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TMI Blog2018 (9) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... Oswal Investment Advisors Pvt. Ltd. This was done by the ITAT in view of the fact that according to it, Motilal Oswal Investment Advisors Pvt. Ltd. was engaged in a qualitatively different and diversified business from that of the assessee which was confined only to rendering non-binding investment advisory services to its Associated Enterprise. 2. According to Mr. Suresh Kumar, the learned advocate appearing on behalf of the appellant - revenue submitted before us that the impugned order gives rise to the following two substantial questions of law which read thus: "(1) Whether on the facts and in the circumstances and in law, the Hon'ble ITAT was justified, in directing not to consider the case of Motilal Oswal Investment Advisors Pvt. Ltd. as a comparable, when the same was within the terms of Rule 10B(2)?. (2) Whether on the facts and in the circumstances and in law, the Hon'ble ITAT was justified, in directing not to consider the case of Motilal Oswal Investment Advisors Pvt. Ltd. as a comparable, when it's P & L showed operational income from advisory fees, the same as that of assessee and instead to place reliance on Director's Report which had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es selected by it in its TPS. On this basis, the assessee asserted that the international transaction of providing investment advisory services to its Associated Enterprise was at an ALP. 6. The Transfer Pricing Officer(TPO), in his order, did not differ with the assessee either on the adoption of the TNM method as the most appropriate method or on considering OP/TC as the PLI formula. However, the TPO disagreed with the assessee on adoption of the multiple years financial data of the comparables and instead considered the single year financial data of the comparables relating to the financial year under consideration. The TPO selected the following final set of comparable companies which read thus: Sr.No Company Name OP/TC F.Y 2009-10(%) 1 Future Capital Investment Advisors Ltd. 16.75 2 Kshitji Investment Advisors Co. Ltd. 31.59 3 Future Capital Holdings Ltd. 15.21 4 Motilal Oswal Investment Advisors P.Ltd. 97.67 Arithmetic Mean 40.31 % 7. By considering the assessee's margin at 20.10% and the arithmetic mean of the comparable companies as set out in the table of 40.31%, the TPO determined an adjustment of Rs. 4,84,81,561/- vide its order dated 27th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a good pipeline of IPOs in the ensuing year. It was on the basis of all this that the assessee sought to justify that the aforesaid set of activities undertaken by Motilal Oswal Investment Advisors Pvt. Ltd.were not comparable to the assessee's international transaction with its Associated Enterprise which was confined only to providing non-binding investment advisory services. It was reiterated by the assessee before the ITAT that it was not engaged in any advisory services in relation to Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications or Structured Debt. The assessee also further pointed out that no separate segments had been drawn in the Annual Financial Statements of Motilal Oswal Investment Advisors Pvt. Ltd., and therefore, also it was not possible to cull out the financial results of each segment of activity which is relatable to the activity undertaken by the assessee for its Associated Enterprise. For all these reasons the assessee contended that including M/s Motilal Oswal Investment Advisors Pvt. Ltd. in the list of comparable companies was wholly wrong and unjustified. 9. Before the ITAT, the revenue contended that these very arguments w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mparable companies and directed the A.O. to recompute the adjustment, if any, after excluding Motilal Oswal Investment Advisors Pvt. Ltd. from the final set of comparables. It is, this Judgment of the ITAT, that has been challenged before us under Section 260A of the I.T.Act, 1961. 11. In this factual backdrop, Mr Suresh Kumar submitted that the ITAT had gone completely wrong in deleting Motilal Oswal Investment Advisors Pvt. Ltd. as a comparable company especially considering that the same was within the terms of Rule 10B(2) of the I.T.Act, 1961. He submitted that Motilal Oswal Investment Advisors Pvt. Ltd. in its Profit & Loss Account showed its operational income from the advisory field which was the same as that of the assessee. According to Mr Suresh Kumar, the reliance placed by the ITAT on the Directors Report of Motilal Oswal Investment Advisors Pvt. Ltd. and which had categorized the activities engaged by it such as Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications and Structured Debt was wholly irrelevant. In these circumstances, he submitted that the TPO had correctly included Motilal Oswal Investment Advisors Pvt. Ltd. in the list of comparabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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