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TMI Blog2017 (4) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... t company, Siguler Guff Global LLC. 2.2 The AO observed that the assessee in its T.P. study has adopted TNMM as the most appropriate method (MAM) and selected the following comparables for justification of the arms length price (ALP) of its international transactions with its associated enterprises (AE): - Sr. No. Name of the Company Weighted Average Operating Margin on operating Costs (%) 2010 1 Future Capital Holding Ltd. 5.52 2 Future Capital Investment Advisors Ltd. 20.35 3 ICRA Management Consulting Services Ltd. 0.71 4 ICRA Online Limited 32.89 5 IDC India Limited 12.72 6 Informed Technologies Limited 11.62 Arithmetic Mean 13.97 The assessee's margin @15% being higher than those of the comparable at 13.97%, it assumed its international transactions were at arms length. 2.3 The AO on examination of the assessee's T.P. study was of the view that the comparability analysis was deficient on certain counts and issued a show cause notice to the assessee calling for certain details, inter alia, regarding the choice of comparables adopted by it. After considering the submissions of the assessee, the AO adopted the following t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd its AEs, thereby comparing companies engaged in merchant banking, investment banking, fund management, financial restructuring and debt syndication etc. with the Appellant, 4. On the facts and in the circumstances of the case and in law, the Learned AO erred in not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Income-tax Act, 1961 ('the Act') read with the Income-tax Rules, 1962 ('the Rules'). The Learned AO erred, in law and in facts, by determining the arm's length margin/ price by using data for financial year 2009-10 to the exclusion of prior years' data [as contemplated under Rule 1OB(4) of the Rules] which was considered by the Appellant in the transfer pricing documentation. 5. On the facts and in the circumstances of the case and in law, the Learned AO erred in holding that the price charged by the Appellant towards provision of investment advisory services was not determined in accordance with provisions of Sections 92C(1) and (2) of the Act and consequently not appreciating the fact that none of the conditions set out in Section 92C(3) of the Act are satisfied in the case. 6. The learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the six comparable companies chosen by the assessee, which includes; (i) IDC India Limited, and (2) ICR Management Consultancy Services Ltd. should not be excluded from the list of comparables and why two companies of the AO's choice namely; (i) Motilal Oswal Investment Advisors P. Ltd. and (ii) Integrated Capital Services Ltd. be not included in the list of comparables. After considering the assessee's reply, the AO rejected the assessee's contentions and proceeded to include in the list of comparables the two companies of his choice namely; M/s. Motilal Oswal Investment Advisors P. Ltd. and M/s. Integrated Capital Services Ltd. The relevant facts, arguments, etc. of both parties in respect of the aforesaid four comparable companies, which are the dispute before us, are considered hereunder in seriatum. A. Assessee's Prayer for Exclusion of comparables included by AO 7. Motilal Oswal Investment Advisors Pvt. Ltd. 7.1 This company has been included in the list of comparables by the TPO as he observed that its income is only from advisory services in the field of investment just like the assessee. The inclusion of this company as a comparable was upheld by the CIT(A). Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. DCIT (ITA No. 776/Mum/2013 dated 25.02.2016 for A.Y. 2010-11) (ii) Carlyle India Advisors P. Ltd. vs. Addl. CIT (43 taxmann.com 184) (Mumbai Trib) (iii) Carlyle India Advisors P. Ltd. vs. DCIT (49 taxmann.com 476) (Mumbai Trib) (iv) Q India Investment Advisors Pvt. Ltd. vs. DCIT (ITA No. 923/Mum/2015 for A.Y. 2010-11) (v) NVP Venture Capital India Pvt. Ltd. vs. DCIT (ITA No. 1564/Mum2015 for A.Y. 2010-11) (vi) Bain Capital Advisors (I) P. Ltd. vs DCIT (ITA No. 413/Mum/2015 for A.Y. 2010-11) 7.2 Per contra, the learned D.R. for Revenue supported the orders of the authorities below in including Motilal Oswal Investment Advisors P. Ltd. in the final set of comparables. 7.3.1 We have heard the rival contentions and perused and carefully considered the material on record, including the judicial pronouncements cited (supra). This company, Motilal Oswal Investment Advisors P. Ltd. was included by the AO in the list of comparables on the ground that it is engaged in advisory services like the assessee. On a perusal of the Directors report it is seen that this company derives its business income from four different business verticals, i.e. equity capital market, M&A, profit equit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ches in the cases of Q India Investment Advisors Pvt. Ltd. in ITA No. 923/Mum/2015 dated 24.04.2015 and Temasek Holding Advisors (I) P. Ltd. in ITA No. 776/Mum/2015 dated 24.02.2016, both rendered for A.Y. 2010-11, the year under consideration in the case on hand, excluded this company from the list of comparables as it was held to be functionally different since it provides consultancy services in the field of reconstruction of business, M&A, etc. which cannot be held to be functionally comparable with the assessee in the case on hand, who provides only non-binding investment advisory services. In view of the above, it is submitted that this company be excluded from the list of comparables to the assessee in the case on hand. 8.2 Per contra, the learned D.R. for Revenue supported the orders of the authorities below in including this company in the final list of comparables to the assessee in the case on hand. 8.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. We find that the Coordinate Bench of this Tribunal in the case of Q India Investment Advisors P. Ltd. in its order in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinate Bench in the case of Q India Investment Advisors P. Ltd. (supra), has excluded Integrated Capital Services Ltd. from the final list of comparables, holding it to be functionally different from a company offering investment advisory services. 8.3.3 Respectfully following the aforesaid decisions of the Coordinate Bench of this Tribunal in the cases of M/s. Q India Investment Advisors P. Ltd. in ITA No. 923/Mum/2015 dated 24.02.2015 and M/s. Temasek Holding Advisors (I) P. Ltd. in ITA No. 776/Mum/2015 dated 24.02.2016, both rendered for A.Y. 2010-11 (i.e. the assessment year under consideration in the case on hand) we direct the AO to exclude M/s. Integrated Capital Services Ltd. from the final list of comparables; as it being engaged in providing consultancy services in the field of reconstruction of business, M&A, etc. it is functionally different from the assessee in the case on hand who is engaged in the business of nonbinding investment advisory services. B. Assessee's prayer for inclusion on comparables rejected by AO 9. IDC India Limited 9.1 This company was one of the comparables chosen/adopted by the assessee as per its T.P. study. The AO rejected this company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate Bench in the same case reported in (2013) 43 taxmann.com 184 (Mum-Trib) wherein it was held that this company M/s. IDC India Limited is a good comparable with companies rendering investment advisory services. The Coordinate Bench in the case of Temasek Holdings Advisors India P. Ltd. (supra) rendered for A.Y. 2010-11; the assessment year under consideration in the case on hand, at para 22 thereof held as under: - "22. This comparable though accepted by the TPO as a good comparable, however, the DRP has additionally rejected this comparable. In assessment year 2008-09, the Tribunal has held to be a good comparable, firstly, on the ground that this company is also engaged in the advisory and consultancy services for the purpose of investment made in various sectors and secondly, it has been found to be good comparable by the TPO in the assessment year 2007-08 and 2009-10. Once company has been held to be good comparable consistently for three years then without any change in the material facts, it cannot be held that this comparable could be rejected in this year. Moreover, in the case of Carlyle Advisory India Ltd., ITAT Mumbai Bench, reported in 43 taxman.com 184, the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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