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TMI Blog2015 (9) TMI 1405X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, we find the MOIAPL is functionally dissimilar and therefore, the same should be excluded for benchmarking the international transactions. Accordingly, AO / TPO is directed to exclude the same. - Decided in favour of the assessee. - I.T.A. No. 7722/M/2012 (AY: 2008-2009) - - - Dated:- 30-9-2015 - SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER Appellant by : Ms. Karishma Phatarphekar Respondent by : Shri N.K. Chand, CIT-DR ORDER PER D. KARUNAKARA RAO, AM: This appeal filed by the assessee on 28.2.2012 is against the order of the Dispute Resolution Panel (DRP)-I, Mumbai dated 28.9.2012 for the assessment year 2008-2009 read with orders of the TPO dated 27.10.2011 and 17.10.2012. In this appeal, assessee raised the following grounds which read as under: Ground 1 - Transfer Pricing Adjustment relating to international transaction of provision of non binding advisory and support services of ₹ 207,049,505/- 1. On the facts and in the circumstances of the case, the learned Transfer Pricing Officer ('TPO') and the learned Assessing Officer ('AO') under the directions of the Hon'ble Dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 234B of the Act Consequent to the Grounds mentioned above, the Appellant prays before the Hon'ble ITAT to direct the AO to delete the interest levied under section 234B of the Act amounting to ₹ 6,719,375. Ground 5: Levy of excess interest under section 234D of the Act Consequent to the Grounds mentioned above, the Appellant prays before the Hon'ble IT AT to direct the AO to delete the interest levied under section 2340 of the Act of ₹ 5,979,965 Ground 6 - Initiation of Penalty Proceedings under section 271(1)(c) The learned AO erred in initiating penalty proceedings under Section 271(1)( c) of the Act. 2. Briefly stated relevant facts of the case are that the assessee is engaged in the business of providing non-binding advisory and support services to the Associated Enterprise (AE) named Lehman Brothers group entities. The OP/TC for the assessee is 20.93 at the entity level. In this regard, at the outset, Ld counsel for the assessee submitted that the case is covered by the decision of the Tribunal in the case of Carlyle India Advisors (P) Ltd vs. DCIT [2014] 43 Taxmann.com 184 (Mumbai-Trib), dated 7.2.2014. Explaining how the case is cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegorized under the head advisory fees‟ the said fees is earned by the assessee from diversified activities as mentioned above. Therefore, the said MOIAPL is functionally different as held by the Tribunal in the case of Carlyle India Advisors (P) Ltd (supra). Consequently, the said MOIAPL is disqualified to be considered for benchmarking the impugned international transactions. 4. We have heard both the parties on the limited issue of if the MOIAPL is a good comparable and whether it passed the functional test. In this regard, we examined the directors‟ report placed on page 13 of the paper book and the following is reported by the directors under the heading review of operations and future outlook‟, which reads as under: The market for the services of the Company is buoyant and the Company made a quantum jump in business during the year 2007-08. On the whole, 23 assignments were completed successfully in the year as against 14 completed in the previous year. Income from cross border M A a:tivity and the related financing solutions has been the largest contributor to the revenue mix during the year. The team size has now increased to 30 and there is a goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd (supra). The details of the findings of the Tribunal in this regard are mentioned in para 12 of the said Tribunal‟s order (supra) and the same is reproduced as under: 12. ..........The only dispute is whether Motilal Oswal Investment Advisors Pvt Ltd can be considered as a comparable for the determination of ALP. A perusal of three comparables considered by the TPO shows that M/s. Future Capital Investment Advisors Ltd has operative profit at 21.79% whereas OPM of Motilal Lswal 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 acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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