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TMI Blog2018 (10) TMI 1812X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company with the associated enterprises were referred to the Transfer Pricing Officer (TPO) for determining the Arm's Length Price (ALP). The TPO passed the order dated 22nd January, 2014 wherein he made an adjustment of Rs. 47,32,323/- on account of ALP of the transaction relating to provision of marketing support services. Vide notice dated 30th January, 2014, the assessee was informed about the adjustment of Rs. 47,32,323/- determined by the TPO on account of ALP relating to provisions of marketing support services to its AE and was asked to submit its reply/explanation regarding the same. The authorized representative of the assessee company filed reply on 10th February, 2014. A draft assessment order dated 28th March, 2014 was forwarded to the assessee. The assessee filed objections before the Dispute Resolution Panel (DRP). While disposing of the objections raised by the assessee, the DRP, vide its order dated 17th December, 2014, upheld the additions made in the draft order with regard to the adjustments made by the TPO. The assessment order was passed on 8th January, 2015. 4. Being aggrieved by the assessment order, the assessee filed crossobjection in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts AE on 01.04.2007 to be read along with an Amendment agreement dated 01.04.2008, under which it agreed to carry out market support services in India, Nepal, Bangladesh and Afghanisthan. The AE agreed to reimburse all Direct marketing expenses (DME), including, events sponsorship and agency costs; Trade marketing expenses (TME), including, sale materials, trade events, display rentals, trade and brand support expenses; allowances and travel costs to the assessee on a mark-up of 10%. In a nutshell, the assessee rendered marketing support services for its AE in connection with sale of tobacco products in India, Nepal, Bangladesh and Afghanisthan. With the above understanding of the nature of functions carried out by the assessee under this international transaction, we will now espouse for determination the four comparable companies challenged by the assessee in seriatim. i. Apitco Limited. 5. The assessee argued against the functional incomparability of this company before the TPO by putting forth that this company was providing high-end diversified activities. Such contention did not find favour with the TPO, who treated this company as comparable by including its OP/OC at 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of similarity even under TNMM. The Hon'ble High Court has laid down that selection of comparables does not differ with the method adopted. Ex consequenti, it is no more open to argue that the functional dissimilarity of the companies under the overall broader category can be ignored under the TNMM. 10. In view of the foregoing discussion, we find that the functionally similarity of Apitco Limited is lacking on entity level with the assessee company. As such, we order for its exclusion from the final set of comparables. Similar view has been taken by the Tribunal in assessee's own case for the immediately preceding year, a copy of which has been placed on record. ii. Global Procurement Consultants Limited 11. The TPO included this company in the list of comparables despite the assessee's objection that it is engaged in providing consultancy services and review of procurement processes for various projects funded by the World Bank. The assessee failed to convince even the DRP for its exclusion. 12. After considering the rival submissions and perusing the relevant material on record, we consider it expedient to first discuss the nature of activities carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble that there is an absolute mismatch with the services provided by the assessee. The services provided by Global Procurement Consultants Ltd. are miles apart from those rendered by the assessee, which, in turn, are confined to market support. By no standard, Global Procurement Consultants Ltd., can be considered as comparable with the assessee company. We, therefore, order for the elimination of this company from the list of comparables. Similar view has been taken by the Tribunal in its order for the immediately preceding year in assesse's own case. iii. TSR Darashaw Limited. 13. The assessee objected to the inclusion of this company by arguing that the business segments of this company are, Registrar and Transfer Agent activity; Records management activity; and Payroll and trust fund activity. Not convinced with the assessee's submissions, the TPO treated it as comparable on entity level, against which the assessee is before us. 14. Having heard the rival submissions and perused the relevant material on record, we find that this company is a broking and investment banking house with its three segments, namely, Registrar and transfer agent activity (R&T); Records manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd earthmoving equipments through auctions and also by means of innovative disposal methodologies; execution of live auctions for financial institutions in the eastern part of the country; and provision of valuation services to a number of clients in respect of assets including construction equipment, barges and other industrial assets. The assessee also raked up such dissimilarities before the TPO, who did not controvert the functional profile of this company. In view of the fact that this company is mainly providing Asset management services of the nature discussed above, the same cannot be considered as comparable with the market support services rendered by the assessee. We, therefore, direct to exclude this company from the list of comparables." Thus, the comparables contested in the present appeal by the Ld. AR has been considered by the Tribunal in case of Philips Morris. The Revenue has not disputed the functional profile of the assessee company and could not distinguish the findings given by the Tribunal relating to these comparables disputed by the assessee in the present case. Therefore, we direct the TPO/AO to exclude these four comparables. Thus, Ground No. 7 is allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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