIOUS PROFESSIONAL ACTIVITIES OF THE MERCHANT BANKING. A MERCHANT BANKER PROVIDES CAPITAL TO COMPANIES IN THE FORM OF SHARE OWNERSHIP INSTEAD OF LOANS. IT AL SO PROVIDES ADVISORY ON CORPORATE MATTERS TO THE COMPANIES IN WHICH THEY INVEST. THE FOCUS IS ON NE GOTIATED PRIVATE EQUITY INVESTMENT. THE WIDE RANGE OF ACTIVITIES INCLUDE PORTFOLIO MANAGEMENT, C REDIT SYNDICATION, COUNSELING ON M&A, ETC. THIS WHOLE RANGE OF FUNCTIONS AND ACTIVITIES CARRIED OUT BY MOTILAL OSWAL IS DEFINITELY ARE FAR WIDER AND MUCH DIFFERENT FROM INVESTMENT ADVISORY SERVICES WH ERE CORE FUNCTIONS IS TO GIVE ADVICES FOR MAKING THE INVESTMENTS IN DIVERSIFIED FIELDS. A COMPANY WH ICH IS ENGAGED IN MERGER AND ACQUISITIONS, PRIVATE EQUITY SYNDICATION, LOAN/CREDIT SYNDICATION AND PER FORMING MOST OF THE FUNCTION OF A MERCHANT BANKER, THEN THE ENTIRE FUNCTIONS AND TRANSACTIONS AFFECTS THE GENERATION OF REVENUE AND MARGINS. SUCH FUNCTIONS ARE ENTIRELY DIFFERENT FROM INVESTME NT ADVISORY SERVICES. MERE CLASSIFICATION OF REVENUE AS ADVISORY FEES WILL NOT PUT THE COMPANY IN A COMPARABLE BASKET SANS FUNCTIONAL SIMILARITY AND TRANSACTIONAL ANALYSIS. IN CASE OF CARLYLE INDI A ADVISORS PVT. LTD (SUPRA), IT HAS BEEN HELD THAT, THE MERCHANT BANKING FUNCTIONS ARE ENTIRELY DIFFERE NT FROM INVESTMENT ADVISORY SERVICES AND THIS DECISION OF THE TRIBUNAL HAS BEEN UPHELD BY THE HON BLE BOMBAY HIGH COURT. THUS, IN VIEW OF PLETHORA OF JUDICIAL DECISIONS AS REFERRED TO BY LD . COUNSEL AND IN VIEW OF FUNCTIONAL DIFFERENCES AS DISCUSSED AS ABOVE, WE HOLD THAT MOTILAL OSWAL CANN OT BE PUT INTO THE COMPARABILITY LIST AND IS DIRECTED TO BE EXCLUDED. IN THE CASE OF WELLS FARGO REAL ESTATE ADVISORS PVT .LTD.(SUPRA)SIMILAR VIEW WAS TAKEN AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT ON 07.12.2012 THE ASSESSEE HAD SUBMITTED ITS PROFILE A ND ANALYSIS OF THE FUNCTIONS PERFORMED, ASSETS UTILISED AND RISKS ASSUMED. AS PER THE FAR THE ASSE SSEE WOULD IDENTIFY OPPORTUNITY FOR PARENT COMPANY TO PARTICIPATE IN EQUITY SECURITY PARTICULA RLY RELATING TO COMMERCIALLY PHYSICAL PROJECTS ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 13 IN THE REAL ESTATE SECTOR,THAT IT WAS SHARING BUSIN ESS INTELLIGENCE, MARKET RESEARCH, COMPLIANCE OF REGIONAL REGULATORY REQUIREMENT SO AS TO ASSIST ITS AE,THAT IT WOULD NOT CONCLUDE ANY CONTRACT ON BEHALF OF THE AE NOR WAS IT FACILITATING EXTERNAL COMMERCIAL BORROWINGS IN REAL ESTATE BUSINESS . WE FIND THAT THE TPO HAD REJECTED THE COMPARABLE SE LECTED BY THE ASSESSEE AND HAD ADOPTED THREE NEW COMPARABLES.AS FAR AS MOIAPL IS CONCERNED,THERE IS NO DOUBT THAT THE JOB PROFILE OF BOTH THE COMPANIES ARE DIFFERENT.THE ASSESSEE IS ENGAGED IN INVESTMENT ADVISORY SERVICES,WHEREAS MOIAPL WAS CARRYING ON BUSINESS OF MERGERS AND ACQU ISITIONS AND OTHER RELATED ACTIVITIES. THE ASSESSEE IS NOT A MERCHANT BANKER LIKE MOIAPL.IN TH E CASE OF CARLYLE INDIA ADVISORS PRIVATE LIMITED (SUPRA), THE TRIBUNAL HAS HELD THAT MOIAPL CANNOT BE TAKEN AS A VALID COMPARABLE IN CASES,WHERE THE ASSESSEE IS RENDERING ADVISORY SERV CIES.IN THAT MATTER THE TRIBUNAL HELD AS UNDER : 8.WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RENDERING IN VESTMENT ADVISORY AND RELATED SERVICES TO ITS PRINCIPAL CARLYLE HONG KONG. THE DI SPUTE RAISED IN GROUND NO.4 RELATES TO WHETHER (I) KLG CAPITAL SERVICES LTD (KL G);(II) KJMC CORPORATE ADVISORS (INDIA) LIMITED (KJMC) AND(III)MOTILAL OSW AL INVESTMENT ADVISORS PVT LTD(MOIAPL)ARE FUNCTIONALLY COMPARAB-LE CASES OR NO T CONSIDERING THE DECISION OF THE TRIBUNAL AS WELL AS THE JUDGMENT OF THE BOMBAY HIGH COURT RELIED UPON BY THE ASSESSEE. REGARDING MOIAPL, ASSESSEE RELIED HEAVILY ON THE ORDER OF THE TRIBUNAL IN ITS OWN CASE FOR THE AY 2008-2009, A COPY OF WHICH IS PLACED AT PAGE 282 OF THE PAPER BOOK. ON PERUSAL OF THE SAID ORDER OF THE TRI BUNAL, WE FIND THAT IT IS DECIDED IN FAVOUR OF THE ASSESSEE VIDE ITA NO.7367/MUM/ 2012(A Y 2008-2009),DATED 7.2.2014. ON PERUSAL OF PARA 12 OF THE SAID ORDER OF THE TRIB UNAL, WHICH CONTAINS THE OPERATIONAL PART, WE FIND THE SAME IS RELEVANT AND THE TRIBUNAL HAS GIVEN ITS FINDING UNDER THE FACTS WHICH ARE SIMILAR TO THAT OF THE AY UNDER CONSIDERATION. THE MOIAPL,WHICH HAS ENGAGED IN THE BUSINESS OF MERCHAN T BANKING IS NOT A GOOD COMPARABLE FOR DETERMINING THE ALP. RELEVANT CONTEN TS OF THE SAID PARA 12 ARE REPRODUCED HERE FOR THE SAKE OF COMPLETENESS OF THI S ORDER WHICH READ AS UNDER: '12... .THE ONLY DISPUTE IS WHETHER MOTILAL OSWAL INVESTMENT ADVISORS PVT LTD CAN BE CONSIDERED AS A COMPARABLE FOR DETERMINATION OF ALP .A PERUSAL OF THREE COMPARABLES CONSIDERED BY THE TPO SHOWS THAT M/S. FUTURE CAPITA L INVESTMENT ADVISORS LTD., HAS OPERATING PROFIT AT 21.79% WHEREAS OPM OF MOTILAL O SWAL INVESTMENT ADVISORS PVT LTD IS 72.33%. THE COMPARABLES USED BY THE TPO THEMSELVES ARE SHOWING EXTREME OPM.A PERUSAL OF THE DIRECTORS REPORT OF MOTILAL OSWAL INVESTMEN T ADVISORS PVT LTD SHOWS THAT DURING THE YEAR UNDER CONSIDERATION, THE SAID COMPANY HAS COM PLETED 23 ASSIGNMENTS SUCCESSFULLY AS AGAINST 14 COMPLETED IN THE IMMEDIATELY PRECEDING YEAR. A CLOSE LOOK AT THE FINANCIAL STATEMENTS OF THE SAID COMPANY SHOW THAT THE INCOM E FROM OPERATIONS HAVE BEEN SHOWN ONLY ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 14 AS ADVISORY FEES WHEREAS IT IS ADMITTEDLY AN UNDIS PUTED FACTS THAT THE SAID COMPANY IS ENGAGED IN DIVERSIFIED ACTIVITIES. SEGMENTAL REPORT ING IS NOT AVAILABLE. PROFIT AND LOSS ACCOUNT APPEARS TO BE ONLY OF CONSOLIDATED ACCOUNTS.THE SAI D COMPANY IS REGISTERED WITH SEBI AS A MERCHANT BANKER AND THE DIRECTORS REPORT SHOW THAT IT IS INTO TAKEOVER, ACQUISITIONS, DISINVESTMENTS ETC. IN THE ABSENCE OF SPECIFIC DATA IT IS NOT POSSIBLE TO MAKE COMPARISON.IT CAN THEREFORE, BE SAFELY SAID THAT THE SAID COMPANY BEI NG INTO MERCHANT BANKING AND CANNOT BE CONSIDERED AS A COMPARABLE. WE, ACCORDINGLY, DIRECT THE AO NOT TO CONSIDER MOTTIAL OSWAL INVESTMENT ADVISORS PVT LTD AS A COMPARABLE FOR D ETERMINATION OF ALP ' 9.CONSIDERING THE ABOVE, WE DIRECT THE AO TO EXCLUD E THE MOIAPL FROM THE LIST OF THE COMPARABLES FOR DETERMINATION OF ALP OF THE SAID TR ANSACTION. THE HON'BLE JURISDICTIONAL HIGH COURT HAS DISMISSED THE APPEAL FILED BY THE DEPARTMENT IN THE CASE OF CARLYLE INDIA ADVISORS PRIVATE LIMITED (IT APPEAL 1286 OF 2012,DATED 22. 