TaxTMI 
TaxTMI 
2024 (12) TMI 518
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....er to be referred as 'the CIT(A)'] erred on facts and in law in partially upholding the action of the Deputy Commissioner of Income-tax, Circle-14(3)(1), Mumbai [AO] and the Transfer Pricing Officer - Addl. Commissioner of Income-4(2), Mumbai [TPO] resulting into transfer pricing adjustment, to the Appellant's total income, in respect of non-binding investment advisory services transaction of the Appellant alleging the same to be not at arm's length in terms or the provisions of Sections 92C(1) and 92C(2) of the Income -tax Act, 1961 ['the Act'] read with Rule 10B of the Income-tax Rules, 1962 ['the Rules'], 2. The CIT(A) erred on facts and circumstances of the case and in law in upholding the action of the AO, in not accepting the arm's length price determined by the Appellant, and choosing to determine the arm's length price by making reference to the TPO even though none of the conditions laid down under section 92C(3) of the Act, were satisfied. 3. The CIT(A)/ AO/ TPO erred on facts and circumstances of the case and in law in disregarding the methodically prepared Transfer Pricing documentation submitted by the Appellant and in not ap....
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....ts and circumstances of the case in levying interest under Section 234B, Section 234C and Section 234D of the Act. The Appellant prays that suitable direction to be given to delete/reduce these interest. 11. The CIT(A)/ AO/ erred on facts and circumstances of the case and in law in initiating penalty proceedings under Section 271(1)(c) of the Act. The Appellant crave leave to add, amend, delete, rectify, substitute and / or modify any of the aforesaid grounds of appeal herein provided and / or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal." 2.2 The Revenue has taken the following grounds: _ "1.1 Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in relying on the decision of ITAT in assessee's own case for A.Y 2009-10 in directing the AO/TPO to include Informed Technologies India Ltd (ITIL) as a comparable entity, ignoring the specific facts of declining revenues pointed out by TPO specific for the impugned AY 2011-12 and adopting subsequent years financials of this company for comparability purpose? 1.2 Whether on the facts and in the circumstances of the case and in law, t....
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.... 4.2 Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in not deciding the case by passing a speaking order, but virtually setting aside the matter to the TPO/AO though such powers of set aside do not remain with CIT(A) w.e.f. 1.6.2001? 4.3 Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in setting aside so, when he has powers u/s 250(4) r.w. Rule 46A to call for remand report from the AO/TPO and to pass a speaking order based on such remand report? 5.1 "The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal" 5.2 "The appellant prays that the 'order of the CIT(A) on the above ground be set- aside and that of the Assessing Officer be restored." 3. Brief facts of the case are that the assessee is engaged in the business of providing sub-investment advisory services, market research and statistical data to its holding company, TPG Capital LLP. The assessee filed its return of income for A.Y. 2011-12 on dated 28.11.2011 declaring total income at Rs. 3,81,92,398/-. Noticing inte....
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.... as under:- "25. In this appeal, the Revenue has challenged the decision of the (Appeals) in excluding Motilal Oswal Investment Advisors Pvt Ltd. as a comparable. 26. As discussed earlier, this company was introduced by the Transfer Pricing Officer as a fresh comparable by the despite the objection of the assessee. However, learned Commissioner (Appeals)having found that the company is engaged in the business of investment / merchant banking has excluded it as a comparable. 27. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon by the parties on the issue of comparability of this company. After careful reading of the decisions cited before us, we are of the considered opinion that the issue relating to the comparability of this company is no more res Integra in view of the judicial pronouncements cited before us. Undisputedly, this company is in the business of investment / merchant banking which is completely different from investment advisory service provided by the assessee. For this reason alone, this company has to be excluded as a comparable. Therefore, consistent with the view expressed in....
