TaxTMI 
TaxTMI 
2016 (2) TMI 503
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....e petition filed by the assessee requesting for condonation of the delay. We have gone through the said petition explaining the delay on the ground that managing director of the company was not available and that is how delay occurred. The assessee has supported the reason along with duly sworn affidavit. No serious objection has been raised by the department for condonation of delay. In view of these facts and in the interest of justice, the delay is condoned and appeal is admitted for adjudication. 4. Ground No.1: In this ground, the assessee has challenged the action of Ld. CIT(A) in confirming the action of AO in making addition as a result of upward Transfer Pricing Adjustment. The main grievance of the assessee is that the AO has wrongly included one comparable namely M/s. Motilal Oswal Investment Advisors Pvt. Ltd. 4.1. During the course of hearing, it has been submitted by the Ld. Counsel that the aforesaid comparable has been included by the AO abruptly in the assessment order without making any fresh search and without following due procedure as prescribed under the law. It has been also submitted that Motilal Oswal (i.e. M/s. Motilal Oswal Investment Advisors Pvt. ....
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....rious judgments coming from the Tribunal and Hon'ble Bombay High Court that Motilal Oswal is not pure advisory company and the same was rejected as comparable to pure advisory companies in following cases: 1. Carlyle India Advisors (P.) Ltd. v. Assistant Commissioner of Income- tax 10(1), Mumbai. (7901/Mum/2011) (Mumbai) 2.Commissioner of Income-tax-1 0, Mumbai v. Carlyle India Advisors (P.) Ltd. (32 taxmann.com 23) (Bombay) 3. Carlyle India Advisors (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle -10(1), Mumbai (43 taxmann.com 184) (Mumbai - Tub.) 4.Carlyle India Advisors (P.) Ltd. v. Deputy Commissioner of Income-tax, 10 (1), Mumbai (49 taxmann.com 476) (Mumbai - Trib.) 5.General Atlantic (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle - 3(1), Mumbai (32 taxmann.com 178) (Mumbai - Trib.) 6.General Atlantic (P.) Ltd. v. Assistant Commissioner of Income-tax (OSD), Circle-3(1), Mumbai. (36 taxmann.com 44) (Mumbai - Trib.) 7.Temasek Holdings Advisors (I) (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle -3(3), Mumbai. (38 taxmann.com 80) (Mumbai - Trib.) 8.Deputy Commissioner of Income-tax, Cir....
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..... In the case of Lehman Brothers Advisors Pvt. Ltd., in which one of us (i.e. Hon'ble Judicial Member was a party), it was held, with regard to Motilal Oswal as under: "4. We have heard both the parties on the limited issue of if the MOIAPL is a good comparable and whether it passed the functional test. In this regard, we examined the directors‟ report placed on page 13 of the paper book and the following is reported by the directors under the heading "review of operations and future outlook‟, which reads as under: "The market for the services of the Company is buoyant and the Company made a quantum jump in business during the year 2007-08. On the whole, 23 assignments were completed successfully in the year as against 14 completed in the previous year. Income from cross border M&A activity and the related financing solutions has been the largest contributor to the revenue mix during the year. The team size has now increased to 30 and there is a good blend of relationship managers, products specialist and sector expert. Specifically, the knowledge and expertise in the industry areas of real estate, oil & gas, information technology, steel and power hav....
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.......The only dispute is whether Motilal Oswal Investment Advisors Pvt Ltd can be considered as a comparable for the determination of ALP. A perusal of three comparables considered by the TPO shows that M/s. Future Capital Investment Advisors Ltd has operative 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 dat....
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....uisition, disinvestment, IPO etc. 8. As per the annual report of M/s Motilal Oswal Investment Advisory Pvt. Ltd. for the year ending on 31-3-2010 relevant assessment year 2010- 2011, the company derives its business income from four different business verticals viz. Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications and Structured Debt. The income source across the four products was more or less evenly balanced. The company continues to perform well on advising Indian corporate on cross border acquisitions. The Private Equity business over the last three years has also resulted in a good pipeline of IPOs in the coming year. 9. In view of the above observations regarding nature of business carried on by Motilal Oswal and the judicial pronouncements, it is crystal clear that in addition to investment advisory services in which assessee was involved, M/s Motilal Oswal Investment Advisory Pvt. Ltd. was engaged in diversified activities and registered with SEBI as a merchant banker. Thus, M/s Motilal Oswal Investment Advisory Pvt. Ltd. is functionally different from the assessee. Accordingly, we direct the AO to exclude M/s Motilal Oswal Investment Advi....