02.2013). HERE,WE WOULD ALSO LIKE TO REFER TO THE ORDER OF NV P VENTURE CAPITAL INDIA PRIVATE LTD. (SUPRA),WHERE IN A CASE OF INVESTMENT ADVISORY THE COMPARABLE OF MOIAPL WAS REJECTED BY THE TRIBUNAL.IN THAT MATTER THE TRIBUNAL HAD HELD A S UNDER :- 7.WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS.WE FIND THAT THE ASSESSEE HAS BEEN CONSISTENTLY CANVASSING BEFORE THE LOWER AUTHORITIE S THAT MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE LIMITED BE EXCLUDED FROM THE FINAL SET OF C OMPARABLES ON THE GROUND THAT ITS ACTIVITIESARE FUNCTIONALLY INCOMPARABLE TO THE ACT IVITY OF PROVISION OF INVESTMENT ADVISORY SERVICES BEING RENDERED BY THE ASSESSEE TO ITS ASSO CIATED ENTERPRISES. IN FACT, BEFORE THE TPO, ASSESSEE POINTED OUT THAT THE SAID CONCERN WAS ENGA GED IN PROVIDING COMPREHENSIVE INVESTMENT BANKING SOLUTIONS AND THAT IT WAS RENDERING SERVICE S ACROSS VARIOUS PRODUCTS, VIZ. EQUITY CAPITAL MARKETS, MERGERS & ACQUISITIONS, PRIVATE EQUITY SYN DICATIONS AND STRUCTURED DEBT, ETC. THE APPELLANT RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF CARLYLE INDIA ADVISORS PRIVATE LIMITED (214 TAXMANN 492), TO SUPPORT ITS PLEA FO R EXCLUSION OF THE SAID CONCERN FROM THE FINAL SET OF COMPARABLES. THE TPO REJECTED THE AF ORESAID PLEA ON THE GROUND THAT THE PROFIT AND LOSS ACCOUNT OF THE SAID CONCERN FOR THE YEAR UND ER CONSIDERATION SHOWED THAT THE ONLY STREAM OF INCOME WAS FROM ADVISORY SERVICES AND NOT FROM ANY ACTIVITY OF MERCHANT BANKING AND, THEREFORE, THE SAID CONCERN WAS CARRYING OUT ONLY ADVISORY SERVICES AND, ACCORDING TO HIM, THE SAID CONCERN WAS INCLUDIBLE IN THE FINAL SET OF C OMPARABLES. THE DRP ALSO ACCEPTED THE POSITION THAT THE SAID CONCERN WAS ENGAGED IN ADV ISORY SERVICES WHICH ARE BROADLY COMPARABLE TO THE ASSESSEE'S ACTIVITIES UNDER TEST. 8.WE HAVE PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS STARKLY EVIDENT THAT THE SAID CONCERN M/S. MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE LIMI TED IS ENGAGED IN QUALITATIVELY DIFFERENT AND DIVERSIFIED BUSINESS ACTIVITIES, WHEREAS THE AC TIVITIES OF THE ASSESSEE ARE CONFINED TO RENDERING NON-BINDING INVESTMENT ADVISORY FOR ITS A SSOCIATED ENTERPRISES. NO DOUBT, BOTH THE ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 15 CONCERNS MAY BE IN THE BUSINESS OF RENDERING ADVISO RY SERVICES,SO,HOWEVER, IT WOULD ALSO BE NECESSARY TO EVALUATE THE MANNER AND THE SPECIFIC S ECTORS,IN WHICH SUCH SERVICES ARE BEING RENDERED BY THE TWO CONCERNS.IT IS REVEALED FROM TH E ANNUAL FINANCIAL STATEMENT OF MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE LIMITED THAT THE SAID CONCERN IS ENGAGED IN RENDERING SERVICES IN DIVERSIFIED FIELDS, VIZ. EQUITY CAPITAL MARKETS, MERGERS & ACQUISITIONS, PRIVATE EQUITY SYNDICATIONS AND STRUCTURED DEBT,ETC.IN THE CASE OF CARLYLE INDIA ADVISORS PRIVATE LIMITED(SUPRA) FOR A.Y.2008-09, THE TRIBUNAL CONCLU DED THAT THOUGH THE SAID CONCERN WAS DECLARING A SOLITARY STREAM OF OPERATING INCOME UND ER THE HEAD 'ADVISORY FEE', BUT UNDISPUTEDLY IT WAS ENGAGED IN DIVERSIFIED FIELDS AND THE FINANC IAL RESULTS FOR EACH SEGMENT WERE NOT AVAILABLE. THE TRIBUNAL ALSO FOUND THAT THE SAID CO NCERN WAS REGISTERED WITH SEBI AS A MERCHANT BANKER, AND THAT IT WAS CARRYING ON MERCHA NT BANKING ACTIVITIES.IN OUR CONSIDERED OPINION, THE AFORE-SAID FEATURES WITH RESPECT TO TH E ACTIVITIES OF THE M/S. MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE LIMITED (SUPRA) NOTED B Y THE TRIBUNAL IN THE CASE OF CARLYLE INDIA ADVISORS PRIVATE LIMITED (SUPRA) FOR ASSESSMENT YEA R 2008-09,ARE CLEARLY EMERGING IN THE INSTANT YEAR TOO AND, THEREFORE, IT CANNOT BE SAID TO BE A CONCERN WHICH IS COMPARABLE TO AN ENTITY WHICH IS RENDERING NON-BINDING ADVISORY INVE STMENT SERVICES ALONE.THUS, IN OUR CONSIDERED OPINION, THE ASSESSEE IS JUSTIFIED IN SE EKING THE EXCLUSION OF THE SAID CONCERN FROM THE FINAL SET OF COMPARABLES ON ACCOUNT OF FUNCTION AL DISSIMILARITIES.IN FACT,IN OTHER PRECEDENTS CITED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE,TH E SAID CONCERN HAS ALSO BEEN EXCLUDED FROM THE SET OF COMPARABLES UNDER SIMILAR CIRCUMSTANCES. 9. IN CONCLUSION,ON THE BASIS OF THE AFORE-SAID DI SCUSSION AND HAVING REGARD TO THE PRECEDENTS NOTED ABOVE, WE HOLD THAT M/S. MOTILAL OSWAL INVEST MENT ADVISORS PRIVATE LIMITED (SUPRA) IS LIABLE TO BE EXCLUDED FROM THE FINAL SET OF COMPARA BLES. FOLLOWING THE ABOVE ORDERS,WE HOLD THAT JOB PROFILE OF MOIAPL WAS DIFFERENT AS COMPARED TO THE ACTIVITIES UNDERTAKEN BY THE ASSESS EE.IT WAS RENDERING INVESTMENT ADVISORY SERVICES, SPECIFICALLY RELATED WITH REAL ESTATE BUS INESS WHEREAS MOIPAL IS A MERCHANT BANKER.SO,WE HOLD THAT MOIAPL IS LIABLE TO BE EXCLU DED FROM THE FINAL SET OF COMPARABLES. RESPECTFULLY,FOLLOWING THE ABOVE,WE HOLD THAT KIACL AND MOIAPL WERE WRONGLY INCLUDED IN THE LIST OF VALID COMPARABLES.BOTH ARE FUNCTIONALLY DIF FERENT FROM THE ASSESSEE.ACTIVITIES CARRIED OUT THE ASSESSEE FOR THE YEAR UNDER APPEAL ARE DISTINCT AND QUITE SEPARATE FROM THE ACTIVITIES OF THOSE COMPANIES.SO,REVERSING THE ORDER OF THE FAA,WE DECI DE FIRST EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. RESPECTFULLY,FOLLOWING THE ABOVE,WE HOLD THAT THE D RP WAS NOT JUSTIFIED IN EXCLUDING ICRA AND IDCL FROM THE LIST OF THE VALID COMPARABLES.WE ALSO HOLD THAT THE DRP HAD RIGHTLY EXCLUDED MOIALP FROM THE LIST OF COMPARABLES. ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 16 WE FIND THAT IF ICRA AND IDCL ARE INCLUDED AND MOIA PL IS EXCLUDED AS FINAL AND VALID COMPARABLE,THEN THE ASSESSEE WILL BE IN SAFE ZONE,A S ARGUED BY THE AR.WE ARE NOT EXPRESSING OUR VIEWS ABOUT OTHER COMPARABLES.EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. IT-E SERVICES: 4. NEXT EFFECTIVE GROUND OF APPEAL IS ABOUT INCLUSION /EXCLUSION OF CERTAIN COMPARABLES OF IT-E SERVICES SEGMENT.DURING THE TP PROCEEDINGS,THE TPO FOUND THAT THE ASSESSEE PROVIDES HIGH END SUPPORT SERVICES TO INVESTMENT DIVISION OF ITS AE,THAT THE VALUE OF IT IN THAT SEGMENT WAS RS.61,10,19,912/- ,THAT IT HAD APPLIED TNMM AS MAM, THAT THE PLI APPLIED WAS OR/OE,THAT IT HAD SELECTED 12 COMPARABLES TO DETERMINE THE ALP .HE APPLIED CERTAIN FILTERS TO SELECT THE COMPARABLES. OUT OF THE TWELVE,FOUR COMPANIES COULD PASS THE FIL TERS APPLIED BY HIM AND THE THEY WERE- ACCENTIA TECHNOLOGIES LTD.(ATL),INFORMED TECHNOLOGI ES INDIA LTD. (ITIL), JINDAL INTELLICOM PVT. LTD.(JIPL) AND MICRO GENETIC SYSTEM LTD.