BARCLAYS SECURITIES (INDIA) PRIVATE LIMITED,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 6(1)(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “K” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)

ITA No. 8715/MUM/2025 Assessment Year: 2012-13

Barclays Securities (India) Assistant Commissioner of Private Limited, 9th Floor, B6, Income Tax, Circle – 6(1)(2), Nirlon Knowledge Park, Off, Vs. Aayakar Bhavan, Maharshi Karve Western Express Highway, Marg, Mumbai - 400020 Mumbai, Maharashtra, India. PAN NO. AACCB 8800 G Appellant Respondent

Assessee by : Shri Madhur Agarwal/Punit Shah Revenue by : Shri Ajay Uke. SR. A.R

: 01/07/2026 Date of Hearing : 14/07/2026 Date of pronouncement ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against the order dated 29.10.2025, passed by the learned Commissioner of Income-Tax (Appeals) – 55, Mumbai [in short, ‘the Ld. CIT(A)’], for Assessment Year (in short ‘A.Y’), 2012-13, raising following grounds:- “1. Ground of Appeal No. 1 1.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the Income-tax Officer-16(1)(3),

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Mumbai/Assistant Commissioner of Income-tax, Circle 6(1)(2) [collectively referred to as the 'learned AO'] / the Additional Commissioner of Income-Tax, Transfer Pricing 1(2) (hereinafter referred to as 'learned TPO'] to the extent of INR 45,74.925/- under section 92CA(3) of the Act on account of adjustment in the arm's length price of the international transaction entered into by the Appellant in relation to provision of broking services - Cash Equities segment. 1.2 The learned CIT(A) erred in law and on facts in upholding the action of the TPO, of disregarding the detailed functions, assets and risk (FAR) analysis and economic analysis provided by the Appellant in its transfer pricing documentation and submissions with respect to the provision of broking services to its Associated Enterprises ('AEs'). In this regard, the learned CIT(A) has erred - a) In not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income-tax Rules, 1962 ('Rules') by arbitrarily rejecting Transactional Net Margin Method (TNMM) and instead applying the Comparable Uncontrolled price ('CUP') as the most appropriate method. b) Erred in upholding the TPO's decision to disregard the corroborative benchmarking analysis undertaken by the Appellant under the CUP Method, wherein the AE was considered as the tested party, despite the fact that the functions, assets and risks assumed by the Appellant in its transactions with the AE were comparable to those undertaken by the AE in its transactions with third- party clients. 1.3 The learned CIT(A) has erred in not accepting the Appellant's contention that, without prejudice, if the CUP Method using Appellant as the tested party is applied for determining the arm's length price, an appropriate comparability adjustment of at least 40% should be made vis-à-vis the brokerage charged to independent third-party clients, to account for the functional and other economic differences between the international transaction with the AE and the comparable uncontrolled transactions undertaken with independent third-party clients. 2. Ground of Appeal No. 2 2.1 The learned AO, on the facts and circumstances of the case and in law, erred in initiating the penalty proceedings under section 271(1)(c) of the Act in respect of the enhancements made by the learned TPO.” 2. Briefly stated, the relevant facts are that the assessee filed its return of income for the year under consideration on 26.11.2012 declaring Nil income. The return was selected for scrutiny and statutory notices under the Income-tax Act, 1961 ("the Act") were

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duly issued and complied with. Subsequently, the assessee filed a revised return on 28.03.2014, retaining the returned income at Nil.

2.1 During the course of assessment proceedings, the Assessing Officer ("AO") observed that the assessee was engaged in the business of merchant banking, distribution of mutual funds, stock broking, depository services and portfolio management. Since the assessee had entered into international transactions with its Associated Enterprises ("AEs"), the matter was referred, after obtaining the requisite approval, to the Transfer Pricing Officer ("TPO") under section 92CA of the Act for determination of the arm's length price ("ALP").

