PCIT Vs TCK Advisers Pvt. Ltd. (Delhi High Court)
The Delhi High Court dismissed the Revenue’s appeal filed under section 260A of the Income-tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal dated 11 November 2019 for Assessment Year 2010–11. The dispute arose from transfer pricing adjustments proposed in respect of investment advisory services rendered by the assessee to its Associated Enterprise (AE), Trikona Advisors Mauritius Limited, under a consultancy agreement dated 1 April 2008. The assessee provided non-binding investment advisory services, primarily in the real estate sector in India, and functioned as a back-office support entity for its AE. It operated on a cost-plus model, derived 100% of its revenue from exports of services, bore no market or business risks, and was fully funded by its AE.
The assessee benchmarked its international transaction under the Transactional Net Margin Method (TNMM) and demonstrated that its operating margin of 11.46% exceeded the average margin of 8.01% of seventeen comparable companies. The Transfer Pricing Officer (TPO), however, proposed an upward adjustment, which was accepted by the Assessing Officer. On objections, the Dispute Resolution Panel (DRP) partly allowed relief and excluded six companies from the list of comparables, leading to a reduction in the proposed adjustment.
