TaxTMI 
TaxTMI 
2017 (1) TMI 1453
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....wards provision of investment advisory services. The assessee had bench marked the arm's length price of the international transaction by adopting TNMM as the most appropriate method with OP/OC as the PLI by considering itself as a tested party. Assessee had undertaken a search analysis in the data bases and short listed five companies as comparables with average margin of 18.80%. As the margin of the assessee shown at 20.33% is higher to the average margin of the comparables, the price charged to the A.E. towards international transaction was stated to be at arm's length. The Transfer Pricing Officer to whom the Assessing Officer had made a reference to determine the arm's length price, however, did not agree with the transfer pricing analysis made by the assessee. After rejecting the transfer pricing study report of the assessee, the Assessing Officer proposed a new set of eleven comparables with average arithmetic mean of 70.33% for the purpose of bench marking the arm's length price. Though, the assessee objected to the comparables selected by the Assessing Officer and rejection of its own comparables, however, the Transfer Pricing Officer rejecting the objections o....
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....n this context, the learned Authorised Representative drew the attention of the Bench to the Profit & Loss account of the company at Page-185 of the paper book. He, therefore, submitted, this company being only engaged in credit rating service, is functionally different, hence, cannot be treated as comparable to the assessee. He submitted, after considering the objections of the assessee in assessment year 2009-10, the Transfer Pricing Officer himself has excluded the company from being treated as a comparable in assessee's own case. He, therefore, pleaded for excluding this company from the list of comparable. In support of such contention, learned Authorised Representative relied upon the following decisions:- i) Sandstone Capital Advisors Pvt. Ltd. v/s ACIT, [2013] 32 taxmann.com 216 (Mum.); ii) Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2013] 27 ITR (Trib.) 125 (Mum.); and iii) DCIT v/s Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2014] 47 ITR (Trib.) 311 (Mum.). 5. Learned Departmental Representative, however, relying upon the observations of the Transfer Pricing Officer submitted, if a comparable is within accept/reject matrix, ....
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....% of its revenue from investment management fees. He submitted, the balance income earned is in the nature of investment advisory and other misc. income. However, there are no recognisable segments provided in the annual report to identify the different sources of income. He submitted, the company has also high related party transaction of 134.53% which makes it un-comparable. He submitted, in assessee's own case, though, the Transfer Pricing Officer proposed this company as a comparable, however, after considering assessee's objection that RPT is more than 125% eventually rejected company as a comparable. He, therefore, submitted, this company cannot be treated as comparable. In this context, he relied upon the following decisions:- i) DCIT v/s Warburg Pincus India P. Ltd., ITA no.3840/Mum./2009, A.Y. 2005-06, etc., order dated 29.7.2016; ii) Sandstone Capital Advisors Pvt. Ltd. v/s ACIT, [2013] 32 taxmann.com 216 (Mum.); iii) Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2013] 27 ITR (Trib.) 125 (Mum.); iv) DCIT v/s Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2014] 47 ITR (Trib.) 311 (Mum.); v) General Atlantic Pvt. Ltd....
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....ention, learned Authorised Representative relied upon the following decisions:- i) Sandstone Capital Advisors Pvt. Ltd. v/s ACIT, [2013] 32 taxmann.com 216 (Mum.); ii) Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2013] 27 ITR (Trib.) 125 (Mum.); iii) DCIT v/s Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2014] 47 ITR (Trib.) 311 (Mum.); iv) General Atlantic Pvt. Ltd. v/s DCIT, [2013] 32 taxmann.com (Trib.) 178 (Mum.); v) Carlyle India Advisors Pvt. Ltd. v/s ACIT, [2012] 17 ITR (Trib.) 24 (Mum.); 11. Learned Departmental Representative relied upon the observations of the Transfer Pricing Officer and the DRP. 12. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon. It is seen, the Transfer Pricing Officer himself in the assessment year 2009-10 after considering the fact that 68% of the revenue is generated from share broking services had excluded this company as a comparable. The assessee has stated in the impugned assessment year 100% of the revenue earned by the company is from share broking business. That being the case, we are of t....
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....UND MANAGEMENT PVT. LTD. 17. Objecting to inclusion of this company, the learned Authorised Representative submitted, the company is primarily engaged in asset management activities, as it manages off-shore fund and provides portfolio management service. In this context, he referred to the director's report of the company as submitted in the paper book. He submitted, the company earns 84.31% of its revenue from management fee and balance income is earned from portfolio advisory fees, income from investments and other misc. income. He submitted, the Transfer Pricing Officer, though, had proposed the company as a comparable in assessee's own case for the assessment year 2009-10, however, for the aforesaid reasons, he eventually excluded it from final set of comparable. He, therefore, pleaded for exclusion of this company. In support, he relied upon the following decisions:- i) DCIT v/s Warburg Pincus India P. Ltd., ITA no.3840/Mum./2009, A.Y. 2005-06, etc., order dated 29.7.2016; ii) Sandstone Capital Advisors Pvt. Ltd. v/s ACIT, [2013] 32 taxmann.com 216 (Mum.); iii) Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2013] 27 ITR (Trib.) 125 (Mum.); a....
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....submitted, the information and advisory segment of the company was rejected in assessee's own case for assessment year 2005-06 by the Transfer Pricing Officer, DRP and the Tribunal. Whereas, it was accepted by the Transfer Pricing Officer and the DRP in assessment year 2006-07. He, therefore, submitted, the company should be excluded from the list of comparable. In support of such contention, he relied upon the decision of the Tribunal in Sandstone Capital Advisors Pvt. Ltd. (supra). i) Sandstone Capital Advisors Pvt. Ltd. v/s ACIT, [2013] 32 taxmann.com 216 (Mum.); and ii) IIML Asset Advisors Ltd. v/s ACIT, [2013] 33 taxmann.com 297 (Mum.). 22. Learned Departmental Representative relied upon the observations of the Transfer Pricing Officer and the DRP. 23. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon. The fundamental reasons for which the assessee wants exclusion of this company are, it has no revenue from information and advisory segment and is a predominantly rating agency. Further contention is, the RPT at 60.50% is more than the threshold limit of 25%. It is noti....