2.2 The TPO examined the brokerage charged by the assessee to its AE in respect of Clearing House ("CH") trades and Delivery Versus Payment ("DVP") trades. Rejecting the pricing adopted by the assessee, the TPO benchmarked the transactions by applying an arm's length brokerage rate of 0.22% under the Comparable Uncontrolled Price ("CUP") Method and proposed an adjustment as under:

Volume Brokerage Brokerage ALP Arm’s Adjustment. Paid Rate Brokerage length Rate brokerage CH 5,13,74,26,209 38,65,887 0.08 0.22 1,13,02,338 74,36,451 Trade DVP 20,20,419 3031 0.15 0.22 4,445 1,414 Trade 5,13,94,46,628 38,68918 1,13,06,783 74,37,865

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2.3 Incorporating the adjustment proposed by the TPO, the AO completed the assessment under section 143(3) of the Act on 16.03.2016. Aggrieved thereby, the assessee preferred an appeal before the learned Commissioner of Income-tax (Appeals) ["CIT(A)"], who granted partial relief.

2.4 Aggrieved with the impugned order of the Ld. CIT(A), the assessee is in appeal before us by way of raising grounds related to the sole issue of transfer pricing adjustments to the provisions of broking services of cash equity segments. The assessee filed a paper book containing pages 1 to 657.

2.5 The TPO noted that the assessee, a company incorporated in India and forming part of the Barclays Group, was engaged in providing wealth management services, including portfolio management, distribution of third-party financial products, stock broking and depository services. The international transactions undertaken during the relevant previous year were as under:

Sr. No. Nature of International Transaction Amount FY 10- FY 09-10 1. Provision of administrative support 12,321,740 2,71,24,180 services 2 Availing administrative support 6,944,397 57,46,149 services 3 Provision of Broking Services - F & O 830,685,549 8,09,63,489 segment 4 Provision of broking services -Cash 3,871,108 equities segment 5 Provision of investment advisory 3,828,216 33,77,419

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services 6 Provision of research support 1,256,200 services 7 Interest paid on Overdrafts 59,037,111 1,21,56,451 8 Receipt of interest on Fixed Deposit 195,152,559 44,13,05,698 9 Interest on Funding for expenses 5,701,128 14,44,915 10 Payment towards bank cheques 215,930 11 Reimbursement of expenses 230,664,168 13,98,64,611 2.6 In so far as the impugned issue is concerned, the TPO observed that the assessee commenced its stock broking business in January 2010 after obtaining registration from SEBI and membership of the Bombay Stock Exchange and the National Stock Exchange. Institutional cash equity operations commenced in May 2011. During the relevant year, the assessee facilitated equity trades for both its AEs and independent clients in India.

2.7 For benchmarking these transactions, the assessee adopted the Transactional Net Margin Method ("TNMM") as the Most Appropriate Method ("MAM") and supported the same by a corroborative analysis under the CUP Method, treating the AE as the tested party. The TPO rejected the entity-level TNMM and held that the CUP Method was the appropriate method. The benchmarking furnished by the assessee was as follows:

Brokerage paid Nature of transaction For Execution – Cash equities trades Assessee Controlled 0.08 Third Party brokers Uncontrolled 0.03

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2.8 The TPO thereafter called upon the assessee to furnish the brokerage charged to independent domestic clients. On examination of the details furnished, it was noticed that the assessee had charged brokerage at 0.22% from one such client. A show-cause notice was accordingly issued proposing adoption of the assessee as the tested party and benchmarking the international transaction by applying the brokerage rate of 0.22%.

2.9 The assessee objected to the proposal primarily on the grounds that its AE had executed substantially higher volumes through independent brokers, had paid significantly higher brokerage to such brokers, and that the concessional brokerage charged by the assessee was commercially justified to secure business from the AE. It was, therefore, contended that the AE ought to be regarded as the tested party.

2.10 The TPO rejected these submissions, holding that where a reliable internal CUP is available, the assessee itself constitutes the appropriate tested party. The TPO further observed that the assessee had failed to substantiate its claim that the functional profile of the transactions with the AE materially differed from that of the transactions undertaken with independent clients. Consequently, the brokerage rate of 0.22% charged to independent parties was adopted as the arm's length benchmark and the Transfer Pricing adjustment was computed accordingly. The

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submissions filed by the assessee were rejected by the Ld. TPO observing as under:-

i. The assessee is the direct party which is affected in this case. When internal CUP is available in the case of assessee, there is no reason why assessee should not be taken as tested party. ii. The FAR of assessee should normally be same with third parties non AEs as compared to FAR of AE with third party broker. The assessee has not furnished any evidence for examination to prove the contrary claim. iii. Therefore, more reliable and direct information is available in the case of assessee and assessee is taken as tested party. iv. It is observed that one non AE, New world Fund Inc, the assessee has dealt with on 07.03.2012, the assessee has charged brokerage of Rs. 2,564,577 on a volume of Rs. 1,131,491,539/-. The brokerage in this transaction comes out to be 0.22%. v. The assessee's transaction with its AE are for a volume of Rs. 5.13 billion and can be taken as comparable transaction.

