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TMI Blog2015 (5) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... the DRP failed to pass a speaking order about those two comparable,but it also did not pass a rectification order with regard to the application filed by the assessee,u/s.154 0f the Act. Therefore, we are of the opinion, that in the interest of justice matter should be restored back to the file of the DRP who would give a clear direction about the remaining two comparables selected by TPO and objected by the assessee. The DRP would afford a reasonable opportunity of hearing to the assessee before deciding the appeal. Additional ground of appeal raised by the assessee,before the DRP was not adjudicated upon. We direct the DRP to decide the same. X X X X Extracts X X X X X X X X Extracts X X X X ..... 4)." During the course of hearing before us authorised representative (AR) of the assessee did not press grounds No.1.(i), 1.(ii), 1.(iv).Hence,same stand dismissed as not pressed. It was further stated that Ground No.1.(iii) was the effective ground as far as Ground No.1 was concerned, that the other grounds were of consequential nature. 2.Assessee-company,engaged in three business activities namely investment advisory segment, wholesale credit and treasury segment and retail financial services segment, filed its return of income on 30.9.2009 ,declaring total income of ₹ 4,09,91,773/-.The AO completed the assessment u/s.143(3) of the Act on 20.1.2014,determining the income of the assessee at ₹ 10, 27,81,540/-. 3.Effective ground of appeal is about upward Transfer Pricing (TP) adjustment of ₹ 6,17, 90, 764/-in determining the Árm's-Length-Price (ALP) of the international transactions pertaining to investment advisory/support services provided by the assessee to its overseas Associated Enterprises(AE).In the TP study the assessee adopted seven comparables namely-Birla Sun Life Asset Management Co. Ltd.,Credible Management & Consultants Pvt. Ltd., D S P B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in the selection of comparables by the assessee, that the determination of ALP by it was unreliable, that the assessee had correctly followed the TNMM as the most appropriate method, that it did not use the current year data in one of the seven comparable selected by it, that it also used the earlier year data along with the current year data,that investment advisory services industry in India was not of cyclic nature, that no facts had been got on record to justify use of earlier year data, that the entire comparability exercise undertaken by the assessee was vitiated.The TPO applied certain filters and held that the comparables applied by the assessee could not be accepted as appropriate comparables for benchmarking the ALP of the transactions. He further held that from the search process followed by it, as narrated in the TP study report, it had used the prowess and capital line database for finding comparables and using key-phrases, that it did not use the crucial key-phrase i.e. investment advisory services while searching comparables. The TPO made further search in the data base available in public domain.Vide his letter,dt.17.1.2007,he asked the assessee to explain as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerate higher revenue as compared to purely investment advisory provided by the assessee. In this connection, it had relied upon the decision in the case of General Atlantic Pvt.Ltd. and Carlyle India Advisors Pvt. Ltd. It was also contended that there were various anomalies in the search process conducted by the TPO, that MOIAPL,ICSL were earning supernormal profits 82.44% and 69.79% respectively, that those comparable should be rejected. The assessee placed reliance on the following judicial precedents for exclusion of companies with significant related party transactions: 1.24/7 Customer.Com Pvt. Ltd (ITA No. 227/ Bang/2010), 2.Benetton India Pvt. Ltd.(144 TTJ 449), 3.M/s Willis Processing Services (I) P Ltd.(ITA No. 4429 & 4547/Mum/2012), 4.M/s LG Soft India Private Limited[IT(TP)A No. 1121/ Bang/ 2011], 5.Sony India Pvt. Ltd (118 TTJ 865), 6.M/s CSR India Pvt. Ltd. V. ITO 11(1) [IT(TP)A No.1119/Bang/2011]. After considering the submissions of the assessee, the draft order of the AO and the order of the TPO the DRP held in terms of functions performed, MOIAPL appeared to be similar to the assessee, that it had entered into various projects where it had provided advise re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the AO. He referred to the service level agreement entered into by the assessee on 24. 11.2008 and contended that job-profile of the assessee was similar to the functions performed by the 3 companies selected by the TPO that function of Carlyle were not similar to the functions performed by the assessee. 6.We have heard the rival submissions and perused the material before us.We find that on 07. 12.2012 the assessee had submitted its profile and analysis of the functions performed, assets utilised and risks assumed. As per the FAR the assessee would identify opportunity for parent company to participate in equity security particularly relating to commercially physical projects in the real estate sector,that it was sharing business intelligence, market research, compliance of regional regulatory requirement so as to assist its AE, that it would not conclude any contract on behalf of the AE nor was it facilitating external commercial borrowings in real estate business . We find that the TPO had rejected the comparable selected by the assessee and had adopted three new comparables. As far as MOIAPL is concerned, there is no doubt that the job profile of both the companies are diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors 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 as a merchant banker and the Directors report show that it is into takeover, acquisitions, disinvestments etc. In the absence of specific data it is not possible to make comparison. It can therefore, be safely said that the said company being into merchant banking and cannot be considered as a comparable. We, accordingly, direct the AO not to consider Mottial Oswal Investment Advisors Pvt Ltd as a comparable for determination of ALP…… " 9.Considering the above, we direct the AO to exclude the MOIAPL from the list of the comparables for determination of ALP of the said transaction." The Hon'ble Jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary to evaluate the manner and the specific sectors, in which such services are being rendered by the two concerns. It is revealed from the Annual Financial Statement of Motilal Oswal Investment Advisors Private limited that the said concern is engaged in rendering services in diversified fields, viz. Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications and Structured Debt, etc. In the case of Carlyle India Advisors Private Limited(supra) for A.Y.2008-09, the Tribunal concluded that though the said concern was declaring a solitary stream of operating income under the head 'advisory fee', but undisputedly it was engaged in diversified fields and the financial results for each segment were not available. The Tribunal also found that the said concern was registered with SEBI as a Merchant Banker, and that it was carrying on merchant banking activities. In our considered opinion, the afore-said features with respect to the activities of the M/s. Motilal Oswal Investment Advisors Private limited (supra) noted by the Tribunal in the case of Carlyle India Advisors Private Limited (supra) for assessment year 2008-09, are clearly emerging in the instant year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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