(MGSL) .HE REJECTED THE BALANCE COMPARABLES, NAMELY,ADITYA BIRLA MINACS WORLDWIDE LTD.(ABMWL),CA LIBER POINT BUSINESS SOLUTIONS LTD (CPBSL),CEPHA IMAGING PRIVATE LTD.(CIPL),CG VAC SO FTWARE AND EXPORTS LTD. (CVSEL), COSMIC GLOBAL LTD.(CVGL),FORTUNE INFOTECH LTD.(FIL) ,JEEVAN SOFTTECH LTD.(JSL),R-SYSTEMS LTD.(RSL). HE INCLUDED FIVE NEW COMPARABLES- ACROPETAL TECHNOL OGIES (AT), E-4-E HEALTHCARE BUSINESS SERVICE PVT. LTD.(EHBSPL),ECLERX SERVICES LTD.(ESL) , INFOSYS BPO LTD.(INFOSYS) AND TCS E-SERVE(TCS).THE ASSESSEE OBJECTED INCLUSION OF FOU R COMPARABLES.AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE,HE FINALISED THE LIST OF VALID COMPARABLES AND THE LIST INCLUDED EIGHT COMPARABLES. HE MADE UPWARD ADJUSTMENT OF RS.6.73 C RORES. 4.1. THE ASSESSEE AGITATED THE MATTER BEFORE THE DRP AND IN PURSUANCE OF ITS DIRECTIONS, THE AO MADE AN ADJUSTMENT OF RS.5.75 CRORES BY CONSIDER ING THE ARMS LENGTH MARKUP OF SUCH SERVICES AT 26.93%.HE CONSIDERED THE FOLLOWING COMP ARABLES: SN. COMPANY COMPARABLE SELECTED BY O P/TC 1. ATL ASSESSEE 29.18% 2 ITIL ASSESSEE 9.65% 3 JIPL ASSESSEE 13.70% 4 MGSL ASSESSEE -0.02% 5 AT TPO 23.95% ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 17 6 EHBSPL TPO 9.69% 7 ESL TPO 56.86% 8 INFOSYS TPO 17.86% 9. TCS TPO 69.31% AVERAGE 26.93% BEFORE PROCEEDING FURTHER,IT WOULD BE USEFUL TO DIS CUSS THE INCLUSION AND EXCLUSION OF COMPARABLES BY THE TPO/DRP: I) IN THE CASE OF MICRO GENETIC SYSTEM LTD. (MGSL), THE TPO HELD THAT NOT ONLY THE REVENUE OF THE COMPANY HAD DECLINED BY 50% FOR THE YEAR UND ER CONSIDERATION,BUT IT HAD ALSO INCURRED LOSSES. BEFORE THE DRP,THE ASSESSEE PLACED RELIANCE ON M/S. CAPITAL IQ INFORMATION SYSTEM LTD. (INDIA) PVT. LD.(ITA/124 AND 170/HYD./2014) AND ASS ESSEES OWN CASE FOR THE AY.2007-08 WHEREIN THE TRIBUNAL HAD UPHELD THE INCLUSION OF CA PITAL TRUST LTD.WHICH WAS REJECTED BY THE TPO ON THE GROUND THAT THE COMPANY WAS SUFFERING LO SS.AFTER CONSIDERING THE AVAILABLE MATERIAL,THE DRP DIRECTED THAT THERE WAS NO REASON TO REJECT THE COMPARABLE BECAUSE THERE WAS LOSS IN A PARTICULAR YEAR.IT DIRECTED THE TPO T O ACCEPT IT AS A VALID COMPARABLE. II)CALIBER POINT BUSINESS SOLUTIONS LTD.-SEGMENTAL( CPBSL) .THE TPO REJECTED THE SAID COMPARABLE FOR THE REASON THAT IT HAD A DIFFERENT Y EAR ENDING OTHER THAT 31 ST MARCH. THE ASSESSEE SUBMITTED THAT ON REVIEW OF SEGMENT REPORT ING,IT WAS CLEAR THAT MAJOR OPERATIONS OF THE COMPANY WAS IN THE BPO SEGMENT,THAT THE BPO SER VICES WERE COMPARABLE TO THE SERVICES PROVIDED BY THE ASSESSEE. THE DRP HELD THAT THE ASSESSEE HAD NOT MADE ANY SUB MISSION SPECIFIC TO THE REJECTION OF THE COMPARABLE,THAT IT HAD ACCOUNTING PERIOD DIFFERENT FOR FINANCIAL YEAR,THAT CONTEMPORANEOUS DATA WAS NOT AVAILABLE,THAT THE TPO HAD RIGHTLY REJ ECTED THE COMPARABLES. III)R-SYSTEMS LTD. (RSL).THE TPO REJECTED THE COMPANY AS IT HAD DIFFER ENT YEAR ENDING OTHER THAN THE MARCH ENDING. THE ASSESSEE MADE THE SAME SUBMISSIONS BEFORE THE D RP THAT WERE MADE IN THE CASE OF CPBSL.IT WAS ALSO ARGUED THAT RSL WAS ACCEPTED AS A VALID COMPARABLE IN THE CASE OF MERCER CONSULTING (INDIA) PVT. LTD.(ITA/966/DEL/2014).AFTE R CONSIDERING THE ANNUAL REPORT OF THE RSL,THE DRP HELD THAT THE TURNOVER OF THE SOFTWARE SEGMENT OF THE COMPANY FOR THE YEAR ENDING ON 31.12.2010 WAS RS.175.68 CRORES ONLY,THAT THE ASSESSEE HAD NOT FURNISHED THE ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 18 AUDITED QUARTERLY SEGMENTAL RESULTS OF THE COMPANY, THAT THE TPO HAD RIGHTLY REJECTED THE COMPARABLE. IV)CG VAK SOFTWARE AND EXPORTS LTD. (CVSEL):THE TPO HAD REJECTED THE COMPANY FOR THE REASON THAT THE COMPARABLE SEGMENT HAD TURNOVER LESS THAN RS.1CRORE. THE ASSESSEE ARGUED THAT THE COMPANY WAS IN BPO SEG MENT AND THAT THE BPO SERVICES WERE COMPARABLE TO SERVICES PROVIDED BY THE ASSESSEE.AFT ER GOING THROUGH THE ANNUAL REPORT OF THE COMPARABLE,THE DRP HELD THAT SEGMENTAL RESULT SHOWE D THAT COMPANY WAS PERSISTENTLY MAKING LOSSES IN THE COMPARABLE SEGMENT,THAT THE OT HER INCOME INCLUDED FOREIGN CURRENCY INCOME OF RS.46LAKHS,THAT EVEN THE COMPARABLE SEGME NT FAILED THE TURNOVER FILTER OF RS. 1 CRORE,APPLIED BY THE TPO. V)COSMIC GLOBAL LTD. (CVGL) :THE TPO REJECTED THE COMPANY FOR THE REASON THAT I T DID NOT SATISFY THE EXPORT SALES FILTER APPLIED BY HIM. THE ASSESSEE ARGUED,BEFORE THE DRP,THAT CVGL WAS FU NCTIONALLY COMPARABLE TO IT-E SERVICES RENDERED BY THE ASSESSEE, THAT NO REASON WERE PROVI DED BY TPO FOR CONSIDERING THRESHOLD OF 75% OF TOTAL EXPORT AS AN APPROPRIATE FILTER TO REJ ECT THE COMPANY.THE DRP HELD THAT 75% EXPORT SALES WAS A VALID FILTER,THAT THE ASSESSEE H AD 100% EXPORT IN THAT SEGMENT,THAT THE TPO HAD RIGHTLY REJECTED IT AS A VALID COMPARABLE. VI)ADITYA BIRLA MINACS WORLDWIDE LTD. ( ABMWL ):THE TPO REJECTED THE COMPANY FOR THE REASON THAT IT FAILED THE RPT FILTER. THE DRP,REJECTING THE SUBMISSIONS OF THE ASSESSEE,H ELD THAT 25% RPT FILTER WAS A VALID FILTER, THAT THE COMPARABLE HAD FAILED THAT FILTER,THAT THE TPO HAD RIGHTLY REJECTED IT AS COMPARABLE. VII)ECLERX SERVICES LTD.(ECL) :THE ASSESSEE ARGUED BEFORE THE DRP THAT COMPANY WA S EARNING SUPER NORMAL PROFIT OF 56.86 % ,THAT IT OPE RATED UNDER AN EXCEPTIONAL YEAR OF OPERATION,THAT IT PROVIDED SERVICES IN THE FORM OF DATA ANALYTICS AND DATA PROCESS SOLUTION, THAT IT WAS ENGAGED IN ACTIVITIES WHICH THE ASSESSEE DID NOT UNDERTAKE,THAT IN THE CASE OF MAERSK GLOBAL SERVICES (I )PVT. LTD.(ITA7466/MUM/2012), EC L WAS REJECTED AS A VALID COMPARABLE, THAT IN THE CASE OF CAPITA IQ INFORMATION SYSTEM (I NDIA) PVT. LTD.(ITA/1961/HYD/2011) THE TRIBUNAL HAD UPHELD THE REJECTION OF ESL FROM THE L IST OF COMPANIES COMPARABLE TO PROVISIONS OF IT-ENABLED SERVICES. THE DRP AFTER CONSIDERING THE AVAILABLE MATERIAL HE LD THAT THE ASSESSEE PERFORMED SERVICES WHICH WERE BPO IN NATURE,THAT IT HAD NOT DEMONSTRAT ED THE SPECIFIC REASON FOR THE HIGH PROFITS,THAT IN ABSENCE THEREOF WITHOUT ANY VALID R EASONS DIFFERENTIATING IT ON FAR ANALYSIS THE CONTENTION OF THE ASSESSEE COULD NOT ACCEPTED.THE D RP REFERRED TO THE CASE OF WILLIS ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 19 PROCESSING AND HELD THAT, ISSUE OF INCLUSION OR EXC LUSION OF COMPARABLES HAD TO BE DECIDED NOT ON THE GROUND OF ABNORMAL OR HIGH PROFIT MARGINS,TH AT ESL WAS A VALID COMPARABLE. VIII)ACROPETAL TECHNOLOGIES-SEGMENTAL(AT) -THE TPO HELD THAT AT WAS ENGAGED IN DIVERSI -FIED ACTIVITIES INCLUDING INFORMATION TECHNOLOGY S ERVICES.HE CONSIDERED THE HEALTH CARE SERVICE SEGMENT AS COMPARABLE TO THE IT-E S PROVIDE D BY THE ASSESSEE. BEFORE THE DRP,THE ASSESSEE ARGUED THAT ACTIVITIES OF AT WERE NOT FUNCTIONALLY COMPARABLE WITH THE ACTIVITIES OF THE ASSESSEE,THAT THE COMPAN Y OPERATED UNDER AN EXCEPTIONAL YEAR OF OPERATION THAT IT WAS PREDOMINANTLY A SOFTWARE SERV ICE COMPANY,THAT IN THE CASE OF SYMPHONY MARKETING SOLUTIONS(ITA/1316/BANG/2012) THE TRIBUNA L HAD HELD THAT IT COULD NOT BE CONSIDE -RED COMPARABLE TO A BPO SERVICE. ASSESSEE PLACED R ELIANCE UPON FOUR MORE CASES,DECIDED BY THE TRIBUNAL.THE DRP HELD THAT THE COMPANY WAS IN 3 SEGMENTS-ENGINEERING DESIGN,ITES AND HEALTH CARE BPO.IT DIRECTED THE IPO TO ADOPT THE PL I OF IT-E SEGMENT OF AT FOR BENCH - MARKING. IX)TCS-E-SERVE LTD.