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TMI Blog2015 (3) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER For the Appellant : Shri K. Shivaram For the Respondent : Shri. S. D. Srivastava ORDER Per Vijay Pal Rao, JM This appeal by the revenue and Cross Objection by the assessee are directed against the assessment order dated 20.12.2013 passed u/s 143(3) r.w.s 144C(13) of the Income Tax Act in pursuant to the directions of DRP dated 15.11.2013 u/s 144C(5) of the Income Tax Act for the A.Y. 2009-10. The revenue has raised the solitary grounds as under:- " On the facts and in the circumstances of the case and in law, the Hon'ble DRP has erred in directing the Assessing Officer to exclude KJMC Corporate Advisors India Ltd. from the comparable companies relying on the decision of the Hon'ble ITAT in the case of Carlyle India Advisors Pvt. Ltd. without appreciating that the same has not been accepted by the Department and an appeal u/s 260A of the IT Act has been filed before the Hon'ble Bombay High Court." 2. The assessee company is wholly owned subsidiary of Arisaig Partners (Asia) Pte Ltd., headquarterd in Singapore. Vide the serviced agreement between the assessee and its holding company (AE), the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as under:- Sr. No. Name of the Company OP/TC for FY 2008-09 1. Quantum Advisors Pvt LTd 10.90% 2. Indian Venture Capital Ltd. - 1145% 3. Kshitij Investment advisory Co Ltd. 27.82% 4. Future capital Holdings Ltd- Investment advisory segment -25.04% 5. Future capital investment advisors Ltd. 20.67% Mean 4.50% 5. The TPO rejected the comparables selected by the assessee except the comparable at serial no. 2 namely Indian Venture Capital Ltd and carried out fresh search and added eight more comparables for determination of ALP in respect of the international transaction carried out by the assessee with the AE. The comparables selected by the TPO are as under:- Sl No. Particulars OP/TC 1. KLG Capital Services Limited 85.22% 2. A R Venture Fund Management Limited 27.49% 3. KJMC Corporate Advisors (India) Limited (formerly known as KJMC Global Markets (India) Limited) 45.09% 4. Motilal Oswal Investments Advisors Pvt. Ltd. 82.77% 5. Quantum Advisors Pvt. Ltd. 10.90% 6. Kshitij Information Advisory Co. Ltd. 27.82% 7. Future Capital Holdings Ltd - Investment Advisory Segment -25.04% 8. Future Capital Investment Advisors Ltd 20.67% 6. Thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed." 7. It was found by the Tribunal that the said company is in the business of investment, merchant banking, corporate finance and similar activities which cannot be compared to the investment advisory activities. There is no dispute that the assessee's international transaction with the AE is only with respect to the investment advisory and no other service or activity like investment, merchant banking, corporate finance etc. Thus the company KJMC Corporate Advisors (India) Limited cannot be treated as functionally comparable with the assessee. 8. In view of the above facts and circumstances of the case as well as the decision of this Tribunal in the case of Carlyle India Advisors Private Limited Vs. DCIT (supra), we do not find any error or illegality in the order of DRP in deleting this company from the list of comparables. 9. Cross Objection 62/Mum/2014 10. The assessee has raised the following grounds in Cross Objection.. "1. On the facts and in the circumstances of the case and in law, the Learned Dispute Resolution Panel - I, Mumbai ('Learned DRP') erred in directing the Deputy Commissioner of Income-tax - 2(1) ('the Assessing Officer'/ the 'AO' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book. On perusal of the said order of the Tribunal, we find that it is decided in favour of the assessee vide ITA No.7367/Mum/2012 (AY 2008-2009), dated 7.2.2014. On perusal of para 12 of the said order of the Tribunal, which contains the operational part, we find the same is relevant and the Tribunal has given its finding under the facts which are similar to that of the AY under consideration. The MOIAPL, which has engaged in the business of merchant banking is not a good comparable for determining the ALP. Relevant contents of the said para 12 are reproduced here for the sake of completeness of this order which read as under: "12. …………..The only dispute is whether Motilal Oswal Investment Advisors Pvt Ltd can be considered as a comparable for determination of ALP. A perusal of three comparables considered by the TPO shows that M/s. Future Capital Investment Advisors Ltd., has operating profit at 21.79% whereas OPM of Motilal Oswal 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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