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TMI Blog2019 (8) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... es, not on behalf of the AE but as their own agents to fulfill their own obligations. We, therefore, are of the considered opinion that the assessee is working as an independent marketing agency and the payments made to the third parties for discharging the obligations of the assessee as envisaged in, are the cost of the assessee alone. We reject the contention of the assessee that the assessee is only a conduit and deal with the third parties agencies on behalf of the AE. With this view of this matter, we uphold the findings of the Ld.CIT(A) and dismiss Ground No.4. Comparable selection - inclusion or exclusion of Goldmine Advertising Ltd. and MRUC - HELD THAT:- Functions performed by the assessee include the activities to promote and market TripAdvisor group s Indian website, tripadvisor.in under the direction and management of Trip-UK, identifying new Indian advertisers for the group websites, maintaining relationships with existing advertisers, and marketing and promoting the TripAdvisor websites in India, and are determining the market conditions in India and informing Trip-UK of the local terms and pricing levels. Coming to the comparability of Goldmine Advertising Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and management of trip UK. 3. For the assessment year 2011-12, they have filed their return f income 29.11.2011 declaring income of ₹ 62,04,883/-. 4. During the Financial year 2010-11, the assessee had undertaken two international transactions with its AEs, namely, Provision of Marketing Support Services by Trip India to Trip UK and reimbursement of expenses. The determination of arm s length price of the international transaction was referred to the Ld.TPO u/s 92CA of the Act and by order dated 21.01.2015, Ld.TPO recommended an adjustment of ₹ 26,10,163/- u/s 92CA (3) of the Act. Besides that while making certain disallowances, Ld.AO by order dated 22.04.2015 assessed the income of the assessee at ₹ 91,02,630/-. Assessee challenged the said order before the CIT(A) and by way of impugned order, Ld.CIT(A) directed the Ld.AO to consider the compensation for marketing expenses as classified in the financial accounts of the assessee as part of the total cost for calculating the profit level indicator ( PLI ). Ld.CIT(A) also brushed aside the contentions of the assessee to include Goldmine Advertising Ltd. and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting support services to its AEs and as per the service agreement with AEs, the AE remunerates the assessee at mark-up of 10% in respect of the direct and indirect cost incurred by the assessee; whereas in respect of the third party marketing cost borne by the assessee on half of the AEs on cost to cost basis without any mark-up being charged. In respect of the observations of the Ld.CIT(A), it s submitted that the agreement defines the direct cost on which the mark-up can be charged as cost incurred by the assessee that are attributable on the employees directly engaged in performing the duties of the assessee under the agreement; whereas the cost incurred by the assessee for securing the services performed by third parties, it was defined as third party cost. It is further submitted that all the relevant bills and invoices were submitted before the TPO, the TPO verified and accepted the same and therefore, the interference by the Ld.CIT(A) is unwarranted. 9. Ld.AR further submitted that the assessee is only a conduit between the AEs and third parties or performance of the marketing services, but routed the third parties marketing expenses through P L A/c on actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firstly, we deem it necessary to note the functions of the assessee as captured by the authorizes below and there is no dispute on the nature of the functions performed by the assessee. Functions performed by the assessee include the activities to promote and market TripAdvisor group s Indian website, tripadvisor.in under the direction and management of Trip-UK, identifying new Indian advertisers for the group websites, maintaining relationships with existing advertisers, and marketing and promoting the TripAdvisor websites in India, and are determining the market conditions in India and informing Trip-UK of the local terms and pricing levels. 14. Now coming to the comparability of Goldmine Advertising Ltd., the annual report and the website information clearly show that this company is engaged in the provision of digital advertising and marketing services which are in the nature of marketing support services. Further, Ld.TPO in his order by Paragraph No.12.2 does not dispute the nature of functions performed by this entity and the only reason for rejection of this entity is that they failed the service income filtered of 75%. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company is very much comparable on its FAR analysis with the assessee. 20. With reference to the annual report of this company, Ld. AR demonstrates that MRUC is registered as not-for-profit body of members representing advertisers, advertising agencies, publishers and broadcast/other media totally 249 in number; that it is engaged in undertaking surveys, research into readership, viewership, listenership of various media for advertising; that MRUC works for the benefit of its exclusive members only without any objective of profit and making; that the major sources of income earned by the MRUC was in the form of membership and subscription fees for Indian readership survey and Indian outdoor survey reports; and that this company was outsourcing most of its activities to third-party research agencies. 21. We have referred to the page No. 462 to find out that the source of income of this entity is membership subscription, income from subscription for IRS/Ay Wireless reports etc and it constitutes more than ₹ 2 crores out of the ₹ 2.64 crores of its income. Page numbers 449 and 452 of the paper book show the activities of this entity which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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