(TCSE) -THE ASSESSEE OBJECTED TO THE INCLUSION OF THE SAID COMPANY BEFORE THE DRP AND CONTENDED THAT AS PER THE ANNUA L REPORT TCSE EARNED REVENUE FROM FOUR ACTIVITIES,THAT IT WAS TAKEN OVER BY TATA CONSULTAN CY SERVICES,DURING AY.2009-10,THAT IT HAD A HIGH BRAND VALUE,THAT THE ACCELERATED MARGIN OF T HE COMPANY FOR THE CURRENT YEAR WAS DUE TO TAKEOVER,THAT COMPANY WAS EARNING VERY HIGH PROF IT I.E. 69.31%,THAT IT HAD A HUGE TURNOVER OF 1593 CRORES AS COMPARED TO THE TURNOVER OF THE ASSESSEE OF 61.10CRORES. HOWEVER,THE DRP UPHELD THE ORDER OF THE TPO AND REF ERRED TO THE CASE OF TECH BOOKS INTL PVT. LTD.(ITA/240/DEL/2015-AY.2010-11,DATED 06.11.1 5)AND HELD THAT HIGH PROFIT OR HIGH TURNOVER WAS NOT A CRITERIA TO EXCLUDE AN OTHERWISE COMPARABLE CO. X)INFOSY BPO LTD. ( INFOSYS ):THE ASSESSEE REQUESTED THE DRP TO EXCLUDE THE SAI D COMPARABLE STATING THAT IT HAD VERY HIGH TURNOVER VIZ-A-VIZ TH E TURNOVER OF THE ASSESSEE .IT RELIED UPON THE VARIOUS CASES DECIDE BY THE TRIBUNAL IN THAT REGARD . THE DRP,WHILE REJECTING ITS OBJECTIONS, HELD THAT I T WAS FUNCTIONALLY COMPARABLE ON THE BASIS OF ACTIVITIES OF THE ASSESSEE,THAT HIGH PROFITABILI TY WAS NOT GOOD GROUND FOR REJECTION OF A COMPARABLE,THAT THE TPO HAD PROVED THAT TURNOVER DI D NOT HAVE MUCH IMPACT ON PROFITABILITY. XI)E-4-E HEALTHCARE BUSINESS SERVICE PVT. LTD. ( EHBSPL )-BEFORE THE DRP,THE ASSESSEE CONTENDED THAT THE COMPANY WAS ENGAGED IN HEALTH CA RE OUT-SOURCING SERVICES.THE DRP HELD THAT EHBSPL WAS INTO HEALTHCARE BPO AND WAS FUNCTIO NALLY COMPARABLE TO THE ASSESSEE, THAT THE TPO HAD RIGHTLY ACCEPTED IT AS A VALID COMPARAB LE. ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 20 4.1. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE(AR)STATED THAT IN THE ASSESSEES OWN CASE THE TRIBUNAL HAD EXCLUDED E CL AND AT FROM THE LIST OF THE VALID COMPA -RABLES(ITA/6921/MUMU/2012.AY.2008-09,DTD.22. 07.2016),THAT IN THE CASE OF CAPITIA INDIA PVT.LTD.(ITA.S/356&105/MUM/2016.AY.2-11-12,DT D.19.09.2016)TCS WAS HELD TO BE AN IN-VALID COMPARABLE FOR IT-E SERVICES,THAT THE T RIBUNAL HAD HELD THAT INFOSYS WAS NOT A VALID COMPARABLE IN THE CASE OF ACTIS GLOBAL SERVIC ES PRIVATE LIMITED(ITA/6175 /DEL/ 2015, AY. 2011-12,DTD.29.07.2016),THAT IN THE MATTER OF E XEVO INDIA PVT.LTD.(ITA/907/ DEL/ 2016, AY. 2011-12,DTD.25.07.2016)CVSEL AND RSL WERE CONSI DERED VALID COMPARABLE FOR IT-E SERVI -CES,THAT EHBSPLWAS A FUNCTIONALLY DIFFERENT COMPANY AND THAT IT WAS NOT ENGAGED IN PROVIDING IT-E SERVICES. HE REFERRED TO PAGES 4,43 AND 51 OF THE PAPER BOOK. HE ARGUED THAT THE IF THE ABOVE INCLUSION/ EXCLUSIONS WERE CONSIDERED THE MARGIN WOULD FALL WI TH THE PERMISSIBLE LIMIT OF +/(-) 5%, THAT THEN THERE WAS NEED TO CONSIDER THE OTHER COMPARABL ES. 4.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS BEFORE US.WE FIND THAT THE TPO HAD INCLUDED FIVE NEW COMPARABLES IN THE FINAL LIST AFTER REJECTING COMPARABLES SELECTED BY THE ASSESSEE,THAT DRP HAD HELD THAT MGSL SHOULD BE INCLUDED IN THE FINAL LIST,THAT IT UPHELD THE EXCLUSION OF CPBSL,RSL,CVSEL,CVGL,ABMWL, THAT IT CONFIRMED THE INCLUSION OF EHBSPL,ESL,INFOSYS,TCS AND AT(E-SEGMENT ONLY) I N THE FINAL LIST OF THE COMPARABLES. 4.2.A. WE WOULD LIKE TO DEAL WITH THE INCLUSION/EXCLUSION OF THE COMPARABLES BY THE DRP.WE FIND THAT THE TRIBUNAL HAD EXCLUDED AT AND ECL FROM THE LIST OF THE VALID COMAPARABLES, WHILE DECIDING THE APPEAL FILED BY THE ASSESSEE FOR THE EARLIER YEAR(SUPRA).WE ARE REPRODUCING THE RELEVANT PARAGRAPHS OF THE ORDER AND SAME READ AS UNDER: 56.WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS PER THE ANNUAL REPORT OF THIS COMPANY , IT IS NOTED THAT THE COMPANY IS ENGAGED IN OFFERING SOLUTIONS IN THE FIELD OF DATA ANALYTIC S, OPERATIONS MANAGEMENT, AUDITS AND RE CONCILIATION, MATRICS MANAGEMENT AND REPORTING SERV ICES. THE FUNCTIONALITY OF THE COMPANY WAS NOT ONLY CONSIDERED BY THE TRIBUNAL, MUMBAI SPE CIAL BENCH, IN THE CASE OF MAERSK GLOBAL CENTRES INDIA PVT. LTD. (SUPRA), BUT A HOST OF OTHER DECISIONS REFERRED TO EARLIER, WHEREIN, IT HAS BEEN HELD THAT THE COMPANY IS INVOL VED IN PROVIDING HIGH END SERVICES WHICH IS IN THE NATURE OF KPO, HENCE, CANNOT BE COMPARED TO A GENERAL ITES PROVIDER. IN FACT, THE HON'BLE DELHI HIGH COURT IN RAMPGREEN SOLUTIONS PVT . LTD., ITA NO.102 O 2015, HAS HELD THAT THIS COMPANY BEING A KPO SERVICE PROVIDER CANN OT BE CONSIDERED AS A COMPARABLE TO ITES COMPANIES. WE MAY FURTHER MENTION, MANY OF THE ORDERS PASSED BY THE COORDINATE BENCHES OF THE TRIBUNAL REJECTING ECLERX SERVICES L TD. AS A COMPARABLE TO ITES SERVICE PROVIDER IS FOR THE VERY SAME ASSESSMENT YEAR 2008 09. THEREFORE, RESPECTFULLY FOLLOWING THE VIEW EXPRESSED BY VARIOUS JUDICIAL AUTHORITIES, WE HOLD THAT ECLERX SERVICES LTD. BEING FUNCTIONALLY DIFFERENT CANNOT BE TREATED AS COMPARA BLE TO THE ASSESSEE. XXXXXXX ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 21 67.WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE NOTED THAT THE TRIBUNAL, BANGALO RE BENCH, IN SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD. (SUPRA), AFTER PERUSING T HE ANNUAL REPORT OF THIS COMPANY FOUND THAT MAJOR SOURCE OF INCOME IS FROM PROVIDING ENGIN EERING DESIGN SERVICE WHICH IS NOT COMPARABLE TO ITES / BPO FUNCTIONS. THE BENCH OBSER VED, PROVISION OF ENGINEERING DESIGN SERVICE IS A HIGH END SERVICE AMONGST THE BPO WHICH REQUIRES HIGH SKILL, HENCE, IT CAN BE REGARDED AS KPO SERVICE. THE BENCH, THEREFORE, EXCL UDED THE COMPANY AS A COMPARABLE TO ITES / BPO SEGMENT. THE TRIBUNAL, HYDERABAD BENCH, IN M/S. MARKET TOOLS RESEARCH