AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 1099
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmits that the AO erred in passing the order on the following grounds: 1. In making an upward transfer pricing adjustment of Rs. 5,99,98,350/- by re-computing the arm's length price (ALP) of the international transaction pertaining to provision of nonbinding investment advisory services by the Appellant to its overseas associated enterprise (AE) using Transactional Net Margin Method (TNMM) as the most appropriate method, inter alia,on the following grounds: a. Rejecting the documentation maintained by the Appellant for the international Transaction entered into by the Appellant with its AE without giving any cogent reasons; b. Not sharing the search process conducted by the transfer pricing officer (TPO) to arrive at the final set of comparable company; c. Identifying a new comparable company without following a scientific search process, namely, Ladderup Corporate Advisory Private Limited, engaged in providing merchant banking/ investment banking services, which is functionally not comparable to the nonbinding investment advisory services provided by the Appellant; d. In arbitrarily selecting a company as a comparable, namely, Ladderup Corporate Advisory Private Limi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order u/s 143(3) r.w.s. 144C(13) determining an adjustment of Rs. 5,99,98,349/- in the case of the assessee for the impugned assessment year. 4. Before us, the Ld. counsel for the assessee submits that the comparable selected by it viz. (i) ICRA Management Consulting Services Limited, (ii) Informed Technologies India Ltd. and (iii) IDC (India) Ltd. be included. Explaining further, it is stated by him in respect of ICRA Management Consulting Services Ltd. that the same is accepted as comparable by the Tribunal in assessee's own case in AY 2010-11 (ITA No. 6989/Mum/2014) and also by the TPO in assessee's own case for AY 2013-14 and AY 2014-15. Further, the Ld. counsel submits that ICRA Management Consulting Services Ltd. is accepted as a comparable in the following orders for AY 2011-12 : * Goldman Sachs (India) Securities Private Limited v. DCIT (ITA No. 927/Mum/2016 & ITA No. 902/Mum/2016), * Principal CIT-14 v. AGM India Advisors Private Limited (ITA No. 1377 of 2017) (Bombay High Court decision) * Carlyle India Advisors Pvt. Ltd. v. Asst. CIT (ITA No. 2410/Mum/2016 and ITA No. 2506/Mum/2016) * Temasek Holdings Advisors India Private Limited v. DCIT (ITA No. 477 & 816/M....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er submits that it is not open to the Revenue to challenge a comparable which has been held by the Tribunal as comparable in another case for the same year as it certainly cannot be said that a company is comparable to one company rendering non-binding investment advisory services but not with another company rendering same services. Finally the Ld. counsel submits that (i) even if a company is accepted as comparable in earlier year or a different year, the same should be accepted as comparable in the relevant year unless it is shown that there is change in the functional profile of the comparable company, (ii) unless there is change in the functional profile of the comparable company, the same company should not be re-considered merely because some new arguments are raised by the Revenue, as the Tribunal is deemed to have considered all aspect of the matter while accepting the company as comparable in the earlier assessment year. 5. On the other hand, the Ld. Departmental Representative (DR) supports the order of the TPO/AO rejecting all the comparable selected by the assessee. Arguing strongly for inclusion of Ladderup Corporate Advisory Pvt. Ltd., it is stated by him that as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der to identify companies engaged in providing management consultancy support and advisory support services earning fee based income and carrying limited risks and accordingly IMCSL was considered as a comparable given that it is engaged in provision of management consulting and business advisory services. We also find that IMCSL has been accepted by the Tribunal in ITA No. 6989/Mum/2014 in assessee's own case for AY 2010-11. Also it has been accepted as a comparable by the TPO in assessee's own case for AY 2013-14 and AY 2014-15. Further, we find that IMCSL is accepted as comparable for AY 2011-12 in (i) Goldman Sachs (India) Securities Private Limited v. DCIT (ITA No. 927/Mum/2016 & ITA No. 902/Mum/2016), (ii) Principal CIT-14 v. AGM India Advisors Private Limited (ITA No. 1377 of 2017) (Bombay High Court decision), (iii) Carlyle India Advisors Pvt. Ltd. v. Asst. CIT (ITA No. 2410/Mum/2016 and ITA No. 2506/Mum/2016), and (iv) Temasek Holdings Advisors India Private Limited v. DCIT (ITA No. 477 & 816/Mum/2016) . In view of the above factual scenario, we direct the TPO/AO to include IMCSL as a comparable for the year under consideration. 