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ACIT 4(1), MUMBAI vs M/S BOFA SECURITIES INDIA LIMITED (EARLIER KNOWN AS DSP MERRILL LYNCH LTD ), MUMBAI | BharatTax

ACIT 4(1), MUMBAI vs. M/S BOFA SECURITIES INDIA LIMITED (EARLIER KNOWN AS DSP MERRILL LYNCH LTD ), MUMBAI

ITA 6175/MUM/2010Status: DisposedITAT Mumbai10 June 2024AY 2003-04Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI S RIFAUR RAHMAN (Accountant Member)1 pages

AI SummaryAllowed

Facts

The assessee, M/s. Bofa Securities India Ltd, filed cross appeals against orders for Assessment Years 2002-03 and 2003-04, relating to transfer pricing adjustments for equity broking services, port fee charges, and administrative support services. The department also filed appeals.

Held

The Tribunal held that the Comparable Uncontrolled Price (CUP) method was appropriate for benchmarking. It was determined that the transactions were at arm's length, with minor adjustments made for sales/marketing and port fees. The disallowance of interest expenses was also deleted. The appeals were allowed in favor of the assessee, and the Revenue's appeals were dismissed.

Key Issues

The primary issues involved transfer pricing adjustments related to equity broking services, port fee charges, and administrative support services, as well as disallowance of interest expenses.

Sections Cited

Sec. 143(3), Sec. 92CA(3), Sec. 92C(2), Sec. 92B(2), Sec. 14A, Sec. 10(33), Sec. 80M

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘K‘ BENCH MUMBAI

Before: SHRI AMIT SHUKLA & SHRI S RIFAUR RAHMAN

For Appellant: Shri Percy J. Pardiwalla

For Respondent: Shri H.M. Bhatt

Hearing: 22/03/2024Pronounced: 10/06/2024

2 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) Assessee by Shri Percy J. Pardiwalla Revenue by Shri H.M. Bhatt Date of Hearing 22/03/2024 Date of Pronouncement 10/06/2024 आदेश/ O R D E R PER AMIT SHUKLA (J.M): The aforesaid cross appeals have been filed by the assessee as well as by the department against order dated 30/04/2010 for the A.Y.2002-03; and order dated 03/06/2010, for the A.Y.2003- 04, passed by CIT (Appeals)-15, Mumbai for the quantum of assessment passed u/s.143(3).

2.

Since issues involved in both the appeals are common arising out of identical set of facts, therefore, same were heard together and have been disposed of by way of its consolidated order.

3.

Ground No.1 relates to validity of reference made by the ld. AO to the ld. TPO for computation of ALP, however, same has been stated to be general ground and has not been pressed for the reason that the issue has been raised in other substantive grounds, therefore, the same is not pressed.

4.

In ground No. 2, the assessee has challenged that ld. CIT(A) has failed to appreciate that assessee is a joint venture between Kothari family (58%) and Merrill Lynch having minority stake of 3 ITA No.5416/Mum/2010 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) 40% and the pricing of further transactions is dependent on the approval also of the unrelated JV, therefore, there is in built mechanism to meet the arm’s length price and therefore, no TP adjustment should have been made. This ground too is not adjudicated as same has not been argued in view of the fact that grounds on merits were argued and is bein discussed herein this order as agreed by the parties. Accordingly, ground No.1 & 2 are dismissed as infructuous.

9.

