The Tax Publishers2020 TaxPub(DT) 1595 (Mum-Trib)

INCOME TAX ACT, 1961

Section 92C

Since the company, which was selected as a comparable by assessee, was found to be functionally similar to the assessee, the TPO was not justified in rejecting such company from the list of comparables.

Transfer pricing - Computation of ALP - Selection of comparables - Functional similarity

Assessee-company provided non-binding investment advisory services to its AE. In TP study report, the assessee selected ten companies as comparables for benchmarking the said transaction with the AE. However, TPO rejected a company named 'I' from the list of comparables. Assessee contended that there was no reason to reject the said company as it was providing advisory services, hence, was functionally similar to it. Held: It was observed that the comparability of the company 'I' with a non binding investment advisory service provider came up for consideration not only before the Tribunal, but even before the High Court. After analyzing the function, asset and risk (FAR) of such company, the Tribunal found that the service provided by it was akin to the service provided by an investment advisory service provider. Therefore, the 'I' was found to be a good comparable being functionally similar to the assessee. Accordingly, the TPO was directed to include the same in the list of comparables.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :


INCOME TAX ACT, 1961

Section 92C

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