9911796707
TMI Blog2015 (11) TMI 1506X X X X Extracts X X X X X X X X Extracts X X X X ..... t of comparable firstly because it is doing business on a different filed and secondly and more importantly the related party transaction is more than 50%. Disallowance of foreign travel expenditure - Held that:- The details of expenditure which are exhibited at pages 6,7 & 8 of the assessment order. We find that the details are complete and exhaustive. The AO has not understood the nature of expenditure qua the business of the assessee. As mentioned elsewhere, the assessee is an Investment Advisory Company and for the purpose of its advisory business, it has to meet various clients across the globe for which travelling is must. It is an error to say that assessee was soliciting/seeking potential investors by taking these foreign visits. The findings of the AO are clearly erroneous on the facts of the case and the DRP further fell into error by confirming the same. We, therefore direct the AO to delete the impugned disallowance - Decided in favour of assessee Incorrect adjustment on account of refund not received - Held that:- We restore this issue to the file of the AO. The AO is directed to furnish the complete adjustment sheets to the assessee explaining how the refund was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Such services include (i) assistance in connection with the identification, investigation and analysis of potential investments and the management and disposition of investments; (ii) administrative and accounting services; and (iii) such other services as the General Atlantic may from time to time require in connection with the management of General Atlantic Limited. GASC is not engaged in funding for investment but assist GA with investment decisions. In the process of rendering the aforesaid services, GASC LLC requires certain information on specific industries along with the information in relation to potential targets located in various jurisdictions. For the purpose of effectively identifying the potential investment opportunity, GASC LLC has entered into exclusive service agreements with General Atlantic Limited ('GAL'), a wholly owned subsidiary based in United Kingdom, General Atlantic GmbH, a wholly owned subsidiary based in Germany and General Atlantic Private Limited (,GAPL ') wholly owned subsidiary of GAL based in Inida. 2.6. The International transactions of the assessee are summarized as under: Sr. No. Nature of Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Sumedha Fiscal Services Ltd. 59.93% 8. I D C (India) Ltd. 9.99% Average 67.02% 2.10. The assessee was asked to explain why these companies should not be accepted during the year under consideration also. Vide letter dated 29.10.2012, the assessee strongly objected to the inclusion of these companies as comparables stating that these companies are functionally different because they are doing investment banking as well as investment advisory. Rebutting the claim of the assessee, the TPO asked the assessee to justify the selection of comparables made by it wherein the companies are also not exclusively engaged in investment advisory. The TPO further noticed that the assessee has excluded certain companies on the ground that these are not functionally comparable. The assessee was asked to explain why the following companies have been rejected which are also into financial advisory business. KJMC Corporate Advisors (India) Ltd. Motilal Oswal Investment Advisors Pvt. Ltd. AR Venture Fund Management ltd. KLG Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82.44% - do - 15. AR Venture Fund Management Ltd. 27.49% - do - 16. KLG Capital Services Ltd. 85.22% - do - 17. Kshitij Investment Advisory Co. Ltd. 27.82% - do - Average 46.90% 2.12. As the assessee has shown markup of 12.6% on cost, whereas the cost plus margins of the comparables selected for the TPO comes to 46.90%. The TPO computed the adjustment as under: Total Expenses 35,47,01,791/- Arm Length price @ 146.90% of total cost 52,10,56,931/- International Transaction @ 112.6% of total cost 39,95,95,638/- Adjustment 12,14,61,293 2.13. Finally an adjustment of ₹ 12,14,61,293/- was made to the income of the assessee on account of consultancy services. 3. The assessee carried the matter before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng business whereas the assessee is only an investment advisory company. The Ld. Counsel further stated that in assessee s own case for A.Yrs 2006-07 and 2007-08, three companies mentioned at item No. 1,2 3 above were excluded by the Tribunal therefore, the same deserves to be excluded for the year under consideration also. 5.2. So far as the inclusion of Motilal Oswal Investment Advisors Pvt. Ltd., is concerned, the Ld. Counsel stated that firstly this company is not an investment advisor but an investment banker and secondly on this very ground, the Tribunal has excluded this company in the case of CIT Vs Carlyle India Advisors (P) Ltd. in ITA Nos. 7367/M/2012 and 2200/M/2012, Bain Capital Advisors (India) Pvt. Ltd. Vs DCIT in ITA No. 1360/M/2014, DCIT Vs Arisaig Partners India Pvt. Ltd. in ITA No. 1083/M/2014, Q India Investment Advisors Pvt. Ltd. Vs DCIT in ITA No. 923/M/2015, Wells Fargo Real Estate Advisors Pvt. Ltd. Vs DCIT in ITA No. 7722/M/2012. It is the say of the Ld. Counsel if these companies are excluded from the final list of comparables, the difference would come within the range of 5% and therefore no TP adjustment would be required. 6. Per contra, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Book. It is mentioned that company s business operations are investment banking and at page-9 of the Paper Book, there is an exhibit of Management Discussion Analysis which says that the company is primarily operating in the Merchant Banking Industry which totally depends on the Capital Market which further depends on the overall economic condition in the country. Under the head Fund Raising activity by company, it is mentioned that during the financial year 2008-09, ₹ 14,908.33 crores were mobilized via Public issue, right issue QIPs through 50 issues and under the head Outlook , it is mentioned that we offer comprehensive Investment Banking Solutions and transaction expertise covering equity offerings, debt and convertible instruments covering international domestic capital markets. Thus it can be clearly seen that this company is totally functioning on different platform and cannot be used as comparable. As mentioned elsewhere, the Tribunal in assessee s own case in A.Y. 2006-07 and 2007-08 has rejected the inclusion of this company. 2. Edelweiss Capital Ltd. At Page-51 of the Paper Book, it is mentioned that this company is an Investment Banking Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of comparables, we accordingly direct the AO to exclude these companies from the final list of comparables and decide the issue afresh as per the provisions of the law. Ground No. 1 is allowed for statistical purpose. 11. The second grievance relates to the disallowance of foreign travel expenditure. 11.1. During the course of the scrutiny assessment proceedings, the AO found that the assessee has debited ₹ 2,32,59,346/- as expenditure incurred on travelling, conveyance and car hire charges. The AO further found that the travelling expenditure includes Foreign Travel Expenditure. The assessee was asked to furnish the details. The assessee filed a complete details mentioning the date, name of the employee, Airfare, sector between the flights were operated and the purpose of the travel. The complete details is incorporated at pages-6,7 and 8 of the assessment order. Without any further verification, the AO disallowed the entire expenditure stating that the meeting of potential investee is not a meeting for the purpose of business , addition of ₹ 24,36,150/- has been made. 12. The assessee carried the matter before the DRP but without any success. 13. Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
