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TMI Blog2014 (2) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... into takeover , acquisitions, disinvestments etc. - In the absence of specific data it is not possible to make comparison - the company being into merchant banking and cannot be considered as a comparable – thus, the AO is directed not to consider Motilal Oswal Investment Advisors Pvt. Ltd. as a comparable for the determination of ALP and redetermine the Arm’s Length price excluding Motilal Oswal Investment Advisors Pvt. Ltd. – Decided partly in favour of Assessee - I.T.A. No.7367/Mum/2012 - - - Dated:- 7-2-2014 - Shri I. P. Bansal, JM And Shri N. K. Billaiya, AM,JJ. For the Appellant : Shri Vishal Kalra For the Respondent : Shri Ajeet Kumar Jain ORDER Per N. K. Billaiya, AM:- This is an appeal by the assessee against the order dt. 10.10.2012 passed u/s. 143(3) r.w. s 144C(13) of the Act passed by the Dy. Commissioner of Income Tax, Circle 10(1), Mumbai for the assessment year 2008-09. 2. The grounds of appeal raised by the assessee read as under: That on facts and circumstances of the case and in law the Ld AO erred in assessing 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 data used by the Appellant for the Transfer Pricing study was not contemporaneous. 8. That on the facts and circumstances of the case and in law, the Ld AO/ DRP/ TPO have erred by rejecting the usage of multiple year data by the Appellant. 9. That on the facts and circumstances of the case and in law, the Ld AO/ DRP/ TPO have erred in not providing the benefit of 5 percent range to the Appellant as envisaged under proviso to Section 92C(2) of the Act. 3. So far as ground No. 1 2 are concerned, they are of general in nature and need no separate adjudication. 4. The Ld. Counsel for the assessee has submitted before us that the assessee is not pressing ground Nos. 3, 4, 5, 5.1, 7, 7.1 8. These grounds are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he TPO. S.No. Name of the company OperatingRevenues Operating cost Operating Profit OP/TC 1. Motilal Oswal Investment Advisors Pvt. Ltd. 628.50 364.70 263.8 72.33% 2. Future Capital Holdings Ltd.(Segment Investment Advisory) 173.76 144.13 29.63 20.57% 3. Future Capital Investment Advisors Ltd 158.05 129.77 28.28 21.79% ARITHMETICAL MEAN MARGIN 38.23% 8. The objections were raised before the DRP. The DRP considered the objections of the assessee and directed/held as under: It is seen that all the comparables of the assessee have been dealt with by the TPO. The TPO has given his reasons to exclude Crisil, Arix and Quantum Advisors on account of different accounting years. We have dealt with this filter in paras supra. Arix and Indian Venture Capital Limited have been rejected because of turnover below Rs. I Crore, which 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 Y 2007-08 by the Hon ble ITAT. We have considered the FAR of IDC and find that it can be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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 been accepted by the DRP/TPO and also by the Tribunal in the immediately preceding year whereas M/s. Motilal Oswal Investment Advisors Pvt. Ltd. is a SEBI Registered Merchant Banking Co. and hence not a comparable. 11. Per contra, the Ld. Departmental Representative referred to the financial statements of Motilal Oswal Investment Advisors Pvt. Ltd. and submitted that under the head income from operations , the companies main revenue was from advisory fees. It is the say of the Ld. DR that even Motilal Oswal Investment Advisors Pvt. Ltd. is generating revenue from advisory fees. Out of the total revenue of 63.74 crores, advisory fees contributed to 62.77 crores. Meaning thereby that, 98% of the income of Motilal Oswal Investment Advisors Pvt. Ltd. is contributed by advisory fees. The Ld. DR strongly submitted that Motilal Oswal Investment Advisors Pvt. Ltd. is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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