9911796707
TMI Blog2014 (2) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... essing the income of the Appellant under the normal provisions of the Act at Rs 15,93,95,480 as against returned income of Rs 7,35,95,578 based on the directions received from Hon'ble Dispute Resolution Panel ("DRP") upholding the adjustment to the transfer price proposed by the learned Transfer Pricing Officer (" Ld TPO"). 2. That on facts and circumstances of the case and in law the Ld AO/ TPO erred in proposing and the Hon'ble DRP further erred in upholding an adjustment of Rs 8,55,51,779 in respect of the international transaction pertaining to investment advisory, alleging that the same to be not at arm's length in terms of the provisions of Sections 92C(1) and 92C(2) of the Act read with Rule 10D of the Income-tax Rules,1962 ("the Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejecting comparables namely (a) Arix Consultants Pvt Ltd and (b) Indian Venture Capital Pvt Ltd applying subjective filter of turnover below one crore. 6. That on the facts and circumstances of the case and in law, the Ld AO/ TPO have erred in not following the directions of Hon'ble DRP to include IDC (India) Ltd in the final set of comparables for computing the arm's length price. 7. That on the facts and circumstances of the case and in law, the Ld AO/ DRP/ TPO have erred in rejecting the Transfer Pricing documentation prepared by the Appellant in the manner as required under the provisions of the Act and the Rules." 7.1 That on the facts and circumstances of the case and in law, the Ld AO/ DRP/TPO have erred by concluding that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has described the nature of the services rendered by it. Following are the details of the international transactions as per the 3CEB report and TP document entered into by the assessee with its associated enterprises during the year 2007-08. Nature of transaction Amount (Rs.) Investment advisory related support services 41,49,37,418/- Reimbursement of travel expenses 56,458/- Financials of the taxpayer for the F.Y. 2007-08 The abridged financial results for the financial year 2007-08 are as follows: Description Amount (Rs.) Operating Revenues 41,49,37,418/- Operating Expenses 36,20,69,881/- Operating profit 5,28,67,537/- OP/TC(PLI) 14.69% 6. The assessee arrived at the following comparables: S. No. Name of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filter has also been found acceptable by us. Pg. 29 of the TPO's order discusses the rejection of IDC. The assessee submits that IDC was found comparable in its case in ÀY 2007-08 by the Hon'ble ITAT. We have considered the FAR of IDC and find that it can be considered a comparable for the year under consideration as well we find that the reasons given for selection of Motilal Oswal Investment Advisors Pvt. Ltd. and its financials indicate that this company also is engaged in providing advisory services. Moreover, to the extent of composite accounting, both IDC and Motilal Oswal ante are similar. Both the companies are considered comparables. The assessee has raised the issue of application of Proviso to S.92C (2) and stated that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the company's revenue were mainly from cross border merger and acquisition activity and the related financing solutions were the largest contributor to the revenue mix during the year. The Ld. Counsel further pointed out that the said company was also in QIP business. The said company was also able to originate and structure high quality deals in private equity business. It is the say of the Ld. Counsel that the assessee's business is only related to investment advisor to its AE. Since the business of Motilal Oswal Investment Advisors Pvt. Ltd. is extremely diversified in nature, the same cannot be considered as comparable for the determination of the ALP. The Ld. Counsel further stated that the functional profile of the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal Investment Advisors Pvt. Ltd. is 72.33%. The comparables used by the TPO themselves are showing extreme OPM. A perusal of the Director's report of Motilal Oswal Investment Advisors Pvt. Ltd. shows that during the year under consideration, the said company has completed 23 assignments successfully as against 14 completed in the immediately preceding year. A close look at the financial statements of the said company show that the income from operations have been shown only as advisory fees whereas it is admittedly an undisputed facts that the said company is engaged in diversified activities. Segmental reporting is not available. Profit and loss account appears to be only of consolidated accounts. The said company is registered with SEBI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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