6.2 Then we turn to the issue of comparab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d (iii) Carlyle India Advisors Pvt. Ltd. v. Asst. CIT (ITA No. 2410/Mum/2016 and ITA No. 2506/Mum/2016). In view of the above factual scenario, we direct the TPO/AO to include IDC (India) Ltd. as a comparable during the year under consideration. 6.4 Finally, we come to the issue of comparability of Ladderup Corporate Advisory Pvt. Ltd. (in short 'LCAPL'). The TPO selected LCAPL on the ground that (i) it is engaged in the business of financial advisory services; it offers various types of services such as equity investments, business and equity valuations, project and acquisition financing, (ii) it has earned revenue of Rs. 11.18 crores from the business of financial and management advisory and consulting fees. The Ld. counsel submits that as per the web portal of the company, it is engaged in rendering investment banking, capital markets, wealth management, project finance and growth stage investment. It is further stated that LCAPL is registered as Category 1 Merchant Banker with the Securities & Exchange Board of India (SEBI) and is engaged in rendering merchant banking services. Further, it is explained that as per the annual report of LCAPL for FY 2010-11, there are no repor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... breakup of income and no income has been reported from merchant banking advisory activities. The Tribunal further found that Ladderup Corporate Advisory Pvt. Ltd. has been excluded by the Coordinate Bench in the case of SUN Ares Real Estate Pvt. Ltd., vs. DCIT (ITA No. 621/Mum/2016) for AY 2011-12. Similar view has been taken by the Tribunal in the DCIT vs. General Atlantic Pvt. Ltd., (91 taxmann.com 406) (Mum Trib) for AY 2011-12. Thus following the above two decision of Coordinate Bench, the Tribunal directed the TPO/AO to exclude LCAPL from the list of comparables. The relevant paragraphs of the above order of Tribunal are produced below: 7. The DRP has upheld inclusion of 'Ladderup' merely on the ground that the said company has not reported segment wise breakup of income and no income has been reported from merchant banking advisory activities. We find that the Co-ordinate Bench of the Tribunal in the case of SUN-Ares Real Estate Pvt. Ltd.(supra) has directed exclusion of 'Ladderup' in assessment year 2011-12 as is not functionally comparable with the entity engaged in providing non-binding Investment Advisory Services. The relevant extract of the findings of Tribunal on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eld that the company cannot be treated as comparable to non-binding investments advisory provider. Respectfully following the aforesaid decision of the Co-ordinate Bench, we exclude this company from the list of comparables." 8. Therefore, in view of the finding of the Tribunal excluding Ladderup from the list of comparables, in the case of companies engaged in Non-binding investment advisory services, we direct the Assessing Officer /TPO to exclude the said company from the list of comparables being functionally different. The grounds of appeal by the assessee are thus, allowed." 6.6 Facts being identical, we follow the order of the Coordinate Bench in Kitra Capital Pvt. Ltd. and Wells Fargo Real Estate Advisors Pvt. Ltd. mentioned hereinabove and direct the TPO/AO to exclude Ladderup Corporate Advisory Pvt. Ltd. from the list of comparables. 7. In view of the above findings, we direct the TPO/AO to recompute the arms length price of the assessee. ITA No. 835/Mum/2016 Assessment Year: 2011-12 8. The appeal filed by the revenue reads as under: 1. Whether on the facts and in the circumstances of the case, the DRP was correct in rejecting the comparable taken by the TPO, i.e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch involve skills sets which are comparable to the other investment advisory services to that of the assessee's and none of the activities are in the nature of merchant banking services, (v) the assessee's claim of exclusion on the basis that the company has earned super normal profits, is not acceptable as a company cannot be eliminated just because it has earned high profits or has made huge losses. 9.2 Regarding the comparables selected by the TPO, the Ld. counsel submits that MOAIPL is rejected as comparable by the Tribunal in assessee's own case in AY 2010-11 (ITA No. 6989/Mum/2014) and also rejected as comparable by the DRP in assessee's own case in AY 2011-12. Further, it is stated by him that MOAIPL is rejected as comparable in the following orders for AY 2011-12 : * Goldman Sachs (India) Securities Private Limited v. DCIT (ITA No. 927/Mum/2016 & ITA No. 902/Mum/2016), * Principal CIT-14 v. AGM India Advisors Private Limited (ITA No. 1377 of 2017) (Bombay High Court decision) * Carlyle India Advisors Pvt. Ltd. v. Asst. CIT (ITA No. 2410/Mum/2016 and ITA No. 2506/Mum/2016) * Kitara Capital Pvt. Ltd. v. ITO (ITA No. 796/Mum/2016) 9.3 We have heard rival submissions ....