TaxTMI 
TaxTMI 
2019 (9) TMI 1337
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.... advisory services rendered by the Appellant, on the following grounds: 2.1 In rejecting the comparable companies, namely Access India Advisors Limited, ICRA Management Consulting Services Limited and Kinetic Trust Limited, selected by the Appellant in the transfer pricing documentation to benchmark the international transaction of provision of investment advisory services to its AE; 2.2 In rejecting the use of contemporaneous and multiple year data available for computing the arm's length price as on the date of filing the return of income and in relying only on the single year data (i.e. for the year ended 31 March 2009) for the purpose of determining the ALP; and 2.3. Without prejudice to the grounds 1, 2.1 and 2.2 above, the learned AO erred in computing the ALP without considering the +/-5 percent variation from the ALP as permitted to the Appellant under the provisions of section 92C(2)of the Act." 3. At the outset, Ld. Counsel for the assessee submits that both the Transfer Pricing Officer [for short "TPO"] and the DRP have rejected the comparable companies namely Access India Advisors Limited, ICRA Management Consulting Services Limited and Kinetic Trust Limited select....
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....nies, the arithmetic mean of which was arrived at 55.06% as against the assessee's operating margin of 20%. The comparables selected by the assessee, TPO and DRP are illustrated in the following manner:- S No Particulars Assessee's Set TPO's Set DRP' Set 1 Access India Advisors Ltd NC NC NC 2 Future Capital Investment Advisory Ltd. 15.71% 15.71% X 3 ICRA Online Ltd. 41.77% 43.43% 41.77% 4 ICRA Management Consulting Services Ltd 0.41% X X 5 IDC (India) Ltd. 13.00% 13.00% Rejected 6 Informed Technologies Limited 25.52% 25.52% 25.52% 7 Integrated Capital Services Ltd. -2.52% X X 8 , Kinetic Trust Limited 10.39% X X 9 Future Capital Holdings Limited 29 .48% Rejected 10 Motilal Oswal Investment Advisors Pvt. Ltd. 97.89% 97.89% Arithmetic mean 14.84% 37.51% 55.06% Applicant's operating margin 20.00% 20.00% 20.00% Before us, the assessee has finally contested the following comparables for inclusion and exclusion:- i. ICRA Management Consulting Services Ltd- for inclusion ii. IDC (India) Ltd. - for inclusion iii. Kinetic Trust Limited - for inclusion iv. Integrated Capital Services L....
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....gn company in multiple projects and has a very big client base unlike assessee. However all these facts do not affect the core competency and functions of the said company, which is advisory, because in all the fields it is rendering only advisory and consultancy services. The whole revenue is again from consultancy/advisory fees. In the instant case also, the assessee is providing Investment Advisory Services to its AE in diverse industries like, infrastructure, telecom, media, banking etc. to enable the AE to take decision for making investments. The functions of consultancy/advisory have to be seen as its core competence area and not in the field in which such consultancy is given. Under the TNMM, one has to see the transaction undertaken are comparable or not and whether any adjustment is required to obtain a reliable result, because under TNMM the net margin are less affected by transactional differences and is more tolerant to some minor functional differences between controlled and uncontrolled transactions. However, if any unique function or property significantly affects the operating costs or net margin or has a bearing in the generation of revenue itself, then it cannot ....
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....nalysis there are differences on account of either assets deployed and risk assumed materially affecting costs or margins then probably such comparability can be rejected. But here in this case, merely on the ground that it has a low turnover cannot be the reason or criteria for rejection. Moreover, from the perusal of the decision of Triolgy E. Business India Pvt Ltd.(supra), it is seen that the Tribunal on the facts of the case highlighted the importance of applying turnover filter between the range of Rs. 1 crore to 200 crores. This does not lead to any inference that in all the matters the same criteria for applying the turnover filter should be taken between 1 crore to 200 crores. Thus, the ratio of the Tribunal decision cannot be applied universally in all the cases. Rather in the case of Nortel India Pvt. Ltd vs. Addl. CIT (supra), the Tribunal held that a company cannot be excluded from the comparable list merely for the reason of low turnover especially, when no turnover filter was applied by either party. The analysis in such cases has to be carried out on functional basis. Before us, it has also been brought on record that the said decision of the Tribunal in the appeal ....
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....ifferent business verticals, i.e. Equity capital markets, merger and acquisitions, profit equity syndications and structured debt. It also give advises on cross border acquisition. Its core competence is in the field of merchant banking. It also provides comprehensive investment banking solutions and transaction expertise covering private placement of equity, debt and convertible instruments in international and domestic capital markets, monitoring mergers and acquisitions and advising M&A as professional and restructuring advisory and implementations. It is also involved in various professional activities of the merchant banking. A Merchant Banker provides capital to companies in the form of share ownership instead of loans. It also provides advisory on corporate matters to the companies in which they invest. The focus is on negotiated private equity investment. The wide range of activities include portfolio management, credit syndication, counseling on M&A, etc. This whole range of functions and activities carried out by Motilal Oswal is definitely are far wider and much different from investment advisory services where core functions is to give advices for making the investments....