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2019 (3) TMI 1972 - HC - Income TaxTP Adjustment - comparable selection - inclusion or exclusion of certain comparables by the Tribunal while carrying out FAR in case of the Assessee - Tribunal discarded two entities namely Motilal Oswal Investment Advisory Pvt. Ltd. and Brescon Corporate Advisors Pvt. Ltd. on the ground that these companies were merchant bankers or investment bankers and cannot be compared with the Assessee who was investment subadvisor - third instance of comparable is of ICRA Management Consulting Services Ltd. Tribunal accepted the Assessee's contention that ICRA Management provided a safe comparable. The Revenue disputes these three findings of the Tribunal. HELD THAT - Through Judgment in the case of Commissioner of Income Tax-10, Mumbai Vs. Carlyle India Advisors (P) Ltd. 2013 (4) TMI 486 - BOMBAY HIGH COURT this Court has confirmed the Tribunal's view that the case of investment advisor or subadvisor cannot be compared with a merchant banker or investment banker. The first two instances discarded by the Tribunal, therefore, do not call for any interference. Insofar as the comparison with ICRA Investment is concerned, here also, the issue is covered against the Revenue in the decision of The Commissioner of Income Tax3 Vs. Temasek Holdings Advisors India Pvt. Ltd. Income 2016 (11) TMI 1510 - BOMBAY HIGH COURT . - Decided against revenue.
Issues involved:
1. Whether the ITAT was justified in directing not to consider certain companies as comparables. 2. Whether the companies in question fall within the terms of Rule 10B(2). 3. Whether the Tribunal's decisions on comparables were valid based on past judgments. Issue 1: Tribunal's direction on comparables The Revenue appealed against the ITAT's decision on whether certain companies should be considered as comparables. The Tribunal discarded Motilal Oswal Investment Advisors Pvt. Ltd. and Brescon Corporate Advisors Pvt. Ltd., stating they were merchant or investment bankers, not comparable to the Assessee, an investment subadvisor. The Tribunal accepted ICRA Management Consulting Services Ltd. as a safe comparable. The Revenue disputed these decisions. Issue 2: Applicability of Rule 10B(2) The ITAT's decision was challenged based on whether the companies in question fell within the terms of Rule 10B(2). The Tribunal's reasoning for excluding certain companies was that they were merchant or investment bankers, not comparable to the Assessee, an investment subadvisor. The Tribunal's acceptance of ICRA Management Consulting Services Ltd. as a comparable was also questioned in this context. Issue 3: Judicial precedent Past judgments were cited to support the Tribunal's decisions. The Court referred to a case involving Carlyle India Advisors (P) Ltd., where it was held that investment advisors or subadvisors cannot be compared with merchant or investment bankers. This established legal precedent was used to justify the Tribunal's exclusion of certain companies as comparables. The Court also mentioned a case involving Temasek Holdings Advisors India Pvt. Ltd., where a similar comparison issue was decided against the Revenue. In summary, the High Court dismissed the Income Tax Appeal filed by the Revenue, upholding the Tribunal's decisions on comparables. The Court relied on past judgments to support the Tribunal's reasoning that investment advisors/subadvisors cannot be compared with merchant or investment bankers. The issues raised by the Revenue were deemed to be covered by previous orders of the Court, leading to the dismissal of the Appeal.
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