TaxTMI 
TaxTMI 
2015 (6) TMI 594
X X X X Extracts X X X X
X X X X Extracts X X X X
....3,46,06,210 to the value of the international transaction of investment advisory services undertaken by the Appellant with its Associated Enterprise. In doing so, the ld. AO/TPO has erred in law and in facts as follows:- 2.1 Rejecting the transfer pricing analysis undertaken and the comparable companies identified by the Appellant. 2.2 Not computing the Arm's Length Pricing ('ALP') in respect of the international transactions as computed by the Appellant and in ignoring the provisions of the Rule 10B(4) of the Income-tax Rules, 1962 ('Rules') which authorizes usage of multiple year data of comparable companies for the purpose of determination of the ALP under Section 92F of the Act. 2.3 Rejecting the objections raised by the Appellant in relation to selection/rejection of comparable companies while determining the ALP. 2.4 Rejecting the objections raised by the Appellant in relation to selection/rejection of filters while selecting comparable companies for determining the ALP. 2.5 Failing to grant the benefit of + / - 5 percent range as envisaged by the provisions of Section 92C(2) of the Act. Corporate tax related Ground 3. On the facts and circumstances of the case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts international transaction of Provision of investment advisory services by selecting the Transactional Net Margin method (TNM), as the most appropriate method and adopted Operating profit/Total Cost ('OP/TC') as its Profit Level Indicator ('PLI'). The margin of the assessee was determined at 20.10% and the assessee compared it with the weighted average mean of 15.68% of the 6 comparable companies selected by it in its Transfer Pricing Study. On this basis, it was asserted that the stated value of the international transaction of Provision of investment advisory services was at an ALP. The Transfer Pricing Officer (TPO) has not differed with the assessee either on the adoption of the TNM method as the most appropriate method or on considering OP/TC as the PLI formula. However, the TPO disagreed with the assessee on adoption of the multiple year's financial data of the comparables and instead considered the single year financial data of the comparables relating to the financial year under consideration. The TPO selected the following final set of comparables:- Sr. No. Company Name OP/TC F.Y. 2009-10 (%) 1 Future Capital Investment Advisors Ltd. 16.75 2 Kshitji Investment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess income has been derived from four different business verticals, viz. Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications and Structured Debt. It is further stated in the Director's Report that the said concern is also engaged in advising Indian corporates on cross border acquisitions and that its Private Equity business had also resulted in a good pipeline of IPOs in the ensuing year. On this basis, it is sought to be justified that the aforesaid set of activities undertaken by the said concern are not comparable to the assessee's international transaction which is confined to providing non-binding investment advisory services and for that matter, the assessee is not engaged in any advisory services in relation to Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications or Structured Debt. The ld. Representative also pointed out, by referring to the Profit and loss account of the said concern and also Schedule P of the Financial Statements relating to the segmental accounting policy and Notes to accounts, that no separate reportable segments have been drawn out in the Annual Financial Statements and, therefore, it is also not possible ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... pointed out that the said concern was engaged in providing comprehensive investment banking solutions and that it was rendering services across various products, viz. Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications and Structured Debt, etc. The appellant relied upon the decision of the Tribunal in the case of Carlyle India Advisors Private Limited (214 Taxmann 492), to support its plea for exclusion of the said concern from the final set of comparables. The TPO rejected the aforesaid plea on the ground that the Profit and Loss account of the said concern for the year under consideration showed that the only stream of income was from advisory services and not from any activity of merchant banking and, therefore, the said concern was carrying out only advisory services and, according to him, the said concern was includible in the final set of comparables. The DRP also accepted the position that the said concern was engaged in advisory services which are broadly comparable to the assessee's activities under test. 8. We have perused the relevant material on record. It is starkly evident that the said concern M/s. Motilal Oswal Investment Advisors Private l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the transaction of the Provision of investment advisory services to its Associated Enterprises and, therefore, we direct the A.O. to recompute the adjustment, if any, that is required to be made to the stated value of the international transactions in respect of the provision investment advisory services to its Associated Enterprises on the basis of our afore-said discussion. Thus, on this aspect of the matter, the assessee partly succeeds. 11. The only other issue agitated by the assessee is the disallowance of Rs. 29,79,191/- made out of expenses on foreign travel. In this context, the relevant facts are that the A.O. required the assessee to furnish the complete details of expenses of Rs. 59,58,382/- incurred on foreign travel and the business justification for the same. The explanation furnished by the assessee was not found to be satisfactory by the A.O. and, therefore, he disallowed 50% of the total expenses, i.e., Rs. 29,78,191/-. Against the afore-said, the assessee is in appeal before us. 12. Before us, the ld. Representative for the assessee referred to pages 129 to 137 of the Paper Book, wherein is placed the details of such expenditure. The case set up by the assessee....