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vi. The overall brokerage rate charged by the assessee from third party non AEs is also 0.22%.” 2.11 Applying the arm's length brokerage rate of 0.22%, the TPO proposed a total adjustment of Rs.74,37,865, the computation as follows:

“12. Therefore, this transaction of brokerage rate charged by the assessee from AE in clearing, house trade(CH) trade and Delivery versus payment Trade (DVP) is benchmarked at the arms length brokerage rate of 0.22%. The adjustment works out to be as under:- Volume Brokerage Brokerage ALP Arm’s Adjustment. Paid Rate Brokerage length Rate brokerage CH 5,13,74,26,209 38,65,887 0.08 0.22 1,13,02,338 74,36,451 Trade DVP 20,20,419 3031 0.15 0.22 4,445 1,414 Trade 5,13,94,46,628 38,68918 1,13,06,783 74,37,865

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directions, the Transfer Pricing adjustment was sustained. The relevant findings of the learned CIT(A) are reproduced hereunder:

“6. DECISION: Further the Appellant craves leave to submit such further facts and legal arguments at or before the hearing, so as to enable your godself decide this application in accordance with the law. 6.1 The appellant has filed appeal against assessment order for AY 2012- 13 passed by the AO u/s.143(3) of the Act dated 16.03.2016. The appellant is engaged in the business of merchant banking, distribution of mutual funds, stockbroking, and depository and portfolio management services. The ground nos.1 to 7 of the appeal pertains to addition of Rs.74,37,865/- on account of TP adjustment on ALP of international transaction of provision of broking services. During the course of assessment proceedings, the appellant's case was referred to the TPO. The TPO has passed order u/s.92CA(3) dated 15.01.2016, wherein adjustment with regard to transaction of brokerage charged by the appellant from its AE in clearing house trade (CHT) and delivery vs. payment trade (DVP) trade was made by benchmarking the same at the arm's length brokerage rate of 0.22%. The adjustment thus proposed by the TPO for CHT trades amounts to Rs.74,36,451/- and DVP trades amounts to Rs.1,414/-, and thus, the total adjustment proposed by the TPO is amounting to Rs.74,37,865/-. The ALP brokerage rate considered by the appellant was 0.08% for CH trade whereas the brokerage rate considered by the appellant for DVP trade was 0.15%. However, the TPO has considered the ALP brokerage rate at 0.22%, which has resulted in the impugned TP adjustment which has been disputed vide the above quoted grounds of appeal. On perusal of the TPO order passed u/s.92CA(3) dated 15.01.2016, it is noted that the appellant is a private limited company incorporated in India associated with Barclays Group. The appellant is engaged in providing wealth management services to HNIs which include various portfolio management services etc. The appellant has also provided broking services during the instant assessment year. In para 4 of the TP order, the international transactions undertaken by the appellant have been discussed whereas in para 5, the brokerage in cash equity segment has been discussed. The TPO has noted that the cash equity institutional operation started by the appellant in May 2011 and it has facilitated trades for its AEs as well as for third parties. Regarding benchmarking of brokerage in cash equity segment, the appellant had adopted TNMM as MAM and corroborated the benchmarking by adopting