However, the ld. TPO rejected TNMM as MAM adopted in TP study report on the ground that assessee company has used net margin earned by independent enterprises but whether they are working in comparable circumstances or not was not established. The assessee company had not worked out the net margin earned by it in the controlled transaction but the net margin earned in the whole equity broking business which has been used in analysis. Thereafter, he has pointed out many defects in the working of the TNMM by the assessee which has been highlighted in detailed at page 8 & 9 of the TPO’s order. He required the assessee to furnish the details of volume of transactions, commission earned, average rate of broking and DVP rates and clearing house rates for the associated as well as independent enterprises and after getting the details and information, he asked assessee as to why the average broking rates charged to non-AE foreign clients may not be considered at 6 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) arm’s length price while computing the arm’s length price of international transaction relating to brokerage for both DVP and clearing house rates. Based on the information he has worked out analysis of client-wise information in the following manner:- “10 In case of FIIs Clients (Non-AEs), the average rate of commission earned for DVP Trades and Non-DVP Trades Is 0.55% and 0.42% respectively, whereas in case of AES, for these trades, the average rate of commission earned is 0.52% and 0.36% respectively. For deemed AEs, the figures are 0.31% and 0.10%. (ii) For DVP Trades, in respect of deemed AEs, the average rates earned are as low as 0.02%/0.03% / 0.05%, whereas in case of non-AEs, the average rates in no case are less than 0.24%. The average rates are as high as 0.96%. iii) In case of clearing house trades, the brokerage rate received from deemed AEs are as low as 0.10% and for AEs are 0.27%, in comparison to average of 0.42% in case of foreign clients (FIIs).

7 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) (1) The domestic clients, because of their presence in the country, are having access to market information Instantly. They have their full fledged set up for dealing in Indian markets only. They can negotiate the prices with various brokers. Their payments are in Indian Rupees. The costs incurred for such clients to the brokers are less, because of lesser communication expenses incurred. The mutual funds and financial institutions are the big investors in Indian Market and they most of the time decides the market. (ii) The AEs and the Other Foreign Institutional Investors are on same footing, as far as their dealings with DSPML are concerned. Considering the above, the average brokerage rates, In case of foreign clients (FIIs) are considered as Arm's Length Rates and the same are 0.55% for DVP Trades and 0.42% for Non-DVP Trades. The rates for Non-DVP Trades are less because of no funding costs. The Arm's Length Price of the brokerage earned in respect of various associated entities are computed as below: (a) DVP Trades Associated Enterprises: The average rate of commission earned is 0.52%, on a total volume of Rs.1,883,332,792/- for 12 AEs. The volume of Rs.62,738,219,349/- in case of Non-AEs, is in respect of 315 clients. The average per client volume for Non-AEs comes to Rs.199,168,950/-. For the corresponding 12 AEs, the volume would be Rs.2,390,027,403/-, which is more than the volume of Rs.1,833,332,792/-. Therefore, the volume in case of AEs, is less than the per client volume of Non-AEs. Therefore, no adjustment, on account of volume difference, is required to be made. By considering the Arm's Length Rate of 0.55%, the Arm's Length Price of commission would be Rs.10,083,330/-. 95% of this price, by considering the provisions of section 92C(2) would be Rs.9,579,163/- which is less than the commission of Rs.9,589,679/- earned by the company from the AEs, therefore, for this transaction, no adjustment is required to be made. (b) Deemed AEs (Program Trades):