PVT. LTD. V/S DCIT, FOLLOWING COORDINATE BENCH DECISION IN SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD. (SUPRA) HAS ALSO HELD THAT THE COMP ANY CANNOT BE TREATED AS COMPARABLE TO A COMPANY PERFORMING ITES / BPO FUNCTIONS. AS THESE D ECISIONS RENDERED BY THE TRIBUNAL ARE FOR THE VERY SAME ASSESSMENT YEAR, RESPECTFULLY FOL LOWING THE SAME, WE DIRECT EXCLUSION OF THIS COMPANY FROM THE LIST OF COMPARABLES. IT HAS B EEN SUBMITTED BEFORE US BY THE LEARNED SR. COUNSEL THAT ON EXCLUSION OF THESE COMPANIES, T HE MARGIN OF THE ASSESSEE WOULD BE WITHIN +/ 5% TOLERANCE BAND OF THE ARITHMETIC MEAN OF THE COMPARABLE COMPANIES REQUIRING NO FURTHER ADJUSTMENT TO THE PRICE CHARGE D. IN VIEW OF THE AFORESAID SUBMISSIONS OF THE LEARNED SR. COUNSEL, WE DO NOT CONSIDER IT NECE SSARY TO DEAL WITH THE OTHER COMPARABLES OBJECTED TO BY THE ASSESSEE AS IT IS MERELY OF ACAD EMIC INTEREST. GROUND NO.2, RAISED BY THE ASSESSEE IS PARTLY ALLOWED. RESPECTFULLY FOLLOWING THE SAME,WE HOLD THAT AT AND ECL HAVE TO BE EXCLUDED FROM THE LIST OF THE VALID COMPARABLES. 4.2.B. IN THE CASE OF CAPITIA INDIA PVT.LTD.(SUPRA)THE TRI BUNAL HAD HELD THAT TCS WAS NOT A VALID COMPARABLE FOR IT-E SERVICES IN FOLLOWING MA NNERE: I) M/S TCS E-SERVE:- FROM THE PERUSAL OF ITS ANNUAL REPORTS, IT IS SEEN THAT, THIS COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING ITES SERVICES AND BPO SERVICES PRIMARILY TO CITI GROUP ENTITIES GLOBALLY. IT OPERATIONS COMPRISED OF TRANS ACTION PROCESSING INCLUDES THE BROAD SPECTRUM OF ACTIVITIES INVOLVING THE PROCESSING, COLLECTIONS, C USTOMER CARE AND PAYMENTS IN RELATION TO THE SERVICES OFFERED BY CITIGROUP TO ITS CORPORATE AND RETAIL CLIENTS. TECHNICAL SERVICES INVOLVE SOFTWARE TESTING, VERIFICATION AND VALIDATION OF SO FTWARE AT THE TIME OF IMPLEMENTATION AND DATA CENTRE MANAGEMENT ACTIVITIES. FROM THE PERUSAL OF T HE PROFIT AND LOSS ACCOUNT, THE REVENUE SHOWN FROM TRANSACTION PROCESSING AND OTHER SERVICES IS A PPROXIMATELY RS.1442.42 CRORES. THERE ARE NO SEGMENTAL DETAILS AND ANY OTHER BIFURCATION AS TO W HAT COMPRISED OF TRANSACTION PROCESSING CHARGES AND OTHER SERVICES. THAT APART, IT IS SEEN THAT, THIS COMPANY IS A PART OF TATA GROUP AND HAS A HUGE BRAND VALUE ACROSS THE WORLD AND ALSO OW NS HUGE INTANGIBLES. THUS, THERE IS A HUGE DIFFERENCE IN THE ASSETS EMPLOYED BY THIS COMPANY A S COMPARED TO THE ASSESSEE WHICH ALSO REFLECTS IN ITS REVENUE AND PROFIT MARGIN. ITS INTANGIBLE AS SETS ITSELF IS MORE THAN RS. 3337.4 CRORES AS ON 1ST APRIL, 2010 AND ADDITIONS DURING THE YEAR WERE MORE THAN RS.756.24 CRORES. THUS, THIS COMPANY HAVING HUGE INTANGIBLES ASSETS CANNOT BE CO MPARED WITH THE ASSESSEE WHO HAS NO SIGNIFICANT INTANGIBLES. THAT APART, IT HAS BEEN PO INTED OUT BY THE LD. COUNSEL THAT, THIS COMPANY HAS BEEN EMERGED WITH TCS IN THE YEAR 2009 WHICH HA S LED TO SHOOTING UP OF ITS PROFIT MARGIN TO 13% TO 68%-70%. THIS FACTOR ITSELF POINTS OUT THAT ITS HIGH PROFIT MARGIN WERE DUE TO ITS HUGE BRAND VALUE, WHICH CANNOT BE HELD TO BE COMPARABLE WITH CAPTIVE SERVICE PROVIDER LIKE ASSESSEE COMPANY. SO FAR AS THE DECISION OF ITAT DELHI BENCH IN THE CASE OF TECHBOOKS INTERNATIONAL PVT. LTD IS CONCERNED AS POINTED OUT BY THE LD. COUNSEL , WE FIND THAT THIS DECISION OF THE TRIBUNAL HAS BEEN DISTINGUISHED AND EXPLAINED BY THE SUBSEQUENT THREE DECISIONS OF THE DELHI BENCH OF THE ITAT, WHEREIN, THE TRIBUNAL HAS CATEGORICALLY HELD THAT, IN ABSENCE OF ANY SEGMENTAL DETAILS AND SEGREGATION OF THE TOTAL REVENUE THIS COMPARABLE CO MPANY CANNOT HELD TO BE COMPARABLE. THE RELEVANT OBSERVATION OF THE TRIBUNAL IN THE CASE OF AMERIPRISE INDIA PVT. LTD (SUPRA) READS AS UNDER:- 12.5 WE HAVE GONE THROUGH THE ANNUAL REPORT OF COMP ANY AND HAVE CAREFULLY CONSIDERED THE REASONING GIVEN BY THE COORDINATE BENCH IN THE CASE OF TECHBOOK INTERNATIONAL P LTD (SUPRA). ON PERUSAL OF SCHEDULE O NOTES TO ACCOUNTS OF T HE STANDALONE FINANCIALS OF THE COMPANY, ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 22 IT IS CLEAR THAT THE COMPANY IS ENGAGED IN TRANSAC TION PROCESSING AND TECHNICAL SERVICES ACTIVITIES. NO SEPARATE SEGMENTAL DETAILS ARE AVAIL ABLE. ON A CAREFUL READING OF THE DECISION OF COORDINATE BENCH IN TECHBOOK INTERNATIONAL P TD (SU PRA) IT IS CLEAR THAT SCHEDULE O NOTES TO ACCOUNTS IN RESPECT TO CARRIED OUT BY COMPANY AND R ELEVANT SEGMENTAL DETAILS WERE NEVER BROUGHT TO THE ATTENTION OF THE BENCH. WE FIND THAT IN THE ABSENCE OF AVAILABILITY OF ANY SUCH SEGREGATION OF THE TOTAL REVENUE OF THIS COMPANY, I T IS NOT POSSIBLE TO SEPARATELY CONSIDER ITS PROFITABILITY FROM RENDERING OF TRANSACTION PROCES SING SERVICES. THUS, THE ENTITY LEVEL FIGURES RENDER THIS COMPANY AS UNFIT FOR COMPARISON. FOLLOW ING THE ABOVE REASONS ALSO TAKEN NOTE IN THE CASE OF TCS E-SERVICE INTERNATIONAL LIMITED, WE ORD ER FOR THE ELIMINATION OF THIS COMPANY FROM THE FINAL SET OF COMPARABLES. SUBSEQUENTLY IN THE CASE OF EQUANT SOLUTIONS INDIA PVT. LTD ALSO THIS COMPANY HAS BEEN HELD TO BE UN-COMPARABLE ON THE FOLLOWING REASONING: WE HAVE ALSO CONSIDERED THE RIVAL CONTENTION FOR E XCLUSION OF TCS E-SERVICE TD. IT IS MAINLY INVOLVED IN TRANSACTION PROCESSING AND TECHNOLOGY S ERVICES. IT CARRIES ON BUSINESS OF PROVIDING TECHNOLOGY SERVICE SUCH AS SOFTWARE TESTING, VERIFI CATION AND VALIDATION. IT IS ALSO DEVELOPED A SOFTWARE SUCH AS TRANSPORT MANAGEMENT SOFTWARE THER EFORE FUNCTIONALLY THIS COMPANY IS DISSIMILAR TO THE ASSESSEE COMPANY. IT ALSO OWNS HU GE INTANGIBLE AND USES OF TATA BRAND, WHICH HAS DEFINITELY BENEFITED THIS COMPARABLE, IT IS DIR ECTED TO BE EXCLUDED. THIS, IN VIEW OF OUR DISCUSSION AND ALSO FOLLOWING THE PRECEDENCE IN THE AFORESAID CASES, WE HOLD THAT TCS E-SERVE CANNOT BE HELD TO BE COMPARABLE CO MPANY, ACCORDINGLY, WE DIRECT THE AO/TPO TO EXCLUDE THE SAME FROM COMPARABILITY LIST. RESPECTFULLY FOLLOWING THE SAME,WE HOLD THAT TCE E-SERVICE CANNOT BE CONSIDERED A VALID COMPARABLE IN THE CASE OF THE ASSESSEE. 4.2.C. IT IS FOUND THAT IN THE CASE OF ACTIS GLOBAL SERVIC ES PRIVATE LIMITED(SUPRA),THE TRIBUNAL HAD HELD THAT INFOSYS WAS NOT A VALID COMPARABLE FOR THE IT-E SERVICES C OMPANY.WE ARE REPRODUCING THE RELEVANT PORTION OF THE ORDER AND I T READS AS FOLLOW: (II). INFOSYS BPO LIMITED: 17.THIS COMPARABLE IS SELECTED BY THE LEARNED TPO A FTER REJECTING THE CONTENTIONS OF THE ASSESSEE REGARDING FUNCTIONAL NON-COMPARABILITY,INCOMPARABLE SCALE,BRAND PROFITS, PRESENCE OF INTANGIBLES, EXTRA ORDINARY EVENTS ETC.THE LEARNED TPO HELD THAT THIS COMPANY OPERATES PRIMARILY INTO BUSINESS PROCESS MANAGEMENT SERVICES AND TAXPAYER HAS NOT SH OWN HOW BRAND AND OWNERSHIP OF INTANGIBLES IS LEADING TO HIGH PROFIT MARGIN.THE LD . DRP ALSO REJECTED THE OBJECTION OF THE ASSESSEE. 