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CUP method. The appellant had chosen AE as the tested party for the said benchmarking. The TPO, however, did not find the entity level TNMM appropriate nor did he find the selection of AE as the tested party as appropriate. The TPO has, accordingly, rejected the benchmarking conducted by the appellant and has adopted CUP method for undertaking the said benchmarking exercise by treating the appellant as the tested party. The benchmarking details adopted by the appellant are mentioned in para 8 of the TPO order. The appellant was asked by the TPO to submit the brokerage rate charged by it to third party non-AEs in India for services rendered and such details were submitted by the appellant. The TPO observed that the assessee charged brokerage at the rate of 0.22% from the third parties in India, which was much higher than that charged to its AE's. Therefore, a show-cause was issued by the TPO to the appellant as to why assessee should not be taken as the tested party and adjustment should not be made taking brokerage rate of 0.22%. The submissions filed by the appellant disputing the said proposed action of the TPO are mentioned in para 10 of the impugned TPO order. The appellant had suggested that the AE should be taken as the tested party. It was claimed that only because of competitive rates offered to its AE's, the assessee has been able to get some business from the AE. The appellant claimed that the AE has paid brokerage to third parties also, besides paying brokerage to the appellant and further it was claimed that the AE has substantial volume of CH trade with third parties whereas appellant is having only much lower volume in the CH trade and DVP trade. Therefore, the appellant had claimed that AE should be taken as a tested party. The reply of the appellant was not found satisfactory by the TPO and as mentioned in para 11 of the order of the TPO, the TPO was of the opinion that the assessee is a direct party which is affected in the case. Further, the TPO was of the opinion that when internal CUP is available, there is no reason why assessee should not be taken as the tested party. Regarding the claim of the appellant that the FAR of the services rendered is not same with respect to third party non-AEs vis-a-vis FAR of services rendered w.r.t AEs, the TPO noted that the appellant had not submitted any evidence for making such claim and, therefore, the claims of the appellant were rejected. The assessee was therefore taken as the tested party by the TPO who was of the opinion that more reliable and direct information was available w.r.t the assessee as compared to its AE. The TPO noted that one non-AE, New World Fund Inc. with whom assessee has dealt on 07.03.2012, brokerage at 0.22% has been charged at the volume of Rs.113,14,91,539/-. The TPO noted that the appellant's transactions with its AE are for a volume of Rs.5.13 billion and, therefore, the two transactions are comparable. The TPO noted that the overall brokerage rate charged by the assessee from third party non-AEs is also

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0.22% and, therefore, he conducted the benchmarking by considering the ALP brokerage rate of 0.22% for both clearing house trade (CHT) and delivery versus payment (DVP) trade and this resulted in adjustment of Rs.74,37,865/-. The statement of facts, grounds of appeals and submissions filed by the appellant have been quoted above. On behalf of the appellant, Mr. Anish Thakkar, Chartered Accountant from Ernst & Young appeared on different dates and made various submissions as quoted above. The submissions filed by the appellant have been perused. 6.1.1 The appellant has disputed the rejection of TP analysis and rejection of TNMM with AE as tested party by the TPO, and in this regard it has relied upon the decisions of Hon'ble ITAT Mumbai in the case of CLSA India Pvt. Ltd. (ITA No.902/Mum/2016) and Hon'ble ITAT Mumbai in the case of Goldman Sachs India Securities Pvt. Ltd. (ITA No.7724/Mum/2011) and other decisions. The appellant has claimed that it is rendering two types of services to its clients; one is "Full broking service" which includes marketing, research, order origination, execution of order and settlement whereas it is also providing "Execution only services" which only includes order origination and execution of order/settlement. The appellant has claimed that it has undertaken execution only broking services for its AEs, for which no marketing expenditure is required to be incurred, no research is to be undertaken as the Barclay Group does not need any research inputs from the appellant and thus, it has only done order origination and execution of orders/settlement for its AEs. On the contrary, it has been claimed that for the other third parties non-AEs, it has undertaken full broking services, which include marketing research, order origination and other activities also, and necessary details have been submitted in this regard, as mentioned in the above quoted submissions. The appellant has claimed that the FAR of the services rendered by it to AEs is different from the services rendered by it to the non-AEs and hence they cannot be compared. Therefore, it has been claimed that in absence of FAR similarity, CUP cannot be applied to its case. Thus, the appellant has claimed that a valid CUP does not exist in its case and hence the benchmarking conducted by the TPO by taking an internal CUP with assessee as the tested party is not justified. 6.1.2 Regarding TNMM, the appellant has justified its case by referring to the decisions of Hon'ble ITAT, Mumbai in these cases. However, it is noted that these decisions were rendered in specific factual circumstances of those cases as considered by Hon'ble ITAT, Mumbai while passing such judgments. Therefore, these judgments cannot be universally applied to the case of the appellant. Based on the details submitted by the appellant regarding difference in FAR profile of the services rendered to the AEs

