TaxTMI 
TaxTMI 
2019 (6) TMI 1622
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....s. 12,14,10,530/- to the Appellant international transaction of provision of Investment Advisory Services. The Appellant prays that the aforesaid adjustment be deleted. 2. On the facts and in the circumstances of the case and in law, the DRP erred in upholding the action of the AO/TPO of rejecting the Transfer Pricing Study maintained by the Appellant and the fresh search subsequently submitted by the Appellant. 3. On the facts and in the circumstances of the case and in law, the DRP erred in upholding the action of the AO/TPO of excluding the comparables i.e. Cyber Media Research Ltd., Frontline Venture Services Private Limited and Primary Real Estate Advisors Private Limited, without appreciating the functional comparability of the said comparables. 4. On the facts and in the circumstances of the case and in law, the DRP erred in upholding the action of the AO/TPO of including functionally incomparable companies namely Motilal Oswal Private Equity Advisors Private Limited and Ladderup Corporate Advisory Private Limited in the final set of companies for determining the arm's length price of provision of investment advisory services. ....
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.... Sr. No. Name of the company PLI based on single year data (%) 1. Cyber Media Research Ltd. 10.71 2. Frontline Venture Services Pvt. Ltd. 1.70 3. Primary Real Estate Advisors Pvt. Ltd. 3.85 Arithmetic Mean 5.42 It was claimed by the assessee that as its own margin of 20% was higher than the arithmetic mean of 5.42% of the aforementioned three comparables, therefore, the value of the international transactions entered into by it were at arm‟s length. The TPO rejected the aforesaid three comparables of the assessee and proposed a set of three comparables viz. (i). Motilal Oswal Investments Pvt. ltd (OP/TC: 82.29%); (ii).Ladder up Corporate Advisory Pvt. Ltd. (OP/TC : 52.43%); and (iii). Motilal Oswal Pvt. Ltd. Equity advisors Pvt. Ltd. (OP/TC : 32.38%), as good comparables to the assessee. Accordingly, the TPO determined the ALP of the international transactions of the assessee with its AE and worked out a transfer pricing adjustment of Rs. 19,34,11,688/-, as under: Operating cost Rs. 54,17,69,430/- Arms Length Mean Margin 55.70% of the Operating Cost Arms Length Price (ALP) @ 155.70% of the operating cost R....
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.... submitted by him that the AO/DRP had erred in upholding the inclusion of two comparables which were selected by the TPO viz. (i) Ladder up Corporate Advisory Pvt. Ltd.; and (ii) Motilal Oswal Private Equity Advisors Pvt. ltd. The ld. A.R in order to drive home his contention that the aforementioned two comparables were wrongly selected by the TPO, therein relied on certain orders of the coordinate benches of the Tribunal. Further, it was submitted by the ld. A.R that the A.O/DRP had erred in excluding the comparables which were selected by the assessee for benchmarking its international transactions. Insofar the rejection of the comparables selected by the assessee was concerned, the ld. A.R confined his contentions as regards exclusion of Cyber Media Research Ltd. (formerly IDC India Ltd.) by the lower authorities from the list of comparables. 8. Per contra, the ld. Departmental Representative (for short "D.R‟) relied on the order passed by the A.O/DRP. It was submitted by him that as Cyber Media Research Ltd. (formerly IDC India Ltd.) was functionally not comparable, therefore, the same was rightly excluded from the final list of comparables. As regards seeking of exclu....
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....as a comparable for benchmarking the international transactions of the assessee. (i) We have considered the contentions advanced by the authorized representatives for both the parties, and also perused the orders of the lower authorities and the judicial pronouncements relied upon by them in context of the aforementioned comparable. We find that the issue as to whether the aforementioned comparable, viz. Motilal Oswal Equity Adivisors Pvt. Ltd. could be selected as a company for benchmarking the international transactions of an assessee which was providing non-binding investment advisory services, had been looked into by the Tribunal in the case of New Silk Route Advisors Pvt. Ltd. Vs. ACIT, Circle-7(2)(2), Mumbai [IT (TP) Appeal No. 1148/Mum/ 2016, dated 30.11.2018) for A.Y. 2011-12. In its aforesaid order, the Tribunal relying on the earlier orders of its coordinate benches viz. (i) DCIT Vs. General Atlantic Pvt. Ltd., 91 taxmann.com 406 (Mum); (ii) Temasek Holdings Advisors India Pvt. Ltd. Vs. DCIT, (2017) 87 taxmann.com 168; (iii) Well Fargo Real Estate Advisors Pvt. Ltd. Vs. DCIT, (2018) 90 taxmann.com 18; and (iv) Avenue Asia Advisors Pvt. Ltd. Vs. DCIT, (2017) 85 ta....