8 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) In this transaction, for 30 deemed AEs, the volume is Rs.4,419,333,913/ The average volume per client works out to Rs.147,311,130/-, which is less than Rs.199,168,950/- per client in case of Non-AEs, as computed in (a) above. Therefore, the volume per client in case of deemed AEs being less than per client volume of Non-AEs, no adjustment is required to be made on account of volume difference and the Arm's Length Rate of commission is adopted at 0.55%. Considering this rate, the Arm's Length Price of the commission is works out to Rs.24,306,336/- (0.55% of Rs.4,419,333,913/-), the 95% of the price works out to Rs.23,091,019/-, which is more than the commission received of Rs. 13,775,128/- by the assessee from such trades. Accordingly, due to this, the Arm's Length Price Is worked out at Rs 24,306,336/-, as against the transaction value of Rs.13,775,128/-. This will result into an addition of Rs. 10,531,208/- to the income of the assessee. (c) Non-DVP Trades: In respect of 102 Non-AE clients, the total volume is Rs.27,743,440,942/-. The average rate is 0.42%. The details of transactions of associated enterprise are given below: Sr. Name of A.Ε. Total Volume Brokerage Average No. (Rs.) Received Rate of (Rs.) Brokera ge 1 Merrill Lynch 26,531,829,262 71,122,376 0.27% International, U.K. 2 Merrill Lynch Capital 33,621,813,815 145,950,353 0.43% Market Espana S.A. SVB, Spain. 3 ABN AMRO Investment 27,215,582 25,941 0.10% Management Funds, Netherlands 9 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) From the above details, it is seen that the average brokerage rate in comparable uncontrolled transactions is 0.42%. The rate in respect of Merrill Lynch, Spain is 0.43%, 2 which is comparable to the rates in comparable uncontrolled transactions and accordingly the same complies with the principles of Arm's Length. In respect of Merrill Lynch International, U.K., the average brokerage rate received is 0.27%, for a volume of Rs.26,531,829,262/-. The company earned an average brokerage rate of 0.43%, from another AE, whose volume was more than the Merrill Lynch, U.K. Therefore, all the arguments of the assessee that, volumes have affected the brokerage rate, falls flat. Considering this, the Arm's Length Rate of brokerage in case of Merrill Lynch, U.K. is adopted at 0.42%. Considering this rate, the Arm's Length Price of commission received/receivable is worked out at Rs.111,433,682/-, as against the commission received/receivable of Rs. 71,122,376/-. Due to this, an adjustment of Rs.40,311,306/- to the income of the assessee. L In respect of the remaining International transactions of ABN AMRO funds, the volume of trade being very low of Rs.27,215,582/-, considering the smallness of amount, no adjustment is made. The adjustments in the equity broking business are summarised as below: (1) For DVP Trades Rs. 10,531,208/- (ii) Non-DVP Trades Rs.40,311,306/- Total Rs.50,842,514/- ============== The Arm's Length Price of each international transaction, AE wise, is not computed separately, as the same is not available in Form No.3CEB for DVP and Non-DVP Trades. Otherwise also, it is not required to be computed separately, as all the similar transactions, are aggregated, by the company for the analysis.

15.

However, at the time of hearing, we asked the Ld. Sr. Counsel, Mr. Pardiwala for the assessee that, if CUP is to be considered as MAM looking to the nature of broking business where comparable price can be benchmarked with similar transaction with third parties both FIIs and domestic institutions, which will be best way to benchmark the ALP, because functions 13 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) performed by assessee for all institutional clients i.e. AEs and non-AEs are the same. There is no difference in the functions performed by the assessee for foreign and domestic institutional clients. In response, Ld. Sr. Counsel, contended that if CUP is to be considered as most appropriate method, then the approach of TPO in benchmarking the brokerage is incorrect, because the ld. TPO has not considered the brokerage rates charged by Assessee to its third party FII clients, which according to him cannot be compared because the geography of the service recipient is relevant while determining comparability. However, given that the functions performed by Assessee are the same for foreign as well as domestic institutional clients then location of service recipient is not relevant, because assessee is providing same services from India. He submitted that the rates charged to the category of all institutional third party clients should be considered to benchmark from comparable uncontrolled transction be considered. Further, use of pricing charged to third party institutional clients as comparable to the services provided by an assessee to its AE which is an institutional client has also been upheld by the Mumbai Tribunal in the case of Morgan Stanely India Company Private Limited (ITA No-266/Mum/2006) for the AY 2002-03. Before us ld. Counsel had also submitted that the volume of business of assessee with its AEs only comprise of 37.5% of the total institutional volume of business. In fact, in the Non-DVP/ CH segment, the AE volume is INR 6,015 crores as against a volume of INR 2,7774 crores with non- 14 ITA No.5416/Mum/2010 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) AEs FIIs, i.e. AE volume is more than 2 times the volume with all Non-AE FIIs. Thus, there is internal CUP available.

20.