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(execution only services ) versus FAR of services being rendered to non-AE parties (being full broken services), this claim of the appellant regarding difference in FAR/nature of services rendered is found to be prima facie correct. However, these differences are not sufficient or material enough to discard application of CUP as MAM and for not considering the appellant as the tested party. In this regard, during the course of appellate proceedings, it was pointed out to the Ld. Counsel of the appellant that there are various decisions of Hon'ble jurisdictional ITAT, wherein internal CUP with the appellant as the tested party has been accepted by the Hon'ble ITAT, Mumbai, also in similar factual circumstances. It is noted that there are various subsequent decisions of Hon'ble ITAT, Mumbai, wherein on similar facts, CUP as MAM with assessee as the tested party has been considered as the correct approach by Hon'tbe ITAT, Mumbai after providing certain adjustments to account for the differences in volume, marketing, research etc. These relevant decisions are:- (i) Hon'ble Mumbai ITAT in the case of Morgan Stanley India Company Private Limited (Formerly known as J.M. Morgan Stanley Securities Private Limited) (ITA No. 266/Mum/2006) / (ITA No. 7057/Mum/2008), wherein the Hon'ble ITAT upheld the order of CIT(A) allowing discounting factor of 40% as adjustment to the brokerage charged by assessee (a broking entity) to its Mauritius-AE for AY.2002-03. Earlier, the CIT(A) had accepted assessee's contentions that appropriate adjustments need to be made if CUP is to be applied and, accordingly, had granted adjustments at 40% as a 'discounting factor' on the brokerage charged towards savings on lower research activities for the AE and high volume business from the AE. (ii) Subsequent decision of Hon'ble Mumbai ITAT in the case of Morgan Stanley India Company Private Limited dated 30.11.2023 (ITA Nos. 340 & 7550/Mum/2019). (iii) Hon'ble Mumbai ITAT in the case of J. P. Morgan India Private Limited vs. ACIT (ITA No.670/Mum/2006) and affirmed by the Bombay High Court (ITA No.1599 of 2014) wherein the Hon'ble ITAT has held that for the application of CUP Method, appropriate adjustments need to be made for the differences in functions performed, assets employed and risks assumed with respect to the services provided to related parties vis-a-vis unrelated parties. (iv) Hon'ble Mumbai ITAT in the case of Bofa Securities India Limited (ITA No.5416/Mum/2010) / (ITA No. No.5864/Mum/2010)/ (ITA No.5425/Mum/2010) / (ITA No. 6175/Mum/2010)

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On perusal of these decisions, it is noted that despite differences in the nature of brokerage services rendered between AER's and non AE's, CUP can still be applied since assessee is the main affected party and hence it should be considered as the tested party after accounting for / providing adjustments as per law towards such differences. The appellant was also asked to submit further details in this regard. As discussed above, in various subsequent decisions on similar facts (some of which have been mentioned above), Hon'ble Jurisdictional ITAT, Mumbai has upheld applicability of CUP method with appellant as the tested party after providing certain adjustments to account for differences in FAR of broking services rendered to third parties versus FAR of broking services rendered to its AEs. The application of CUP as MAM with appellant as the tested party by the TPO is found correct in view of the above discussed decisions of Hon'ble jurisdictional ITAT, as mentioned above. The appellant has further pointed out that the issue involved is recurring in nature and in later years, the TPO has considered the average brokerage rate charged to all the third parties, whereas in the instant assessment year, TPO has only considered brokerage rate charged to its largest third party. It is noted that the volume of largest third party is much different than that of the volume of the AE, and hence there is no error in the claim of the appellant that all third-party transaction brokerage rates should be considered instead of considering the largest third party brokerage rate which appears to be considered in the instant case. Therefore, the TPO is directed to apply the average third-party brokerage rates while applying the internal CUP which is being confirmed. 6.1.3 Without prejudice to its primary contentions regarding the appropriateness of the TNMM, the appellant submitted that the CUP method requires a very high degree of comparability between the tested and comparable transactions in terms of the nature of services, contractual terms, commercial circumstances, and risk exposure. In the present case, the services rendered to the AE were limited to "execution-only" broking activities, whereas services provided to third-party clients were full-service in nature, encompassing marketing, research, advisory, and client relationship management functions. These differences directly impacted the value of the services and the appropriate pricing as claimed by the appellant. The appellant further emphasized that the brokerage rates charged to third-party clients could not be used as a reliable benchmark for AE transactions without making appropriate adjustments to reflect differences in marketing efforts, research inputs, transaction volume, and risk profile. The appellant had, therefore, quantified a 20% adjustment on the brokerage rate to account for the functional differences and had

