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TaxTMI 
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TaxTMI 
2019 (2) TMI 1817
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....issue to be decided is as to whether the Ld. DRP was justified in not including IDC (India) Ltd., Informed Technologies India Ltd., Pipal Research Analytics & Information Services India Pvt. Ltd., and ICRA Management Consulting Services Ltd., as comparable companies for the purpose of benchmarking the international transactions carried out by the assessee. The interconnected issue is whether the Ld. DRP was justified in including the Ladderup Corporate Advisory Pvt. Ltd. as comparable for the purpose of benchmarking international transactions in the facts and circumstances of the case. 3. The brief facts of this issue are that the assessee is a part of Gugganheim group which provides diversified financial services. It renders asset management, investment banking and capital market services, insurance, institutional finance and investment advisory solutions. The assessee is engaged in providing non-binding/recommendatory investment advisory services to Gugganheim Partners India Management, LLC [hereinafter referred as AE"]. Assessee collects information from above companies, funds or portfolios recommended by the AE and analyse the same to give its reports to its overseas AE. Ass....
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....e of the Company Single Year OP/TC (%) Comparable Selected by 1 ICRA Online Ltd 21.63% Assessee 2 Motilal Oswal Investment Advisory Pvt. Ltd. 82.29% TPO 3 Ladderup Corporate Advisory Pvt Ltd 52.43% TPO 4 New Berry Advisors Ltd., 35.62% TPO 5 ICRA Technoloanalyst Ltd., 24.29% TPO Average 43.26% 3.4. Accordingly, the Ld. TPO made an adjustment of Rs. 1,39,97,428/- as under:- Particulars Amount (Rs.) Operating Income (A) 6,46,96,564 Operating Cost (B) 5,49,34,724 Operating profit (C) 97,61,840 OP/OC 17.77% Arm's Length OP/OC 43.25 % Arm's Length Operating Income (E) 7,86,93,992 Adjustment -E- A 1,39,97,428/- 105% of Income (A) 6,79,31,392 95% of Income (A) 6,14,61,736 3.5. The assessee filed objections before the Hon'ble Dispute Resolution Panel (Ld. DRP) and the Ld. DRP vide its directions u/s.144C(5) of the Act dated 23/09/2015 directed the TPO to include Motilal Oswal Investment Advisory Pvt. Ltd., and ICRA Technoanalyst Ltd., in the list of final comparables chosen by the Ld. TPO and directed the Ld. TPO t....
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....he Co-ordinate Bench decision of this Tribunal in IT(TP)A Nos. 1148 & 2092/Mum/2016 for A.Y.2011-12 in the case of New Silk Route Advisors Pvt. Ltd., wherein it was held as under:- "11. This company was selected by the Transfer Pricing Officer and was also retained by the DRP. 12. Objecting to the selection of the aforesaid company by the Transfer Pricing Officer and the DRP, learned Authorised Representative submitted, the company being a merchant / investment banking company, is functionally different from the assessee, hence, cannot be treated as comparable to an investment advisory service provider like the assessee. In this context, he relied upon the following decisions:- i) DCIT v/s General Atlantic Pvt. Ltd., 91 taxmann.com 406 (Mum.); ii) Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2017] 87 taxmann.com 168; iii) Well Fargo Real Estate Advisors Pvt. Ltd. v/s DCIT, [2018] 90 taxmann.com 18 iv) Avenue Asia Advisors Pvt. Ltd. v/s DCIT, [2017] 85 taxmann.com 311 (Del.) 13. The learned Departmental Representative relied upon the observations of the Transfer Pricing Officer and the DRP. 14. We have considered rival submissions and peru....
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....e. In view of the aforesaid, we direct the Assessing Officer to include this company as a comparable." Respectfully following the same, we direct the Ld. AO to include this company to be a comparable for benchmarking the international transaction of the assessee. c. ICRA Management Consulting Services Ltd: We find that the Co-ordinate Bench of this Tribunal in ITA Nos. 928&1370/Mum/2018 dated 30/11/2018 for A.Y.2011-12 in the case of Blackstone Advisors India Pvt. Ltd., had observed as under:- "8. This is one of the companies selected by the assessee. The Transfer Pricing Officer rejected this comparable on the reasoning that the company is not functionally similar to the assessee on the basis functions provided, asset employed and risk undertaken. The Transfer Pricing Officer observed, while the assessee is providing investment advisory services, as per the information obtained under section 133(6) of the Act, this company provides management consultancy and advisory services to corporate banks, government, multilateral agencies, institutional agencies, etc. Whereas, the assessee is providing investment advisory services for private equity investment as well as r....
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....ically on the reasoning that unlike the assessee this company is providing management consulting service. One more reason by the Transfer Pricing Officer to exclude this company is difference in skill set of employees. However, we find nothing new in the argument of the Department as upon consideration of the very same argument, this company has been found to be a comparable to a non-binding investment advisory service provider. It is relevant to observe, in case of AGM India Advisors Pvt. Ltd. v/s DCIT, [2017] 79 taxmann.com 86 which is for the very same assessment year, the Tribunal after considering argument advanced by the Department regarding difference in skill set held that ICRA Management Consultancy Services is a valid comparable to a company providing non- binding investment advisory services. It is also relevant to note, in assessee's own case for assessment year 2009-10, this company has been accepted as a comparable by the DRP. Even otherwise also, the observations of the Transfer Pricing Officer on difference in skill set between the assessee and the comparable company appears to be not on the basis of proper analysis of fact and more on assumption and presumption. As....
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....following comparables viz., 1. ICRA Management Consulting Services Ltd., 2. IDC (India) Ltd., and 3. Informed Technologies India Ltd., and sought for exclusion of Ladderup Corporate Advisory Pvt. Ltd. for the A.Y.2012-13 for the purpose of benchmarking international transactions carried out by him. 9.1. The brief facts of this issue are that the business profile of assessee remain the same in A.Y.2012-13 also and the details of various international transactions carried out by the assessee during the year are as under:- Sr.No. Nature of International transaction FY 2011-12 Method Used 1 Provision of non-binding investment advisory services 59,546,585 TNMM 2 Availing of support and global management charges 7,295,607 TNMM 3 Reimbursement of expenses 3,351,875 Cost to cost Total 70,194,067 9.2. The assessee claimed its profit margin at 15.07%. The assessee benchmarked its transactions by using both multiple year data and single year data of the following comparables as under:- Sr. No. Name of the Company Three year average Operating Profit / Operating Cost Single Year upda....
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....been made to para 9.1 of the order of TPO to point out that assessee had brought out, on the basis of the website extract of the said concern, that it was engaged in rendering investment banking and debt capital services and not investment advisory services. Before the TPO, assessee has also pointed out that even if there was any element of investment advisory services being rendered by the said concern, the Annual Report of the said concern showed that there was no separate reportable segment and, therefore, the said concern could not be compared with the tested transactions. At the time of hearing, the learned representative for the assessee pointed out that for the instant assessment year, under identical circumstances, in the case of Temasek Holdings Advisors (India) Pvt. Ltd. (ITA No. 1429/Mum/2017 dated 03.01.2018), the said concern stood held to be functionally dissimilar to the activities similar to that of the assessee. Reliance has also been placed on the case of Temasek Holdings Advisors (India) Pvt. Ltd. (ITA No. 477/Mum/2016 dated 11.08.2017) and Wells Fargo Real Estate Advisors Pvt. Ltd., (ITA No.1520/Mum/2016 dated 17.01.2018. 6. Apart therefrom, it is point....