Since at the time of hearing we made it clear that we are not going to the controversy of whether TNMM is most appropriate method or CUP and both the parties agreed that CUP should be applied after taking into consideration, proper comparability analysis because the functions performed by the assessee for the AEs are non-AEs were the same. If we compare the average rate of 0.36% from the brokerage earned from AE and the CH/Non-DVP, it is seen that it comes around to 0.36%, whereas if we compare with the same way with top 10 third party institutional clients, the average rate was 0.40% and the top 10 third party FIIs worked out to 0.43%. We find that the ld. TPO also under the DVP segment has taken the brokerage commission received from all AEs on an aggregate basis which was compared with the brokerage commission received from 20 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) third party FIIs. Since the weighted average brokerage commission rate earned from AEs was higher than the weighted average brokerage commission earned from third party FIIs, the ld. TPO has treated it to be at ALP. Therefore, if the same yardstick is adopted and the same benchmarking of aggregate basis as been upheld by the ld. TPO in assessee’s own case in the subsequent years right from A.Y.2004-05 to 2011-12 is taken into consideration, then weighted average brokerage rate earned by assessee from AEs if compared with rate earned by third party FIIs, the difference is 0.07%. Further, we find that ld. CIT(A) has given adjustment of sales cost of 0.6%, which we find is most reasonable basis for benchmarking the sale cost adjustment, because assessee has to incur extra sales cost in the case of third party FIIS which may not be the case with the AEs. This adjustment has been also demonstrated with figures by the Ld. CIT (A), which we uphld. Thus, the working of ALP is as under:- (i) Weighted average rate of brokerage of all third party FIIs - 43 Bps (0.43%) (ii) Less Marketing adjustment as allowed By the ld. CIT(A) - 6 Bps (0.06%) (iii) Adjusted weighted average brokerage for all third party FIIs - 37 Bps (0.37%) (iv) Weighted average rate of brokerage Charged to MLI & MLCME - 36 Bps (0.36%) (v) ALP determination - 1 Bps (0.01%)

29.

The brief facts as stated before us are that assessee was engaged to carry out co-ordination and administrative support services (ADC) to monitor the functioning of a third party engaged in development of securities related systems including the software for the AE from time-to-time. The provision of such services was steered by a 2 member team with administrative support from 1-2 people (major part of the year only 1 support member was involved). Further, the administrative support was functioning only out of Chennai office and other members operated from the vendors office and did not utilize any office space and infrastructure of Assessee. For the provision of such services, Assessee charged its AE on the basis of the direct costs incurred plus a mark-Up of 10%. While determining the ALP of the transaction, Assessee considered the mark up at 25% on direct cost and offered the shortfall in its return of income. Based on the computation of the Assessee, the margin earned by the assessee works out to be 17.2 percent which was higher than the arm's length margin of comparable companies of 13.67% and accordingly, the transaction was concluded to be at arm's length. The learned TPO in para 4.3 of his order, considered direct and indirect cost using employee cost as an allocation key for allocating the indirect cost and applied it to the total administrative, other expenses and depreciation cost for the year and made an adjustment of Rs 1,04,06,386/- Further, the learned TPO imputed interest on delayed receivables at an 26 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) interest rate of 12% for an average period of 6 months. The ld CIT(A) reduced the costs that were attributable to other business activities from the cost base used by the TPO as no rationale was provided for the same and changed the allocation key from employee cost to employee count. Further, the learned CIT(A) reduced the mark-up from 25% to 15% Accordingly, the learned CIT(A) granted relief of Rs. 75,97,875/-. The observation and finding of the ld. CIT (A) reads as under:- “8.7. I have considered the order of the TPO as well as the submissions of the appellant. In my view, the TPO has not given a rationale reason for rejecting the Direct and Indirect costs worked out by appellant other than stating at page 20 of his order that "the entitlement for assets and facilities in any office depends upon the grade/ level of the employee in organization". I agree with the appellant that TPO while working out the total Costs which included direct and indirect costs should not to have noted the mark of 25%, which per the arrangement was only Direct Costs. 8.8. Having regard to the facts, I accept the revised (without prejudice) working of the appellant which is based on headcount. The average mark-up per the transfer pricing study was worked out at 13.67%. Considering the TP study and the assessment recently concluded in the hands of the Indian subsidiary rendering the same services, I hold that a mark-up at 15% as against 25% (which was taken by the appellant on a different cost level indicator viz direct costs) is reasonable. The ALP would worked out as under:- Rs. Employee costs 1,49,50,099 Travel, Telephone and other costs (as returned by the appellant) 12,458 27 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) Allocation out of "Administrative & Other Expenses & Depreciation" (Total Rs 40.79 crores) 38,51,000 on the basis of head count) Total 2,00,553,27 Mark up at 15% 3,008,313 Arms length Price as determined by this 2,30,63,730 office 8.9. The appellant has contended that benefit of +/- 5% be considered while determining the arm's length price for adjustments made to the international transactions. For reasons aforesaid, I have already decided that the contention of the appellant is not acceptable. and this submission is rejected. 8.10. The ALP per the appellant was Rs. 2,02,55,521/-. The AO has reworked the ALP at Rs.3,06,61,605. The ALP as worked out by this office is Rs.2,30,63,730/- The appellant gets a relief of Rs.75,97,875/- 30. After considering the aforesaid finding and arguments placed by both the parties, we find that it is not in dispute that ML entity had engaged software companies to develop security market related software systems for use and rendering its security related services as a measure of quality and standard control it had engaged the assessee to provide coordination and administrative support services to manpower development of security related system including software from time to time. The provision of such services was by two member team with administrative support which functioning only with the administrative support from one or two persons. One of the employee working from Chennai office of the assessee while other 28 ITA No.5416/Mum/2010 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) party from division office. The assessee charged direct cost plus 10% for these services and this was arranged to reduce direct cost plus 25% effective from 01/04/2002. Assessee had made adjustment in its computation of income for assessment year under consideration on the basis of direct cost plus 25% and use TNMM for comparison purpose. The net margin of comparable companies in the TP study was 13.67% whereas assessee made interest margin of 17.20%. The ld. CIT (A) has considered the cost computation considering the cost related activity and using employee headcount as allocation key and after considering the cost pertaining to the activity. The computation of ALP as per assessee, TPO and CIT (A) is summarized as under:-

