AMBIT CAPITAL PRIVATE LIMITED,MUMBAI vs. DCIT, CIRCLE 4(1)(1), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the final assessment order dated 23.10.2024 passed under section 143(3) r.w.s 144C(13) passed in pursuance of direction of Dispute Resolution Panel (DRP) dated 19.02.2024 for Assessment Year (AY) 2021-22. The assessee has raised following grounds of appeal: “General On the facts and in the circumstances of the case and in law, the learned Transfer Pricing Officer ('TPO") and the learned Assessing Officer ('AO') under the directions of the Hon'ble Dispute Resolution Panel ('DRP') erred in making an adjustment of Rs. 83,05,130 (with respect to transaction of availing of business- related support services) under Chapter X of the Income-tax Act, 1961 ('the Act') under other provisions of the Act.

Legal

Ambit Capital Private Limited ITA No. 6784/M/2024 (AY: 2021-22) 2. On the facts and the circumstances of the case and in law, the Id. AO has erred in issuing the final assessment order dated 23 October 2024, beyond the time-limit as prescribed under section 153 of the Act. The final assessment order is, thus, barred by limitation, and liable to be quashed.

Factual

Availing of business-related support services-INR 83,05,130 4. On facts and in the circumstances of the case and in law, the learned TPO, the AO and the Hon'ble DRP have erred in disregarding the transfer pricing analysis undertaken by the Appellant. The Appellant had appropriately selected the Transactional Net Margin Method (TNMM') as the most appropriate method ('MAM') for the analysis. However, the Ld. TPO has resorted to Other Method, without providing any substantial reasons or rationale for this deviation;

Ambit Capital Private Limited ITA No. 6784/M/2024 (AY: 2021-22) inconsistent approach for the purpose of cost-allocation, without understanding the underlying facts and disregarding the documentation/submissions made by the Appellant.

Other Grounds 9. On the facts and circumstances of the case and in law, the learned AO has erred in initiating penalty proceedings u/s 270A of the Act.

Each of the above grounds of appeal is without prejudice to and independent of one another.

The Appellant prays that the additions made by the learned AO/TPO and upheld by the Hon'ble DRP be deleted and consequential relief be granted.

The Appellant craves leave to add, alter, amend and/or withdraw any of the above grounds of appeal and to submit such statements, documents and papers as may be considered necessary either at or before the hearing of this appeal as per law.

Ambit Capital Private Limited ITA No. 6784/M/2024 (AY: 2021-22) 1. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that assessee is wholly owned subsidiary Ambit Private Limited incorporated in India on 28.04.1997. The assessee is a SEBI registered stock broker, portfolio manager and depository participant. The assessee is engaged in the business of providing non-binding investment advisory services, equity broking, private wealth management etc. The assessee filed its return of income for A.Y. 2021-22 on 14.03.2022 declaring income of Rs. 35,30,370/-. The assessee while filing return of income furnished Form 3CEB reporting certain international transaction with its Associated Enterprises (AE) that is Ambit Singapore and Ambit America. Consequent upon reporting of international transaction, the AO made reference to TPO for computation of Arm’s Length Price (ALP). The TPO in para 6 of his order noted that assessee has reported international transaction for availing business-related support services from its associated enterprises (ASE) to benchmark the transaction, the assessee adopted Transaction Net Margin Method (TNMM). The TPO disregarded the most appropriate method and resorted to other method. The TPO disregarded the mandatory provision of Rule 10AB. The action of TPO in rejecting TNMM without bringing on record any comparable uncontrolled transaction as required under Rule 10AB. The TPO suggested adjustment on account of transaction with Ambit Singapore of Rs. 3.02 crore and adjustment on account of transaction with Ambit America of Rs. 71.53 lakhs that

Ambit Capital Private Limited ITA No. 6784/M/2024 (AY: 2021-22) aggregating of Rs. 3.73 crore. The adjustment suggested by TPO is arbitrary and on ad-hock basis. The DRP confirmed the action of TPO. The ld. AR of the assessee submits that TPO is despite recording that fact that no adjustment was made on account of similar transaction in A.Y. 2016-17 & 2017-18 not followed the principle of consistency. To support his submission, the ld. AR of the assessee relied upon the following decision:  Johnson and Johnson Limited vs CIT ITA No. 1030/2014 (Mumbai HC),  Iss Facility Services India Pvt. Ltd. vs DCIT ITA No. 1980/M/2025 (Mumbai Trib),  Ineos Styrolution India Ltd. vs NFAC ITA No. 58/Ahd/2022 (Ahmedabad Tribunal) 2. The ld. AR of the assessee further submits that as per regulatory requirements in Singapore, the appointment of two full time representatives to serve the interests of the Asian Institutional clients is a must. All direct and indirect cost relating to said representatives were borne by assessee at a cost plus mark up of 5.00%. The two representatives were providing support services to assessee which includes distribute research reports to Asian Institutional clients including arranging for access to the research analysts, Indian corporations, industry and sector experts for the Asian Institutional clients through conference calls, road shows, conferences sponsored by ACPL under an approved arrangement. Perform know-your-customer (KYC) client due diligence and anti-money laundering checks for prospective Asian Institutional Clients in accordance with the applicable laws. Act as a co- ordinator for placing trades in Indian securities and futures contracts 5