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claimed an additional 20% adjustment on account of research efforts, transaction volume, and risk profile, making the total adjustment significant to arrive at a comparable and arm's length benchmark. The appellant has thus claimed that the absence of such adjustments meant that the application of the CUP method by the TPO did not accurately reflect the arm's length price of the AE transactions. The appellant has claimed that its request for granting of these adjustments was not favourably considered by the TPO. The appellant in its submission dated 17.09.2025, 19.09.2025 and 06.10.2025 has thereafter made various claims with respect to the various adjustments being sought, if its primary argument of TNMM as MAM with AE is not being accepted in the appellate proceedings and the quantum of adjustment sought is 40%. It is noted that in similar facts and circumstances, i.e. nature of services being rendered to third parties being full service brokerage services versus execution only brokerage services rendered to AEs, the appellants had sought adjustments towards marketing effort, research, volume and risk adjustments in various cases and Hon'ble ITAT has allowed certain adjustments in this regard. However, it is noted that there is no fixed rate or yardstick laid down by Hon'ble ITAT in this regard, and the quantum of adjustment to be provided would depend on the relevant facts and circumstances of each case. 6.1.4 It is noted that Hon'ble ITAT, in the case of above discussed decisions of Morgan Stanley in ITA No.266/Mum/2006, 7057/Mum/2008 and Hon'ble ITAT, Mumbai in the case of JP Morgan India Ltd. in ITA No.670/Mum/2006 (as discussed above) passed similar order which was affirmed by Hon'ble Bombay High Court vide Order No.ITA No.1599 of 2014, i.e. internal CUP as MAM was upheld and average third-party brokerage rate was considered by the Hon'ble ITAT and the TPO was directed accordingly and necessary adjustments / discounting factor was provided by Hon'ble ITAT. In these cases, a discounting factor of 40% was allowed by Hon'ble ITAT. Further, in this regard, it is noted that Hon'ble ITAT, Mumbai in its judgment dated 10.06.2024 (AYs.2002-03 and 2003- 04) in the case of Bofa Securities India Ltd. dealt with a similar issue. In this case also, TNMM as MAM was not considered proper and the weighted average of top 10 third-party FIIs was considered and CUP was applied as functions performed for AE vs. non-AE were same and adjustments on account of sales lost etc. were granted by Hon'ble ITAT, Mumbai. Similarly, in the judgment of Hon'ble ITAT, Mumbai in the case of Morgan Stanley in ITA Nos.2206/Mum/2011 and 2320/Mum for AY.2005- 06, similar decision was rendered by Hon'ble ITAT. Vide para 20 of this order, internal CUP application was upheld and marketing cost adjustment was granted by Hon'ble ITAT. Hon'tbe ITAT referred to Rule 10B of IT rules

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and granted benefit of 40% discounting factor to the appellant. In view of such decisions, the appellant was asked to submit details with respect to adjustments being sought. 6.1.5 On this issue, in its above quoted submissions, the appellant has also referred to various judgments including decision of Hon'ble Bombay High Court in ITA No.1599 of 2014 in the case of JP Morgan Stanley and has submitted details for claiming marketing, research and advisory adjustment, volume adjustment and risk adjustment. It is noted that the appellant has claimed that it had sought similar adjustments before the TPO also during TP assessment proceedings on a without prejudice basis, but no adjustments were allowed by the TPO and no discussion is there on this issue in the impugned order of the TPO. It is noted that on perusal of the various decisions of Hon'ble Jurisdictional ITAT/other ITATs that there is no fixed yardstick for computing the adjustments has been laid down by these decisions. Based on the various details submitted by the appellant, it is clear that certain adjustments for marketing, volume, research and risk etc. needs to be provided to the appellant. Therefore, in the interest of justice, based on the details submitted by the appellant, it is held that the interest of justice would be served if an overall adjustment at 25% as a discounting factor on the brokerage charged is provided to the appellant to cover for the marketing, volume and research effort differences. Therefore, a discounting factor of 25% as an adjustment to the ALP (which is to be computed based on the average brokerage rate charged by the appellant to all third parties) is directed to be applied by the TPO/AO. 6.1.6 Based on the above discussion, the claim of the appellant regarding application of TNMM by treating the AEs as tested party as is being claimed in the grounds of appeal is being rejected. The application of CUP by the TPO with appellant as the tested party is upheld. However, as discussed above, the TPO has been directed to consider the average brokerage rate charged by the appellant to all third-party clients in the given segment and further, the TPO/AO has been directed to provide a discounting factor of 25% to cover for the various adjustments being sought by the appellant. Based on the above discussion, the AO/TPO is directed to determine the actual quantum of ALP adjustment, accordingly. Based on the above discussion, the ground nos. 1 to 7 of appeal are considered as Partly Allowed.” 4.1 Before us, the learned counsel for the assessee assailed the findings of the lower authorities and submitted that the Transfer