40.

However, the ld. AO made a disallowance of INR 4,97,62,365 (INR 4.98 Cr) on the following basis:-  Proportionate interest expense to the extent of INR 4,50,00,000 (-INR 4.5 Cr) which was computed by applying the average rate of interest to the total investments and multiplying the same with the ratio of the total borrowings to the total funds of the Appellant. While doing so the learned AO considered that the interest expenditure incurred on the borrowings is attributable to the investments made by the Appellant.  5% of the dividend income of INR 9,52,47,305 ie., INR 47,62,365 (~INR 0.48 Cr) being administrative expenses such as staff salary, rent, Demat charges, etc. by placing reliance on the decision of the Hon'ble Bombay High Court in the case of M/s. Sind National Sugar Mills P. Ltd. Vs CIT (121 ITR 742) 41. Before the ld. CIT(A) assessee was required to furnish the disallowance as per Rule 8D. In response to which assessee filed working wherein the disallowance worked out to Rs.37,24,591/-. The ld. CIT(A) based on the working of Rule 8D has disallowed further amount of Rs. 24,591/- over and above the suomoto disallowance of Rs.37,00,000/-. 42. We have considered the aforesaid finding of the ld. AO and ld. CIT (A). The ld. AO has made disallowance by taking proportionate interest expenses to the extent of Rs.4.5 Crores 35 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) which was computed by applying the average rate of interest to the total investment and multiplying with the same with the total borrowing to the total fund of the assessee 5% of the dividend income towards administrative expenses. First of all, it is a well established law that Rule 8D is not applicable in the A.Y.2002-03 and the basis of which ld. AO has made the disallowance cannot be sustained, firstly, that no interest expenses can be attributed as noted above assessee had more surplus interest free funds by sixth investment made by the assessee. Thus, in such a case no disallowance can be made. Secondly, in so far as Revenue expenses are concerned, the ld. AO has taken 5% of dividend income. The ld. CIT (A) has reduced the addition after applying Rule 8D(2), the disallowance upheld by the ld. CIT(A), which is almost to the extent of suomoto disallowance offered by the assessee which under the facts and circumstances and looking to the fact that Rule 8D is not applicable is far more sufficient. Thus, suomoto disallowance offered by the assessee is accepted. Consequently, assessee’s appeal is allowed and Revenue’s appeal is dismissed. 43. Accordingly, assessee’s appeal is allowed and Revenue’s appeal is dismissed. A.Y. 2003-04 44. Now coming to the appeal for A.Y.2003-04 ground No. 1 & 2 are general in nature as held above in the appeal for A.Y.2002-03. The same is dismissed as infructous.