Ambit Capital Private Limited ITA No. 6784/M/2024 (AY: 2021-22) wherever required, between Asian Institutional clients and ACPL. Connect with Asian Intuitional clients the opportunity to tr4ade in Indian securities and futures contracts by offering them the execution services o0f ACPL under an approved arrangement. Provide client servicing and other administrative support, including complaints handling for Asian Institutional clients. During TPO proceeding, the assessee submitted inter-company agreements for business-related support services with Ambit Signapore, copy of which already placed on record. In its TPSR, the assessee to justify its arm’s length price (ALP) selected 14 comparables with regard to transaction with Ambit Singapore wherein the margin of comparables was 3.94% to 7.18%. Similarly to support arm’s length transaction with Ambit America, the assessee selected 31 comparables having margin of 4.79% to 9.30% whereas the assessee has paid mark-up of 5.00%. The TPO and the DRP erred in adopt adhoc and arbitrary approach in treating certain items such as grant / income / rebate of job support income, property tax and rental rebates. The depreciation of right to use asset disposed off during the year as information operating in nature. While adopting such approach, the TPO and DRP erred in following the principle of consistency. The ld. AR of the assessee submits that he has also given note on depreciation of right to use asset which may be considered. 3. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the Revenue submits that the submission of ld. AR that consistency to be

Ambit Capital Private Limited ITA No. 6784/M/2024 (AY: 2021-22) applied only where the facts are similar whole dispute is about rent of leased asset. The assessee has shown only notional expenditure which were not actually incurred. The ld. Sr. DR for the Revenue submits that he fully supports the order of TPO and DRP. 4. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that assessee while reporting international transaction with associated enterprises (AE) that is Ambit Singapore submitted that in order to promote institutional client’s business in Singapore, Ambit Capital has appointed two full time representative to serve the institutional client. During the relevant financial year, Ambit Singapore provided business related support services to the assessee also submitted that it was mutually agreed that all direct cost in relation to such services incurred by Ambit Singapore is to be compensated by assessee along with mark-up of 5.00%. The assessee adopted TNMM as most appropriated method. The assessee chose AE as tested party. The assessee raised 14 comparable companies as recorded by TPO in para 7.1 of his order. The TPO issued show cause notice for furnishing details of cost incurred by assessee with supporting documentation. The assessee furnished its reply and also furnished invoices raised and reimbursement made and revenue earned by assessee. The TPO held that Ambit Singapore who raised invoices is having independent income, thus, such independent income required to be apportioned in the ratio of their independent income in

Ambit Capital Private Limited ITA No. 6784/M/2024 (AY: 2021-22) respective proportion to a third-party scenario. The TPO instead of bringing any comparable instances disregarded the TPSR and suggested adjustment of Rs. 3.02 crore as per his working on page no. 7 & 8 of his order. Similarly with regard to transaction with Ambit America, the assessee submitted that Ambit America was set up in targeting US Institutional Investors to make investments in Indian-listed securities. Ambit America provided business related support services to the assessee. It was mutually agreed that all cost incurred by Ambit America in related to said services is to be compensated along with mark-up of 5.00%. The assessee selected 31 comparable companies having mean margin of 4.79% to 9.30%. The TPO by applying the same methodology has applied for Ambit Singapore suggested adjustment of Rs. 71,53,666/- as per his working on page no. 17 of his order. The DRP confirmed the action of TPO. 5. We find that similar transaction was reported in A.Y. 2016-17 and 2017-18, despite making reference to TPO, no adjustment was suggested, copies of orders of TPO for A.Y. 2016-17 and 2017-18 is available on record. We find that in the year under consideration, TPO has disregarded the TNMM without bringing comparable uncontrolled transaction as mandated by rule 10AB. The TPO has suggested adjustment on adhoc basis as reflected in his working of adjustment. We find that Hon’ble Jurisdictional High Court in CIT vs Johnson & Johnson Ltd. has held that TPO has to determine ALP by following one of the methods prescribed in 92C read with rule 10B. The determination of ALP

Ambit Capital Private Limited ITA No. 6784/M/2024 (AY: 2021-22) on adhoc is arbitrary. Similar view as taken by Hon’ble Jurisdictional High Court in PCIT vs Sabic India Pvt. Ltd (supra). Thus, in view of aforesaid factual and legal position, we do not find any justification on suggesting the adjustment in the manner adopted by TPO and DRP. Thus, the adjustment suggested by TPO and confirmed by DRP is set aside. In the result, ground no. 4 to 8 of the appeal is allowed. 6. Considering the fact that we have allowed relief to the assessee on merit, therefore, adjudication on other ground of appeal have become academic. 7. In the result, the appeal of the assessee is allowed. Order was pronounced in the open Court on 23/06/2026.

/- S/- Sd/- /- SSd/- SSd/- GIRISH AGRAWAL PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 23/06/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar / DDO ITAT, Mumbai