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Pricing adjustment has been made on an erroneous premise that the transactions undertaken by the assessee with its Associated Enterprise ("AE") and those with independent third parties were comparable. It was contended that the assessee rendered only execution-only brokerage services to its AE. According to the learned counsel, the AE independently undertook market research, identified the securities to be traded and merely routed the execution of trades through the assessee. Consequently, the assessee neither rendered research nor advisory services to its AE.

4.2 In contrast, the brokerage services rendered to independent domestic clients constituted full-service broking, which involved research support, market intelligence, investment recommendations, client servicing and other value-added functions. Owing to these material functional differences, it was submitted that no reliable internal Comparable Uncontrolled Price ("CUP") existed. The learned counsel further submitted that the benchmarking undertaken by the assessee, wherein the AE was considered as the tested party by comparing the brokerage charged by third-party brokers to the same AE, constituted the most reliable analysis and ought to have been accepted. It was, therefore, argued that no Transfer Pricing adjustment was warranted.

4.3 Per contra, the learned Departmental Representative strongly relied upon the orders of the Assessing Officer, the Transfer Pricing Officer and the learned CIT(A). It was submitted that once an

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internal CUP was available, the assessee itself constituted the appropriate tested party and the benchmarking adopted by the Transfer Pricing Officer had rightly been upheld by the learned CIT(A), subject to appropriate adjustments.

5.1 It is an undisputed position that the assessee rendered brokerage services both to its AE and to independent third-party clients. The assessee seeks to distinguish the two categories of transactions on the ground that while the services rendered to the AE were confined to execution-only broking, the services rendered to third-party clients were comprehensive broking services involving research, marketing and advisory functions. The learned CIT(A) has examined this contention in considerable detail. While accepting that certain functional differences existed, the learned CIT(A) concluded that such differences did not warrant rejection of the internal CUP method altogether. Instead, following the consistent judicial approach adopted by the co-ordinate Benches of the Tribunal in comparable cases involving stock-broking entities, the learned CIT(A) directed that the average brokerage charged to all

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comparable third-party clients should be adopted in place of a single comparable transaction and further granted an overall discounting factor of 25% to account for differences arising on account of research, marketing, volume and allied functional variations.

5.2 The grievance of the assessee before us is confined to the quantum of such adjustment. According to the assessee, a comparability adjustment of at least 40% ought to have been allowed instead of 25%.

5.3 We are, however, unable to accept this contention. Except making a general assertion that a higher adjustment would be appropriate, the assessee has not placed any cogent material, empirical analysis or contemporaneous evidence demonstrating that the functional differences warranted a discounting factor of 40%. It is well settled that the burden to establish the necessity and quantum of a comparability adjustment rests upon the taxpayer. In the absence of any reliable material quantifying the alleged differences, no interference with the factual determination made by the learned CIT(A) is called for.

5.4 We further find that the learned CIT(A), while sustaining the adoption of the CUP method with the assessee as the tested party, has substantially mitigated the impact of the adjustment by directing (i) adoption of the average brokerage earned from third-

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party clients and (ii) by granting a 25% adjustment towards functional differences. These directions are founded upon the judicial precedents relied upon by the learned CIT(A) and, in our considered opinion, represent a fair and reasonable application of the transfer pricing provisions to the facts of the present case.

5.5 In these circumstances, we find no legal or factual infirmity in the impugned order warranting interference. The findings recorded by the learned CIT(A) are affirmed and the grounds raised by the assessee are dismissed.

Order pronounced in the open Court on 14/07/2026.

Sd/- Sd/- (ANIKESH BANERJEE) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 14/07/2026 M. Ranganath Vittal , Sr. P.S.

Barclays Securities (India) Private Limited 20 ITA No. 8715/MUM/2025

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai