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TMI Blog2018 (11) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... te Advisory Private Limited and inclusion of ICRA Management Consulting Services Ltd, the necessity for adjudication of the other pleas for inclusion of IDC (India) Ltd., and Informed Technologies Ltd has been rendered academic and is obviated. Thus, for the aforesaid reasons we do not deal any further. we hereby direct the Assessing Officer to re-determine the total income of the assessee, keeping in view our aforesaid decision. Before parting, we may also put on record another point made by the assessee. The Ld. Representative submitted a chart showing operating margins declared by the assessee from A.Y 2010-11 to A.Y 2015-16. It is pointed out that in the A.Y 2010-11 the margin was 20%, in A.Y 2012-13 the margin was 18.60%, in A.Y 2013-14 the margin was 17.21%, in A.Y 2014-15 the margin was 17.27% and in A.Y 2015-16 the margin was 20%. The aforesaid is sought to be presented to show that the current years margin of 17.41% is quite comparable and is also otherwise justified and does not require any interference. We do not find any reason to adjudicate on this aspect, since we have already adjudicated the specific points raised by the assessee regarding the determination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. As a perusal of the aforesaid Grounds of appeal reveal, although multiple Grounds have been raised, but the solitary issue is an addition of ₹ 6,47,24,374/- made by the Assessing Officer while determining the Arm s Length Price (in short the ALP ) of the international transactions entered by the assessee with its associate enterprise. In order to appreciate the controversy brief background of the case can be summarised as follows. 4. The assessee is a company incorporated under the Companies Act, 1956 and is a joint venture between Mecquarie India Infrastructure Management Holdings Pte. Limited, State Bank of India and International Finance Corporation. The assessee is engaged in the business of rendering non-binding investment advisory services to its associated enterprises in respect of unlisted Indian equities. The services provided, inter-alia, include identifying and analysing potential investment opportunities; evaluating and making recommendations to the associated enterprise with respect to investment opportunities; making recommendations to the associate enterprise with respect to specified investments; and, any other advisory services as may be required from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s operating margin on Cost is concerned i.e 17.41%. Though in the Transfer Pricing Study assessee had selected a set of comparables and determined their margins based on multiple year s financial data but, during the proceedings before the TPO, the assessee furnished revised margins of such comparables based on their single year s financial data. This aspect is also not dispute. Before the TPO, assessee asserted that the following five concerns were good comparables whose arithmetic mean of margin based on the single years financial date came to 13.24%. Margins of Assessee s Comparables (Single year data) Name of the comparable company Arithmetic mean ICRA Management Consulting services Limited 15.90% ICRA Online Limited 22.32% IDC (India) Limited 10.33% Informed Technologies 11.70% Integrated Capital Services Limited 5.95% Arithmetic Mean 13.24 7. Based on the aforesaid analysis, assessee ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sultancy. It was therefore contended by the Ld. DR that the said concern was not rendering general consultancy services but it was providing financial consultancy, which is comparable to the instant services rendered by the assessee to its associated enterprise. 10. We have considered the rival submissions with regard to the exclusion of M/s Ladderup Corporate Advisory Private Limited, and find that for the very assessment year in question, the Tribunal has already considered the comparability of such concern viz-a-viz the activity of rendering non-binding investment advisory services. For A.Y 2011-12, which is also the year before us, the Tribunal case of Temasek Holdings Advisors (I) P. Ltd. (supra), considered the comparability of M/s Ladderup Corporate Advisory Private Limited to a concern which was rendering non-binding investment advisory services, and the relevant discussion in the order of the Tribunal reads as under: 12. We now advert to the new comparables which had been included by the TPO in the final list of comparables. The ld. A.R strongly assailing the inclusion of M/s. Ladderup Corporate Advisory Private Limited as a comparable by the TPO, which thereafter h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . DCIT, Circle 3(1), Mumbai (2013) 32 Taxmann.com 178 (Mumbai Trib) (Page 85-97 of APB), which thereafter had been affirmed by the Hon ble High Court of Bombay in the case of CIT-3, Mumbai Vs. General Atlantic (P) limited. (2016) 68 taxmann.com 88 (Page 98-101 of APB), therein submitted that pursuant to the aforesaid judgment of the Hon ble jurisdictional High Court, the issue that an Investment advisor cannot be compared to a Merchant banker is no more res-integra. It was thus submitted by the Ld. A.R that now when the aforesaid comparable, viz. M/s Ladderup Corporate Advisory Private limited was functionally different as in comparison to the assessee company, therefore, it could by no means be adopted as a comparable and thus was liable to be excluded from the final list of the