18.THE LEARNED AR OF THE ASSESSEE SUBMITTED BEFORE US THAT THIS COMPARABLE HAS BEEN CONSIDERED IN APPELLANT'S OWN CASE FOR ASSESSMENT YEAR 2010-11 BY THE COORDINATE BENCH AND FOLLOWING THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTIONS, HAS HELD THAT IT IS FUNCTIONALLY INCOMPARABLE WITH THE ASSESSEE. HE FUR THER STATED THAT THERE IS NO CHANGE IN THE DATA ANALYSIS OF THE ASSESSEE AS COMPARED TO THE PREVIOU S YEAR AND THEREFORE, THIS ISSUE IS COVERED SO FAR AS EXCLUSION OF THIS COMPARABLE IN FAVOUR OF TH E ASSESSEE IS CONCERNED. IN SPITE OF THAT HE SUBMITTED IN HIS SYNOPSIS,THE FUNCTIONS PERFORMED B Y THIS COMPANY AND DEMONSTRATED THAT IT IS FULL FLEDGED ENTREPRENEUR CARRYING GREATER RISK COMPARED TO THE ASSESSEE. HE FURTHER STATED ABOUT THE OUTSOURCING MODEL, SUBSTANTIAL SEALING IN MARKET EX PENSES AND ALSO DRAWN OUR ATTENTION THAT THERE IS EXTRA ORDINARY EVENT DURING THE YEAR. HE FURTHER RELIED ON THE DECISIONS OF HON'BLE DELHI HIGH COURT IN THECAE OF RAMPGREEN SOLUTIONS PVT. LIMITED VS. CIT AND ALSO AGNITY INDIA TECHNOLOGIES VS. ITO OVER AND ABOVE ASSESSEE'S OWN CASE FOR ASSE SSMENT YEAR 2010-11. HE ALSO SUBMITTED THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF PANTAIRE W ATER INDIA PVT. LTD. HAS EXCLUDED THIS COMPANY ON ACCOUNT OF WIDE DIFFERENCE IN TURNOVER. 19. THE LD. DR RELIED ON THE ORDERS OF THE LD. DRP AND SUBMITTED THAT HIGH TURNOVER CANNOT BE A CRITERIA FOR COMPARABILITY ANALYSIS. 20. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS.THE COORDINATE BENCH IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 IN ITA NO. 30/DEL. /2015 AT PARA 38 TO 43 HAS EXCLUDED INFOSYS BPO LIMITED AS COMPARABLE OBSERVING AS UNDER : ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 23 38. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THERE IS NO DENYING OF THE FACT THAT INFO SYS BPO OPERATES ON A LARGE SCALE AND CATERS TO WIDE VARIETY OF CUSTOMERS OPERATING IN DI FFERENT INDUSTRIES. LD. COUNSEL HAS FILED BEFORE US EXTRACTS FROM THE ANNUAL REPORTS AND WHIT E PAPER ISSUED BY INFOSYS IN REGARD TO 'PROCESS PROGRESSION MODEL ( 'PPM'), A HOLISTIC MOD EL TO TRANSFORM BUSINESS PROCESSES'. 39. A BIRDS' EYE VIEW OF THE SAID MODEL MAKES IT CL EAR THAT IT INVOLVES VARIOUS PROCESSES WHICH ARE AIMED AT COPING WITH VARIOUS CHALLENGES W HICH IMPEDE THE BUSINESS STRATEGY. ON THE OTHER HAND, THE ASSESSEE'S BUSINESS PROFILE IS QUITE LIMITED AND NOT AT ALL COMPARABLE TO THE OPTIMISTIC BUSINESS MODEL OF INFOSYS. THE TURNO VER OF INFOSYS WAS RS. 1127 CRORES DURING THE FY 2009-10 AS COMPARED TO THE ASSESSEE'S TURN OVER OF RS. 18.04 CRORES. THIS HUGE DIFFERENCE IN THE TURNOVER ITSELF MAKES IT CLE AR THAT THE MARGINS ACHIEVED BY INFOSYS BPO BEING A SERVICE SECTOR COMPANY, ARE MUCH HIGHER THAN THAT OF ASSESSEE. IN SERVICE SECTOR HIGHER TURNOVER REFLECTS HIGHER MARGIN BECAU SE IT IS PRIMARILY THE CUSTOMER'S SATISFACTION WHICH IS RELEVANT IN SELECTING THE SER VICE PROVIDER EVEN AT THE PAYMENT OF HIGHER MARGINS. 40. IN MERKER EQUITABLE SERVICE CENTRE INDIA PVT. L TD. 133 ITD 543, IT WAS HELD THAT INFOSYS BPO CANNOT BE CONSIDERED AS A COMPARABLE TO A CAPTI VE SERVICE PROVIDER, LIKE ASSESSEE. 41. LD. DR HAS SUBMITTED THAT ACTIS IS ALSO A BRAND AND, THEREFORE, ADJUSTMENT SHOULD BE MADE FOR THE DIFFERENCE. WE ARE UNABLE TO ACCEPT TH IS CONTENTION PARTICULARLY BECAUSE THE DEPARTMENT HAS NOT BROUGHT ON RECORD ANY BRAND VALU E OF ACTIS ON RECORD. MOREOVER, THE WIDE DIFFERENCE IN TURNOVER MAKES IT CLEAR THAT THE RE IS WIDE DIFFERENCE IN THE BRAND VALUE OF THE TWO COMPANIES AND, THEREFORE, WITHOUT QUANTIFIC ATION OF THE SAME, EFFECT ON TURNOVER CANNOT BE ASCERTAINED. WE FURTHER FIND THAT THE INF OSYS BPO HAS NOT BEEN TAKEN AS COMPARABLE IN DETAILED LIST ANNEXED TO SYNOPSIS FIL ED BY ASSESSEE INCLUDING THE FOLLOWING CASES: - ' - ZAVATA INDIA PVT. LTD. VS. DCIT (ITA NO. 1781/HYD /2011) -CAPITAL IQW INFORMATION SYSTEMS (INDIA) PVT. LTD. VS. DCIT (INT. TAXATION) (ITA NO. 1961/HYD/2011) 26 ITA 30/DEL/2015 -TRINITI ADVANCED SOFTWARE LABS (P) LTD. (2011-TII- 92-ITAT-HYD-TP). AGNITY INDIA TECHNOLOGIES VS. ITO ITA 1204/2011 DELHI HIGH COURT - IN THIS CASE IT WAS EMPHASIZED THAT INFOSYS TECHNOLOGIES LTD. COULD NOT BE CONSIDE RED AS A COMPARABLE BEING A GIANT COMPANY. THE SAME PRINCIPLE IS APPLICABLE TO INFOSY S BPO ALSO. 42. IN VIEW OF ABOVE DISCUSSION, WE DIRECT LD. TPO TO EXCLUDE INFOSYS BPO. 43. IN THE RESULT, GROUND NO. 6 IS ALLOWED.' THE LD.DR COULD NOT CONTROVERT HOW THE FACTS OF ASS ESSMENT YEAR 2010-11 IN THE CASE OF ASSESSEE AND IN THE CASE OF COMPARABLE ARE DIFFERENT AND, TH EREFORE, FOLLOWING THE DECISION OF COORDINATE BENCH WE DIRECT EXCLUSION OF INFOSYS BPO LIMITED FR OM THE COMPARABILITY ANALYSIS. CONSIDERING THE ABOVE ,WE DIRECT THE AO TO EXCLUDE INFOSYS FROM THE LIST OF COMPARABLES. 4.2.D. BEFORE TAKING UP OTHER COMPARABLES,WE WOULD LIKE TO REFER TO THE MATTER OF EXEVO INDIA PVT.LTD.(SUPRA),WHEREIN CVSEL AND RSL WERE CONSIDER ED VALID COMPARABLE FOR IT-E SERVICE. FOLLOWING IS THE RELEVANT PORTION OF THE ORDER OF T HE TRIBUNAL: CG-VAK SOFTWARE AND EXPORTS LTD 7.1. THE LD.TPO EXCLUDED THIS COMPANY FROM THE LIS T OF COMPARABLES AS THE REVENUE GENERATED UNDER ITES SEGMENT OF THIS COMPARABLE IS JUST RS. 8 2.78 LACS WAS START HENCE THE LD. TPO HELD THAT THIS COMPANY FAILS THE TURNOVER FILTER 7.2. THE LD. A.O. HAS NOT BROUGHT ON RECORD ANY MAT ERIAL / DOCUMENTS CONTRARY TO THE ABOVE SUBMISSIONS OF THE ASSESSEE. THE LD. TPO HAS ALSO N OT BEEN ABLE TO BRING OUT ANY INSTANCE OF FUNCTIONAL DISSIMILARITY OF THIS COMPARABLE WITH TH AT OF ASSESSEE. THE LD. D.R. PLACED HIS RELIANCE ON THE FINDINGS OF THE AUTHORITIES BELOW. 