Case Law Details
M/s. Enchanting Travels Pvt. Ltd. Vs The Income Tax Officer (ITAT Bangalore)
We find that TPO has already taken the total 10 comparables and with respect to 8 comparables, assessee has no objections. With respect to Kerala Travels Interserve Ltd., we have carefully perused its financial statements and we find the main revenue is from different activities and not from the tour operations. Therefore, Kerala Travels Interserve Ltd., cannot be held to be the good comparable and we accordingly direct the AO/TPO to exclude this company from the list of comparables.
We find that undisputedly the cox & Kings has its own brand value and is also engaged in multifarious activities. From the financials, it is also clear that under the head income, revenue from operation was of Rs.37,227 lakhs out of which income from travel & tour commission was at Rs.34,627 lakhs and other operating income was only Rs.110 lakhs. Therefore, the main revenue of this company is not generated from the tour operation in India. The main revenue is generated from the travel and tour commissions. We have also carefully examined the judgments of Hon’ble Delhi High Court in which it has been held that the brand of the company plays its own role in price or cost determination. While dealing with the brand value of Wipro Ltd., their Lordship of the Hon’ble High Court has held that the brand value plays an important role in price or cost determination. The relevant observation of the Hon’ble High Court is extracted hereunder for the sake of reference:
“As to the exclusion of M/s Wipro Limited, here too, the Court is of the opinion that the brand value of an entity has a significant role in its ability to garner profits and negotiate contracts. Thus, while considering the comparables, the likelihood of profits derived or attributable to the brand having regard to the consistency of the quality of services that an entity is able to offer would relevant; although functionally, the two entities may be similar in terms of the services or products they offer, brand does play its own role in price or cost determination. If this singular aspect is kept in mind, the ITA T’s approach cannot be faulted with.”
In the light of the aforesaid judgments of Hon’ble Delhi High Court and the annual report of the Cox & Kings, we find that Cox & Kings is involved in different activities besides tour operation and has its own brand value. Therefore, it cannot be held to be a good comparable for determination of the ALP.
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