TaxTMI 
TaxTMI 
2015 (3) TMI 1068
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....the same has not been accepted by the Department and an appeal u/s 260A of the IT Act has been filed before the Hon'ble Bombay High Court." 2. The assessee company is wholly owned subsidiary of Arisaig Partners (Asia) Pte Ltd., headquarterd in Singapore. Vide the serviced agreement between the assessee and its holding company (AE), the assessee provides research services to the AE in relation to the suitable investments in India to be made by the AE. During the year under consideration, the assessee carried out international transaction with its AE in respect of provisions of research services. The assessee bench marked its international transaction by adopting the Transaction Net Margin Method (TNMM) as most appropriate method and claimed that the assessee's operating margin PLI OP/TC at Rs. 19.87% is at arm's length in comparison to the mean average margin of five comparables selected by the assessee arrived at 16.14%. During the course of transfer pricing proceedings before the TPO, the assessee submitted that three comparables namely Arix Consultants Pvt. Ltd, Ambit Capital Pvt. Ltd and Chrysler Ltd may be removed from the comparables because of significant related party tra....
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....imited 27.49% 3. KJMC Corporate Advisors (India) Limited (formerly known as KJMC Global Markets (India) Limited) 45.09% 4. Motilal Oswal Investments Advisors Pvt. Ltd. 82.77% 5. Quantum Advisors Pvt. Ltd. 10.90% 6. Kshitij Information Advisory Co. Ltd. 27.82% 7. Future Capital Holdings Ltd - Investment Advisory Segment -25.04% 8. Future Capital Investment Advisors Ltd 20.67% 6. Thus the TPO had arrived at 34.37% mean margin of the comparables being the arm's length price in respect of the international transaction carried out by the assessee for providing research services to its AE. Aggrieved by the action of TPO the assessee filed objection before the DRP. The DRP deleted the first three comparables at Sl. No. 1, 2 and 3of the TPO's comparable and accordingly modified the arm's length price. The revenue has accepted the two comparables deleted by the DRP namely KLG Capital Services Ltd and AR Venture Funds Management Limited but challenged the deletion of comparable namely KJMC Corporate Advisors (India) Limited. At the outset, we note that the DRP has deleted this company as a comparable by....
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.... DCIT (supra), we do not find any error or illegality in the order of DRP in deleting this company from the list of comparables. 9. Cross Objection 62/Mum/2014 10. The assessee has raised the following grounds in Cross Objection.. "1. On the facts and in the circumstances of the case and in law, the Learned Dispute Resolution Panel - I, Mumbai ('Learned DRP') erred in directing the Deputy Commissioner of Income-tax - 2(1) ('the Assessing Officer'/ the 'AO') to retain 'Motilal Oswal Investment Advisor Pvt Ltd' as a comparable to the cross objector / respondent without appreciating that it is not comparable to the business of the cross objector / respondent. 2. On the facts and in the circumstances of the case and in law, the Learned DRP, erred in directing the AO / the Transfer Pricing Officer ('the TPO') to reject assessee's claim for risk and working capital adjustment on account of different risk profile of the cross objector / respondent and companies selected by the Learned TPO / AO. 11. The grievance of the assessee is regarding the inclusion of Motilal Oswal Investments Advisors Pvt. Ltd for the purpose of determining....
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....wal Investment Advisors Pvt Ltd can be considered as a comparable for determination of ALP. A perusal of three comparables considered by the TPO shows that M/s. Future Capital Investment Advisors Ltd., has operating profit at 21.79% whereas OPM of Motilal Oswal Investment Advisors Pvt Ltd is 72.33%. The comparables used by the TPO themselves are showing extreme OPM. A perusal of the Director‟s report of Motilal Oswal Investment Advisors Pvt Ltd shows that during the year under consideration, the said company has completed 23 assignments successfully as against 14 completed in the immediately preceding year. A close look at the financial statements of the said company show that the income from operations have been shown only as advisory fees whereas it is admittedly an undisputed facts that the said company is engaged in diversified activities. Segmental reporting is not available. Profit and loss account appears to be only of consolidated accounts. The said company is registered with SEBI as a merchant banker and the Director‟s report show that it is into takeover, acquisitions, disinvestments etc. In the absence of specific data it is not possible to make comparison. I....