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....td. v/s DCIT, ITA no.776/Mum./2015, A.Y. 2010-11, order dated 25.2.2016; & vii) AGM India Advisors (P) Ltd. v/s DCIT, [2016] 70 taxmann.com 219 (Mum.). 25. Learned Departmental Representative on the other hand objecting to the inclusion of this company as a comparable submitted, IDC India Ltd. is a product company, hence, cannot be considered as functionally similar to the assessee. In this context, he relied upon the decision of the Tribunal, Mumbai Bench, in Tevapharm Pvt. Ltd. v/s ACIT, [2012] 18 taxmann.com 148 (Mum.). 26. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon. On a perusal of the functional profile of IDC India Ltd., as mentioned in the annual report, we have noted that the company operates in a single segment i.e., market research and management consulting. It needs to be observed, in case of General Atlantic Pvt. Ltd. v/s DCIT, [2013] 32 taxmann.com 178 (Mum.), the Tribunal, Mumbai Bench, following another decision of the same Bench has found IDC India Ltd. as a comparable to an investment advisory service provider. The aforesaid decision of the Tribunal, Mumbai ....
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....n view of the APA, the margin shown by the assessee in the impugned assessment year at 20.33% should be considered at arm's length. 28. Learned Departmental Representative vehemently objecting to the aforesaid contention of the learned Authorised Representative had submitted that transfer pricing is not a gross profit issue. Therefore, there is no basis for accepting the margins of the assessee at a particular percentage, hence, nothing will turn on APA. 29. Having considered the submissions of the parties, we are of the view that no conclusive finding on this issue is required to be given in view of our decision on the comparables. Suffice to say, though, APA may not be of a binding nature, but, certainly it has a persuasive value. Since no other argument has been advanced by the parties on any other issues, grounds raised on other issues, except, on the issue of comparables are deemed to have not been pressed, hence, dismissed. 30. In the result assessee's appeal is partly allowed. ITA no.1717/Mum./2014 - A.Y. 2009-10 31. The only issue relating to transfer pricing adjustment is in respect of selection/rejection of comparables. Before we decide the issue, it is nec....
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.... and re-construction of business. In this context, learned Authorised Representative referred to the director's report forming part of the annual report of the company. He submitted, the company is also engaged in business and debt re-restructuring. He submitted, as per the information available in the annual report, the company operates in a single segment of business advisory and consulting services. He further submitted, the sales turnover of this company at Rs. 1.48 crore is less than 1.5% of the assessee's turnover. In this context, he drew the attention of the bench to the Profit & Loss account of the company. He, therefore, submitted the company should be excluded as a comparable. In support of such contention, he relied upon the following decisions:- i) DCIT v/s Warburg Pincus India P. Ltd., ITA no.3840/Mum./2009, A.Y. 2005-06, etc., order dated 29.7.2016; ii) New Silk Route Advisors Pvt. Ltd. v/s DCIT, [2015] 55 taxmann.com 540 (Mum.); iii) Q-India Investment Advisors P. Ltd. v/s DCIT, ITA no.923/Mum./2015, order dated 24.4.2015; viii) Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, ITA no.776/Mum./2015, A.Y. 2010-11, order dated 25.....
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....r dated 30.11.2015. vii) Carlyle India Advisory Pvt. Ltd. v/s DCIT, [2014] 43 taxmann.com 184 (Mum.); viii) M/s. Blackstone Advisors India P. Ltd. v/s DCIT, ITA no.319/Mum./2014, order dated 9.3.2016; ix) Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, ITA no.776/Mum./2015, A.Y. 2010-11, order dated 25.2.2016; x) Bain Capital Advisors India P. Ltd. v/s DCIT, ITA no.413/Mum./2015, A.Y. 2010-11, order dated 15.5.2015; xi) Q-India Investment Advisors P. Ltd. v/s DCIT, ITA no.923/Mum./2015, order dated 24.4.2015; xii) Carlyle India Advisory Pvt. Ltd. v/s ACIT, [2016] 68 taxmann.com (Trib.) 14 (Mum.); xiii) NVP Venture Capital India Pvt. Ltd. v/s DCIT, [2015] 58 taxmann.com (Trib.) 87 (Mum.); & xiv) AGM India Advisors (P) Ltd. v/s DCIT, [2016] 70 taxmann.com 219 (Mum.). 39. Learned Departmental Representative, however, justified selection of this company as a comparable. 40. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon. It is evident from the annual report of the company as well as other material facts, this company....
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.... we have noticed that it is basically engaged in consulting services. The Tribunal, Mumbai Bench, in DCIT v/s Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2014] 47 ITR (Trib.) 311 (Mum.), while considering comparability of this company in the very same assessment year i.e., assessment year 2009-10, having found that the company is offering consultation services in the area of strategy, risk management, operations, improvement, regulatory economics and translations advisory and its entire revenue is generated from consultation fee has concluded that the company is giving consultation in various types of industries through investment advisory, hence, found it to be a good comparable. In the other decisions relied upon by the learned A.R. expressing more or less similar view, the company has been treated as comparable. In view of the aforesaid, we direct the Assessing Officer to include this company as a comparable. IDC INDIA LIMITED 43. In view of our observations in appeal being ITA no.6981/Mum./2012 and also the fact that in case of DCIT v/s Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2014] 47 ITR (Trib.) 311 (Mum.), the company has been accepted as a compara....