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....services since July, 2010. Apart there from, it was submitted by the assessee that as per the "annual report‟ of the aforesaid company, there was only one segment. On the basis of the aforesaid facts, it was the claim of the assessee that as the aforesaid company was engaged in merchant banking/investment banking and other similar activities, which were not functionally comparable to the assessee that was engaged in rendering investment advisory services, hence, it could not have been selected as a comparable for benchmarking the international transactions of the assessee. However, the A.O/DRP did not find favour with the aforesaid contentions of the assessee. Rather, it was observed by the lower authorities, that the aforesaid company was a boutique investment banking firm that offered financial advisory services. Further, it was observed by them that as per its "Annual Report‟, it was registered as a merchant banker in July, 2010 from SEBI, and had no actual income from the said activity during the year under consideration. In sum and substance, it was observed by the lower authorities that though the aforementioned company had stated itself to be an investment bankin....
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.... that this company cannot be treated as comparable to the assessee." Apart there from, we find that a similar view had also been taken by the coordinate benches of the Tribunal viz. (i) M/s Guggenheim Capital Management (Asia) Pvt. Ltd. Vs. ACIT, Circle 3(1)(2), Mumbai (ITA No. 423/Mum/2016, dated 18.02.2019) for A.Y. 2011-12; (ii) Tata Asset Management Ltd, Vs. Dy. CIT, Circle 2(3)(1), Mumbai [IT (TP) A. No. 933/Mum/2016, dated 15.03.201] for A.Y. 2011-12; and (iii) Black Stone Advisors India Pvt. Ltd. Vs. ACIT (ITA No. 1370/Mum/2016, dated 30.11.2018 for A.Y. 2011-12). We thus respectfully following the aforesaid orders of the coordinate benches of the Tribunal, therein conclude that the aforementioned company viz. Ladder up Corporate Advisors Pvt. ltd. cannot be treated as a comparable to the assessee. 11. Now, we shall advert to the comparables which were selected by the assessee but were excluded by the TPO/DRP. At this stage, we may herein observe that the ld. A.R has assailed before us the orders of the lower authorities to the extent they had excluded Cyber Media Research Ltd. (formerly IDC India Ltd.) from the final list of comparables. Accordingly, we restrict....
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....ve considered rival submissions and perused materials on record. It is evident the departmental authorities have excluded this company selected by the assessee on the ground of functional dissimilarity. However, the Tribunal in a number of decisions, including, decisions pertaining to the impugned assessment year has held that this company is a comparable to an investment advisory service provider. In this context, we may refer to the following observations of the Co-ordinate Bench in case of General Atlantic Ltd. (Supra): - "15. Insofar as IDC (India) Ltd. is concerned, it is observed, in assessee's own case for assessment year 2006-07, the Tribunal accepted this company as a comparable which was upheld by the Hon‟ble Jurisdictional High Court while dismissing the appeal filed by the assessee. While upholding the decision of the Tribunal, the Hon‟ble Jurisdictional High Court observed that since the non-binding advisory service provided by the assessee is similar to the service provided by Carlyle India Ltd., wherein, IDC (India) Ltd. is accepted as a comparable there is no reason to defer with the decision of the Tribunal. It is necessary to observe....
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.... "1. Whether on the facts and circumstances of the case and in law, the Hon'ble DRP-1 was correct in rejecting the comparable taken by the TPO i.e. Motilal Oswal Investment Advisors Ltd. despite TPO having established the functional similarity and allowing relief of Rs. 7,20,55,334/- to the assessee from the addition made of Rs. 19,34,11,688/- by the TPO/AO, while determining Arm's Length Price (ALP) of International Transaction of the assessee with its Associated Enterprises (AE). 2. The appellant prays that the order of CIT(A) on the above ground be set aside and that of Assessing Officer be restored. 3. The appellant craves leave to amend or alter any ground or add a new ground which may necessary." 17. The revenue is aggrieved, with the exclusion by the DRP of one of the comparable viz. (i) Motilal Oswal Investment Advisors Ltd., which was selected by the TPO for benchmarking the international transactions of the assessee. 18. On a perusal of the order of the DRP, we find that he had observed that the aforementioned company, viz. M/s Motilal Oswal Investment Advisors Pvt. Ltd. was held by the Tribunal in the assesses own case....