No. Name of the Client Turnover Commission Average excl. Service Rate Tax 1 SCHRODER INVESTMENT 2,256,938,841 1,07,18,780 0.47% MANAGEMENT NORTH AMERICA INC. A/C SCMCT INDIA (MAURITIUS) LTD. 2 GOLDMAN SACHS 1,672,325,932 99,93,098 0.60% INVESTMENT MAURITIUS 1 LTD. - LONGTERM. 3 STICHTING SHELL 1,39,116,6609 69,88,730 0.50% PENSIOENFONDS 4 EMERGING MARKETS 1,309,856,847 62,36,445 0.48% MANAGEMENT LLC A/C EMSAF - MAURITIUS 5 ABU DHABI INVESTMENT 1,233,839,544 58,56,687 0.47% AUTHORITY 6 SCHRODER INVESTMENT 1,157,423,423 54,75,620 0.47% MANAGEMENT (GUERNSEY) LTD. A/C SCHRODER INDIA MAURITIUS LTD . 7 DB INVESTMENT 1,137,630,602 54,09,037 0.48% MANAGEMENT S.A. A/C TOP50ASIEN 8 DB MANDARIN FONDS 994,048,768 47,30,438 0.48% 9 SCHRODER INVESTMENT 993,847,785 47,27,654 0.48% MANAGEMENT NORTH AMERICA LTD A/C SCHRODER EMERGING MARKETS FUND 10 M & G INVESTMENT 805,877,753 34,02,019 0.42% MANAGEMENT LIMITED A/C. THE PRUDENTIAL ASSURANCE COMPANY LTD. Arithmetic Mean 0.49% 40 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) 50. We had also required the assessee to furnish third party FIIs as comparable, the rates charged to the Top 10 third party FIIs which were given as under:- No. Name of the Client Turnover Commission Average excl. Service Rate Tax 1 SCHRODER 2,25,69,38,841 1,07,18,780 0.47% INVESTMENT MANAGEMENT NORTH AMERICA INC. A/C SCMCT INDIA (MAURITIUS) LTD. 2 GOLDMAN SACHS 1,67,23,25,932 99,93,098 0.60% INVESTMENT MAURITIUS 1 LTD. - LONGTERM 3 STICHTING SHELL 1,39,11,66,609 69,88,730 0.50% PENSIOENFONDS 4 EMERGING MARKETS 1,30,98,56,847 62,36,445 0.48% MANAGEMENT LLC A/C EMSAF - MAURITIUS 5 ABU DHABI 1,23,38,39,544 58,56,687 0.47% INVESTMENT AUTHORITY 6 SCHRODER 1,15,74,23,423 54,75,620 0.47% INVESTMENT MANAGEMENT (GUERNSEY) LTD. A/C SCHRODER INDIA MAURITIUS LTD. 7 DB INVESTMENT 1,13,76,30,602 54,09,037 0.48% MANAGEMENT S.A. A/C TOP 50 ASIEN 41 and others M/s. Bafa Securities India Ltd (Formerly known as DSP Merill Lynch Ltd.) 8 DB MANDARIN FONDS 99,40,48,768 47,30,438 0.48% 9 SCHRODER 99,38,47,785 47,27,654 0.48% INVESTMENT MANAGEMENT NORTH AMERICA LTD A/C SCHRODER EMERGING MARKETS FUND 10 M & G INVESTMENT 80,58,77,753 34,02,019 0.42% MANAGEMENT LIMITED A/C. THE PRUDENTIAL ASSURANCE COMPANY LTD. 0.49% Total Arithmetic mean 51. Thus, the average rate comes to 0.49% if the adjustment is given by the ld. CIT (A) on account of sales of marketing function performed by the assessee from its AE vis-à-vis third party client is given which we have upheld in the earlier year. Thus, out of average rate of 0.49%, adjustment of 0.08% towards sales and marketing function is to be released. Thus, ALP brokerage rate comes to 0.41%. Accordingly, adjustment shall be made under the DVP segment by taking the ALP of 0.41% and accordingly, ld TPO is directed to make suitable adjustment. Accordingly, ground No.3 & 4 of assessee’s appeal is partly allowed and ground No.1 of Revenue’s appeal is dismissed.