7.3. WE HAVE PERUSED THE ORDERS PASSED BY AUTHORITI ES BELOW, AND ARGUMENTS ADVANCED BY BOTH THE PARTIES. IT HAS BEEN OBSERVED THAT THE ASSESSEE IN ITS TP STUDY HAS OBJECTED TO THE ADOPTION OF THE TURNOVER FILTER APPLIED BY THE TPO. IT HAS BEEN SUB MITTED THAT TURNOVER FILTER COULD BE DEPLOYED IF ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 24 THE TESTED PARTY IS A RISK BEARING ENTREPRENEUR. HO WEVER, TO THE FACTS OF THE PRESENT CASE, THE ASSESSEE DOES NOT ASSUME ANY RISK AND IS REMUNERAT ED AT COST PLUS BASIS. LD. A.R. HAS PLACED RELIANCE IN THE CASE OF WILLIS PROCESSING SERVICES PVT. LTD. IN I.T.A.NO. 4547/MUM/2012 WHEREIN THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS UNDER: THE TURNOVER IS NOT A CRITERIA AS PRESCRIBED UNDER THE RULE 10B(2) FOR SELECTING THE COMPARABLES. IT IS SETTLED PROPOSITION THAT THE DEC ISIVE FACTOR FOR DETERMINING INCLUSION OR EXCLUSION OF ANY CASE AS A COMPARABLE ARE PRESCRIBE D UNDER RULE 10B(2) WHICH DOES NOT SPECIFY ANY SUCH FACTOR OF TURNOVER ON THE BASIS OF WHICH A PARTICULAR CASE CAN BE INCLUDED OR EXCLUDED IN THE LIST OF COMPARABLES. IN SERVICE INDUSTRY, TURNOVER DOES NOT PLAY ANY SI GNIFICANT ROLE AS FAR AS THE MARGINS ARE CONCERNED. THIS REINFORCES THE VIEW THAT TURNOVER DOES NOT PLAY A SIGNIFICANT ROLE IN SERVICE INDUSTRY AND THERE IS NO LINK BETWEEN TURNO VER AND MARGINS. THE TURNOVER IS NOT A RELEVANT FACTOR FOR CHOICE OF COMPARABLES HAS BEEN CONFIRMED IN MANY DECISION, AS LISTED BELOW. 7.4. APPLYING THE RATIO LAID DOWN BY THE COORDINAT E BENCH OF THIS TRIBUNAL IN THE CASE OF WILLIS PROCESSING SERVICES PRIVATE LIMITED (SUPRA) WE DIRE CT THE LD. TPO/AO TO INCLUDE THIS COMPANY TO THE LIST OF COMPARABLES. R SYSTEMS INTERNATIONAL LTD 7.5. THE LD.TPO HAS REJECTED THE COMPANY ON ACCOUNT OF DIFFERENT FINANCIAL YEAR ENDING VIS-A-VIS THE ASSESSEE. THE LD.AR SUBMITTED THAT COMPANIES WH OSE FINANCIAL DATA WAS AVAILABLE FOR THE RELEVANT PERIOD, WERE CONSIDERED IN VIEW OF RULE 10 D (4), WHICH PROVIDES THAT INFORMATION TO BE USED MUST BE CONTEMPORANEOUS. THE LD. AR SUBMITTED THAT, THOUGH THE COMPANY HAS DIFFERENT FINANCIAL YEAR ENDING, WERE OPERATING DURING THE SA ME PERIOD OF TIME AS THE ASSESSEE, AND WERE ALSO FACING SIMILAR BUSINESS CYCLES, MARKET AND ECO NOMIC CONDITIONS AS FACED BY ASSESSEE HAVING FINANCIAL YEAR FROM APRIL TO MARCH. HE THUS SUBMITT ED THAT IN ABSENCE OF EVIDENCE AVAILABLE TO THE CONTRARY THAT THERE HAS BEEN A SIGNIFICANT IMPACT O N THE MARGINS DUE TO CHANGE IN DIFFERENT REPORTING/ACCOUNTING PERIOD, IT IS INCORRECT TO DIS REGARD THE COMPARABLE USING THIS FILTER. LD.DR, HOWEVER, REFERRED TO THE EXTRACTS MADE BY THE LD.TP O IN HIS ORDER TO SUBMIT THAT R SYSTEMS INTERNATIONAL LTD., SHOULD NOT BE CONSIDERED COMPAR ABLE WITH ASSESSEE. 7.6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PU RSUING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE LD. TPO HAS NOT POINTED OUT EXACT DIFFEREN CE, THE CHANGE OF ACCOUNTING YEAR HAS MADE TO THE FINANCIAL RESULTS OF THE COMPARABLE. THE LD.TPO HAS FURTHER NOT POINTED OUT WHETHER IT WOULD NOT BE POSSIBLE TO RESTATE THOSE FINANCIAL RESULTS FOR A DIFFERENT ACCOUNTING PERIOD WITHOUT SIGNIFICANT CHANGE IN NET PROFIT MARGINS OR ANY OTH ER PARAMETERS CONSIDERED RELEVANT. MULTINATIONAL COMPANIES GENERALLY OPERATE IN DIFFER ENT GEOGRAPHICAL REGIONS AND DIFFERENT COUNTRIES FOLLOW DIFFERENT ACCOUNTING OR FINANCIAL YEARS, FUNCTIONALLY SIMILAR OR EVEN IDENTICAL COMPANIES, CANNOT BE HELD TO BE INCOMPARABLE, ONLY OWING TO DIFFERENCES IN THE DATE OF ENDING OF THE FINANCIAL YEAR. AS MOST OF THE BUSINESS ENTERPR ISES OPERATE ON THE GOING CONCERN CONCEPT, WHICH IS SO FUNDAMENTAL TO PRESENT THE ACCOUNTS. TH E CONCEPT USED IN ACCOUNTING IS JUST AN ARTIFICIAL MEANS TO RECKON THE OPERATING RESULTS OF BUSINESS OPERATION AT A GIVEN POINT IN TIME AND NOTHING WOULD TURN UP ON CHANGING THE END OF ACCOUN TING PERIOD FROM 31ST MARCH TO ANY OTHER DATE WITHIN A SHORT SPAN OF TIME. ASSUMING A SITUAT ION WHERE THE TESTED PARTY IS FOLLOWING A DIFFERENT FINANCIAL YEAR ENDING (SAY 01/01/2010 TO 31/12/2010), FOLLOWING THE FILTER ADOPTED BY THE LD. TPO, ONE WOULD REJECT ALL THE COMPANY WITH THE FINANCIAL YEAR ENDING 31ST OF MARCH 2010 AND ONLY CONSIDER COMPANIES WITH FINANCIAL YEAR ENDING 31/12/2010. THE NUMBER OF COMPARABLE COMPANIES AVAILABLE AFTER USING SUCH A FILTER WOULD BE VERY LIMITED AND THEREFORE, IN SUCH A CASE THE NET MARGIN EARNED BY THE COMPARABLE COMPANIES W OULD BE DIFFERENT FROM THE ONE THAT WOULD BE COMPUTED WITHOUT USING THIS FILTER. THIS VIEW IS SU PPORTED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. MCKINSEY KNOWLEDGE CENTRE I NDIA PRIVATE LIMITED IN ITA NO. 2195/DEL/2011 WHEREIN IT HAS BEEN HELD THAT IF A CO MPANY IS FUNCTIONALLY COMPARABLE, IT CANNOT BE REJECTED MERELY ON THE GROUND THAT DATA FOR THE ENT IRE FINANCIAL YEAR WAS UNAVAILABLE, IF THE DATA CAN BE REASONABLY EXTRAPOLATED. HONBLE TRIBUNAL FU RTHER OBSERVED THAT RULE 10 B (4) CANNOT BE INTERPRETED IN SUCH A RIGID MANNER SO AS TO DEFEAT THE BASIC OBJECTIVE OF THE RULE. THE RELEVANT EXTRACT OF THE RULING ARE REPRODUCED BELOW: ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 25 23. .. HOWEVER, IN OUR CONSIDERED OPINION, IF A COMPARABLE IS FUNCTIONALLY SAME AS THAT OF THE TESTED PARTY THEN THE SAME CANNOT BE REJECTE D MERELY ON THE GROUND THAT DATA FOR ENTIRE FINANCIAL YEAR IS NOT AVAILABLE. IF FROM THE AVAILA BLE DATA ON RECORD THE RESULTS WERE FINANCIAL YEAR CAN BE REASONABLY EXTRAPOLATED, THEN THE COMPA RABLE CANNOT BE EXCLUDED SOLELY ON THIS GROUND. THE LEARN ADR AS REFERRED TO RULE 10 B (4) WHICH ONLY MANDATES THAT THE DATA WHICH IS TO BE UTILISED FOR ANALYSING THE COMPARABILITY O F UNCONTROLLED TRANSACTIONS WITH AN INTERNATIONAL TRANSACTION, HAS TO BE FINANCIAL YEAR ONLY IN WHICH THE INTERNATIONAL TRANSACTION HAS BEEN ENTERED INTO. THIS RULE IS BASED ON MATCHI NG PRINCIPLE BUT THIS ROLE CANNOT BE INTERPRETED IN SUCH A RIGID MANNER SO AS TO DEFEAT THE BASIC OBJECT OF RULE VIZ., SELECTION OF THE COMPARABLE FOR DETERMINATION OF ARMS LENGTH PRICE O F AN INTERNATIONAL TRANSACTION (EMPHASIS SUPPLIED) 7.7. IN ANY CASE THE LD.TPO HAS NOT CITED ANY INST ANCES OF FUNCTIONAL DISSIMILARITY OF THIS COMPARABLE COMPANY WITH THAT OF ASSESSEE.WE THEREFO RE DIRECT THE LD. AO/TPO TO CONSIDER THIS COMPANY IN THE FINAL LIST OF COMPARABLE. ACCORDINGL Y GROUND NO. 3 TO 9 STANDS DISPOSED ACCORDINGLY. RESPECTFULLY FOLLOWING THE ABOVE,WE DIRECT THE AO T O INCLUDE BOTH THE COMPARABLES IN THE FINAL LIST OF VALID COMPARABLES. 