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TMI Blog2019 (10) TMI 1552X X X X Extracts X X X X X X X X Extracts X X X X ..... education related services, then such a concern is not functionally comparable to the assessee. The said concern cannot be included in the final set of comparables. Accordingly, we hold so. MM TV Limited - The source of Revenue in the case of MM TV Limited is from advertising income and it also owned intangibles; as against the assessee which was providing support services and did not own any intangibles. Accordingly, we hold that such a concern cannot be held to be functionally comparable to the assessee and has to be excluded from the list of the comparables. Accordingly, we hold so. Media Research Users Council registered as not-for-profit body of members representing advertisers, advertising agencies, publishers, and broadcast/other media -We find merit in this plea of the assessee on the ground that the said concern was registered as not-for-profit body of members representing advertisers, advertising agencies, publishers, and broadcast/other media. It undertook research work for the benefits of its own members only and the revenue earned was from the membership fee charged to the members. On the other hand, the assessee was providing marketing and sale support services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filters applied by the Appellant and adding certain filters without any cogent reason. 5. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon ble DRP erred in violating the provisions of Rule 10B(2) by alleging Apar Chemtek Lubricants Ltd. as comparable to the Appellant. 6. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon ble DRP erred in violating the provisions of Rule 10B(2) by alleging Info Edge (India) Ltd. as comparable to the Appellant. 7. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon ble DRP erred in violating the provisions of Rule 10B(2) by alleging MMTV Ltd. as comparable to the Appellant. 8. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon ble DRP erred in violating the provisions of Rule 10B(2) by alleging Media Research Users Council as comparable to the Appellant. 9. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon ble DRP erred in rejecting Technicom Chemie (I) Limited without appreciating that in cognizance of Rule 10B(2), the functional, asset and risk profile of the aforesaid comparable company are similar with that of the Appellant. 10. On facts and in law, the Ld. TP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 42,15,45,837/-. The AO made reference to the TPO to benchmark the international transactions under section 92 CA (1) of the Act. The TPO noted that the assessee was engaged in two activities. One was of distribution of software i.e. direct sales; admittedly there is no dispute with regard to the said activity. The second activity undertaken by the assessee was marketing and sale support services provided by it to its AEs. The assessee has selected Transactional Net Margin Method (TNMM) as the most appropriate method for benchmarking the said transaction. The PLI applied by the assessee was operating profits over total cost and the PLI of the assessee worked out to 11.57%. The assessee had selected nine companies as comparables, whose mean margins of multiple year data was 7.06%. The TPO issued a show cause notice to the assessee in respect of the proposed filters to be applied and also pointed out that final set of comparables would be at variance. The assessee filed its reply to the said show cause notice wherein the current year data was to be used for comparability analysis and also in respect of other filters to be applied. The TPO in the final analysis rejected six comparabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Concept Communication Ltd. 4.73 4. Crystal Hues Ltd. 11.69 5. Cyber Media Research Services Ltd. 10.60 6. DHFL Property Services Ltd. 14.86 7. Global Procurement Consultants Ltd. 30.86 8. ICRA Management Consulting Services Ltd. 16.14 9. Info Edge (India) Ltd. 45.53 10. MM TV Ltd. 32.94 11. Media Research Users Council 40.53 12. P ower System Operation Corpn. Ltd. 22.52 13. Quardrant Communications Ltd. 14.58 14. Quippo Valuers Auctioneers Pvt. Ltd. 7.23 15. TSR Darashaw Ltd. 41.60 Average ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Naukri.com for recruitment related services; (ii) Jeevansathi.com for matrimony related services; (iii) 99 acres.com for real estate related services and (iv) Shiksha.com for education related services. It was further stated by the learned AR for the assessee that the assessee was providing marketing and sale support services to the companies to whom the AE of the assessee sells the products. Hence the said concern was not functionally comparable to the assessee. It was also pointed out that Info Edge (India) Limited possesses certain intangible assets and on this account also the concern cannot be said to be comparable. Again reliance was placed on the decision of Delhi Bench in Kobelco Cranes India (P.) Ltd., (supra). The learned DR for the Revenue placed reliance on the orders of the authorities below. 13. We have heard the rival contentions and are of the view that where the assessee was provided marketing and sales support services to its AE then a concern which is engaged in providing Internet based services through web portal for different services i.e. recruitment / matrimony related services, estate services, education related services, then such a concern is not funct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g advertisers, advertising agencies, publishers, and broadcast/other media. It undertook research work for the benefits of its own members only and the revenue earned was from the membership fee charged to the members. On the other hand, the assessee was providing marketing and sale support services to its AE. Accordingly, we direct its exclusion from the final set of comparables. 18. The learned AR for the assessee fairly pointed out that in case the four concerns Apar Chematek Lubricants Ltd., Info Edge (India) Limited ( Info Edge ), MM TV Limited ( MM TV ) and Media Research Users Council ( MRUC ) are excluded from the final list of comparables, then the margins shown by the assessee would be at arm s length with the mean margins of the balance comparable companies selected. Since we have already directed the exclusion of the said concerns, the grounds of appeal raised by the assessee are allowed. No other issue was raised by the learned AR for the assessee during the course of hearing; hence the grounds of appeal of the assessee stand allowed. 19. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 30th day of October, 2019. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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