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.... Company with SEBI and is engaged in merchant banking services w.e.f. July 2010. Considering the aforesaid factual aspect, the Co-ordinate Bench in the decisions cited by the learned Sr. Counsel for the assessee has held that this company cannot be a comparable to a company engaged in the activity of investment advisory services. Since. The aforesaid decisions are for the very same assessment year and no distinguishing fact in the present appeal was brought to our notice by the learned Departmental Representative, respectfully following the consistent view of the Tribunal, hold that this company cannot be treated as comparable of the assesse." The Ld.AR prayed for exclusion of this company from the list of comparable. MOPEAPL 4.3 This company in such process during the preparation of TP Study, the company was rejected on the basis of qualitative review since the description study, the company is engaged in managing and advising two funds, viz. India Business Company Excellence Funds, a sector agnostic to profit equity fund aimed at providing growth capital to meet market enterprise in India and India Realty Excellence, i.e. a domestic real estate fund focused on investing in res....
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....said comparable therein reveals that the latter had made investments in one of the funds managed, by it, i.e 'India Reality excellence fund'. Thus in the totality of the aforesaid facts we are of the considered view that functions performed by the aforementioned comparable, viz. Motilal Oswal Equity Pvt. Limited, which is into managing and investment into funds, cannot be compared to the assessee whose functions are strictly limited to as that of an investment advisor. Thus in light of our aforesaid observations we are of the considered view that the aforementioned comparable, viz. Motilal Oswal Equity Pvt Ltd. is functionally incomparable with the assessee company and had wrongly been included in the list of the final comparables. We thus direct the AO / TPO to exclude the aforesaid comparable from the final list of the comparables." 5. The Ld.AR further placed that the following companies should be included in the comparable list: - 1. ICRA Management Consulting Services Ltd (in short, 'ICRA') 2. Cyber Media Research Limited (in short,' Cyber') 3. Informed Technologies India Ltd (in short, 'ITIL') 5.1. ICRA: The business activity of the ICRA provides corporate an....
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.... focus, competition analysis, even profiles analysis, revenue segmentation and information on customer requirements. Its research covers the communications hardware, peripherals, software, service and government sectors. The Ld.AR placed the judicial pronouncement covered by the co-ordinate bench of ITAT, Mumbai in assessee's own case in ITA No.7594/Mum/2014 date of pronouncement 08/02/2017 A.Y. 2009-10 where it has been held as under: - "We have heard the Ld. Representatives, perused the records and the orders of the lower authorities and therein find that the aforesaid comparable had been accepted by the TPO in the case of the present assessee itself in the immediately preceding year, viz A.Y. 2008-09, which thereafter have been accepted by the Tribunal in the case of the assessee in ITA No. 880/Mum/2013 (supra). We have further given a thoughtful consideration to the averments of the Ld. Representatives of both the parties in context of the order of the ITAT, Delhi in the case of: Actis Advisers Private Limited Vs. ACIT, Circle 1(1) [(2015) 55 taxmann.com 485 (Delhi-Trib) and the order of ITAT, Mumbai Bench 'E' in the case of: Tevapharm Private Limited Vs. Addl. CIT-10....
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....d therefore set aside the order of the CIT(A) who had upheld the said findings of the TPO." 5.3. ITIL: The Ld.AR further placed that the company provides outsourced services consisting of research on financial databases and back-office activities for research / advisory reports for its off-shore clients mainly in the USA. The company also focuses on financial research and analytics and it analyses data on financial fundamentals, corporate governance, director / executive compensation and capital; market. Considering these activities carried out by the ITIL, are similar to this carried out by the assessee and it is functionally comparable. The Ld.AR further proceeded that - * the activities earned out by ITILis similar to those carriedout by the assessee and thus it is functionally comparable. * it is pertinent to note that the Mumbai Tribunal while pronouncing it's ruling in assessee's own case for AY 2008-09, ITA No.880/MUM/2013 had accepted ITIL as a comparable company which was selected by the assessee in its TP study and the same was also accepted by the TPO. * Also the said company was accepted in AY 2009-10 and AY 2010-11 as a comparable company by the ld. TPO....