4.3. WE FIND THAT IF THE ABOVE MENTIONED FOUR COMPARABLE S I.E. AT, ESL, INFOSYS AND TCS E- SERVICE,ARE EXCLUDED FROM THE LIST OF COMPARABLES A ND TWO OF THE COMPARABLES SELECTED BY THE ASSESSEE NAMELY CVSEL AND RSL ARE INCLUDED IN THE L IST,THE MARGIN SHOWN BY THE ASSESSEE WOULD BE WITHIN +/- 5% OF THE TOLERANCE BAND OF THE ARITHMETIC MEAN OF THE COMPARABLES. THEREFORE,WE HOLD THAT THE IT.S ENTERED IN TO BY TH E ASSESSEE WERE AT ARMS LENGTH FOR THE YEAR UNDER APPEAL.WE ARE NOT DEALING WITH OTHER COMPARAB LES. GROUND NO.2 IS DECID ED IN FAVOUR OF THE ASSESSEE. 5. LAST GROUND OF APPEAL PERTAINS TO DISALLOWING CHARG ES PAID TO NATIONAL STOCK EXCHANGE, BSE AND NATIONAL SECURITIES CLEARING CROP.,AMOUNTIN G TO RS. 24.18 LAKHS.IT WAS BROUGHT TO OUR NOTICE THAT THE ISSUE IS COVERED BY THE ORDER O F THE TRIBUNAL ORDER DATED 22.07.2016 (ITA/6912/MUM/2012,AY.2008-09).WE WOULD LIKE TO REP RODUCE THE RELEVANT PORTION OF THE ORDER AND SAME READS AS UNDER: 73.THE ISSUE RAISED IN GROUND NO.6, RELATES TO DE DUCTION CLAIMED OF AN AMOUNT OF RS.11,86,105, PAID TO BOMBAY STOCK EXCHANGE AND NAT IONAL STOCK EXCHANGE. 74.BRIEF FACTS ARE, DURING THE ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAS CLAIMED DEDUCTION TOWARDS PAYMENT MADE TO STOCK EXCHANGES CALLED FOR NECESSARY DETAILS. AFTER VERIFYING THE DETAILS SUBMITTED BY T HE ASSESSEE HE OBSERVED THAT SUCH PAYMENT WAS TOWARDS FINE FOR NONCONFIRMATION OF CLEARING HOUSE TRADES, CLIENT CODE MODIFICATION, ETC. HE, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN THE PAYMENT MADE BEING IN THE NATURE OF PENALTY WHY SHOULD NOT BE DISALLOWED. THOUGH, THE ASSESSEE OBJECTED TO THE DISALLOWANCE BY STATING THAT THE PAYMENT MADE ARE NOT FOR BREACH OF ANY STATUTOR Y PROVISIONS, HOWEVER, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE AND DISA LLOWED THE AMOUNT. BEING AGGRIEVED, ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE THE DRP. ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 26 75.THE DRP ALSO SUSTAINED THE DISALLOWANCE ACCEPTIN G THE REASONING OF THE ASSESSING OFFICER. 76.WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IDENTICAL ISSUE CAME UP FOR CONSIDERATION B EFORE THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 200910 IN ITA NO.222/ MUM./2014. THE TRIBUNAL AFTER CONSIDERING THE SUBMISSIONS OF THE PARTIES IN THE C ONTEXT OF FACTS AND MATERIAL ON RECORD BEING CONVINCED THAT THE PAYMENT MADE BY THE ASSESSEE TO STOCK EXCHANGES WERE NOT FOR INFRACTION OF ANY LAW IN VIEW OF THE JUDGMENT OF HON'BLE JURISDIC TIONAL HIGH COURT DELETED THE ADDITION. FOR READY REFERENCE, THE OBSERVATIONS OF THE TRIBUNAL I S REPRODUCED BELOW: 13.2. BEFORE US, THE LD. SENIOR COUNSEL DREW OUR A TTENTION TO THE DECISION OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF ANGEL C APITAL & DEBITT MARKET LTD. IN INCOME TAX APPEAL (L) NO. 475 OF 2011 WHEREIN THE H ON'BLE COURT HAD THE OPINION TO CONSIDER THE FOLLOWING QUESTION OF LAW. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE HON'BLE TRIBUNAL WAS JUSTIFIED IN DELETING THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER OF CLAIM OF THE ASSESSING COMPANY FOR A DEDUCTION OF PAYMENT OF RS. 6,51,240/- TOWARDS PENALTY PAID TO S TOCK EXCHANGE EVEN THOUGH SUCH PENALTY PAYMENT WAS CLEARLY DISALLOWABLE UNDER EXPLANATION TO SECTION 37(1) OF THE INCOME TAX ACT?' AND THE SAME WAS ANSWERED BY THE HON'BLE HIGH COURT AS UNDER: ' AS REGARDS QUESTION (C) IS CONCERNED, THE FINDING O F FACT RECORDED BY THE ITAT IS THAT THE AMOUNT PAID AS PENALTY WAS ON ACCOUNT OF IRREGU LARITIES COMMITTED BY THE ASSESSEE'S CLIENTS. SUCH PAYMENTS WERE NOT ON ACCOU NT OF ANY INFRACTION OF LAW AND HENCE ALLOWABLE AS BUSINESS EXPENDITURE. IN SUCH A CASE THE EXPLANATION TO SEC. 37 WOULD NOT APPLY. ACCORDINGLY QUESTION (C) RAISED BY THE REVENUE CANNOT BE ENTERTAINED.' RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H ON'BLE HIGH COURT (SUPRA), WE DIRECT THE AO TO DELETE THE IMPUGNED ADDITIONS. GRO UND NO. 7 IS ACCORDINGLY ALLOWED. 77.NO MATERIAL DIFFERENCE IN FACTS HAVING BEEN BROU GHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH AND THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COU RT CITED SUPRA, WE ALLOW DEDUCTION CLAIMED BY THE ASSESSEE. GROUND NO.6, IS ALLOWED. RESPECTFULLY,FOLLOWING THE ABOVE GROUND NUMBER THRE E IS DECIDED IN FAVOUR OF THE ASSESSEE. ITA/902/MUM/2016: 6. THE FIRST EFFECTIVE GROUND OF APPEAL ,RAISED BY THE AO IS ABOUT EXCLUSION OF MOIALP FROM THE LIST OF VALID COMPARABLES FOR INVESTMENT ADVISO RY SERVICES.IN THE EARLIER PART OF OUR ORDER, WE HAVE HELD THAT MOIALP IS NOT A VALID COMPARABLE. FOLLOWING THE SAME,GROUND NO.1 IS DECIDED AGAINST THE ASSESSING OFFICER. 7. NEXT EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING T HE ADDITION BY THE DRP UNDER THE HEAD EXPENDITURE INCURRED ON ACCOUNT OF ESOP.WE FIND THA T IDENTICAL ISSUE WAS DECIDED BY THE TRIBUNAL WHILE DECIDING THE APPEAL FOR THE 2008-09 AS UNDER: 71.WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE NOTED THAT IDENTICAL ISSUE OF DEDUC TION CLAIMED ON ACCOUNT OF ESOP AROSE FOR CONSIDERATION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 200910 BEFORE THE TRIBUNAL IN ITA NO.222/MUM./2014. THE TRIBUNAL VIDE ORDER DATED 30 TH NOVEMBER 2015, HELD AS UNDER: 12.3. BEFORE US, THE LD. SENIOR COUNSEL DREW OUR A TTENTION TO THE DECISION OF THE SPECIAL BENCH OF THE BANGALORE TRIBUNAL IN THE CASE OF BIOCON LTD 144 ITD 21 ITA(TP)/927/M /16(11-12)GOLDMAN SACHS (INDIA)SECURITIES PVT.LTD. 27 (BANG) WHEREIN ON SIMILAR FACTS THE DISCOUNT ON ISS UE OF ESOP WAS ALLOWED AS DEDUCTION. 12.4. THE LD. DR COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. RESPECTFULLY FOLLOWING THE DECISION OF THE SPECIAL BENCH (SUPRA), WE HOLD THAT DISCOUNT ON ISSUE OF EMPLOYEES STOCK OPTI ONS IS ALLOWABLE AS DEDUCTION IN COMPUTING THE INCOME UNDER THE HEAD PROFITS AND GAI NS OF BUSINESS OF PROFESSION. GROUND NO. 5 & 6 ARE ACCORDINGLY ALLOWED. 72.NO MATERIAL DIFFERENCE IN FACTS HAVING BEEN BROU GHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH AS REFERRED TO ABOVE, WE ALLOW ASSESSEES CLAIM OF DED UCTION AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. RESPECTFULLY FOLLOWING THE ABOVE GROUNDS NO.2 & 3 A RE DECIDED AGAINST THE AO. AS A RESULT,APPEAL OF THE ASSESSEE IS ALL OWED AND APPEAL OF THE AO STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2017. 11 , 2017 SD/- SD/- ( / SAKTIJIT DEY ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11.01.2017 JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.
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