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Showing contexts for: Profit Split Method in Avenue Asia Advisors Pvt. Ltd., New ... vs Assessee on 22 January, 2016Matching Fragments
in the country and the manpower at the private equity firm are the highest paid, therefore, the profit in the PE business are the highest. He further submitted that combining results of the PE advisory job with the financial result of merchant banking activity (with low profit margin) would result in profit margin of total entity getting reduced and thus, such comparables, if any, would adversely affect the Revenue rather than the assessee. Thirdly, he submitted that comparables chosen by the assessee i.e. Future Capital holding Ltd, ICRA Management consulting services ltd. and Mecklai Financial & Commercial Services Ltd. could also be rejected on the same ground that they were in divergent business. Further the Ld CIT(DR) submitted that either the matter be restored to the TPO with the direction to make fresh selection of comparables or in case no perfect comparables could be found, then use of other methods like profit split method might be explored.
are different. Since the remuneration of the captive advisor is not linked with the performance, it is not at a significant risk and therefore a suitable adjustment should be allowed. Accordingly, we restore the matter to the AO/TPO for examination of the issue and provide suitable adjustment towards risk in accordance to the law. The assessee is directed to extend cooperation to the TPO in quantification of risk adjustment. If the risk difference is of such a magnitude that reduces the effectively of TNMM method itself, then there are two options left for TPO. First, drop all the comparables and then look for entirely new set of comparables having FAR (Functions performed, Assets employed, Risk undertaken) similarity, and if that is also not possible, then second option is that drop the TNMM as most appropriate method and adopt any other method including profit split method for computation of arm's length price of the international transaction of the assessee. Needless to say, the assessee would be provided sufficient opportunity of hearing.