comparables. That on the other hand the ld. D.R submitted that as per the Annual report of the aforesaid comparable, the latter was in the business of corporate advisory services and had received advisory fees. It was submitted by the ld. D.R that the aforesaid comparable, viz. Ladderup Corporate Advisory Services Limited had received merchant banking registration in the month of July, 2010 from SEBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Annual report the aforesaid comparable is engaged in only one segment, which includes merchant banking. We thus in the backdrop of the very fact that the aforesaid comparable is engaged in the merchant banking/investment banking and other similar activities, are of the considered view that the same cannot be considered as functionally comparable to the assessee company which is engaged in the business of rendering non binding investment advisory services. We are further not impressed by the averrment of the Ld. D.R who by referring to the observations recorded by the coordinate bench of the Tribunal in the case of Avenue Asia (supra) had therein averred that though the aforesaid comparable was planning to expand its wings by venturing into merchant banking activities and broaden its horizon, which revealed that during the year it was not engaged in merchant banking activities, had therein tried to drive home his contention that the aforesaid comparable was not involved in merchant banking activities. We are of the considered view that the aforesaid observations of the coordinate bench of the Tribunal were recorded in context of A.Y. 2009-10 involved in the case before them, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Representative has pleaded for its inclusion, but the Mumbai bench of the Tribunal in the case of AGM India Advisors India Pvt Ltd., Vs. DCIT, Mumbai in ITA No. 4757/Mum/2015 vide order dated 18.05.2016 has held that such concern is not comparable to a concern undertaking activity of rendering non-binding investment advisory services. Following the said precedent we hereby decline to interfere and uphold the action of the lower authorities in excluding ICRA Online Ltd, from the final set of comparables. 14. The next point raised by the assessee is for inclusion of Integrated Capital Services Limited, a concern which has been excluded by the income tax authorities on the basis of its functional incomparability. Referring to the order of the DRP, the Ld. DR had pointed out that such concern renders advisory and consulting services in area of mergers, acquisition and reconstruction, and is engaged in the business of trading of shares and speculation business. 15. On this aspect also, we do not find any justifiable reasons to interfere with the stand of the income tax authorities in view of the decision of the Mumbai Bench of the Tribunal in the case of New Silk Route adviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid observations of the DRP submitted that the ITAT, Mumbai bench K , vide its order passed in the case of the assessee, marked as: Temasek Holding Advisors India Private Limited Vs. DCIT, Circle 14(3)(1), Mumbai, in ITA No. 776/Mumbai of 2015 for A.Y. 2010-11, dated 25.02.2016, had categorically held that the aforesaid comparable, viz. ICRA Management Consultancy Services Limited was a good comparable qua the functions of the assessee, and as such had directed that it be included in the list of the final comparables. The ld. A.R drew our attention to Page no. 53 of the APB , wherein the Tribunal while disposing of the appeal of the assessee for A.Y. 2010-11 had observed as under:- Here it is not the case where there is any unique functions materially affecting the revenue or net margins vis- -vis the functions performed by ICRA. Hence on functional level it is a good comparable. As stated earlier, in the earlier years, the TPO has accepted ICRA to be a comparable and in later years the Tribunal in A.Ys 2008-09 2009-10 has held ICRA Management to be good comparable qua the functions of the assessee and there being no material change on facts, functional profile or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same as against those of the immediately preceding year, viz. A.Y. 2010-11, wherein the said company had been accepted by the Tribunal as a good comparable, coupled with the fact that even in the preceding years also it was accepted as a comparable, therefore, in the absence of any substantial variance, either functionally or otherwise during the year under consideration, the said comparable could not be summarily rejected. The ld. A.R further submitted that the order of the ITAT, Mumbai in the case of the assessee for A.Y. 2008- 09 wherein ICRA Management Consultancy Services Limited was held to be a good comparable, had been upheld by the Hon ble High Court of Bombay in CIT-3 Vs. Taemask Holdings Advisors Pvt. Ltd (ITA No. 1051 0f 2014); Dt. 17.11.2016, and placed on record a copy of the order of the Hon ble High Court. It was further averred by the ld. A.R that the ITAT, Mumbai Bench K , in the case of AGM India Advisors (P) Ltd. Vs. DCIT, 10(1), Mumbai (2016) 70 taxmann.com 219 (Mum), had held ICRA Management Consultancy Services Limited as a good comparable, specifically taking note of the fact that it was accepted as such by the TPO in the earlier year as well as in the suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of adjudicating the present appeal of the assessee, the earlier orders passed by the Tribunal in the assesses own case cannot be characterized as a precedent. The ld. D.R in order to drive home his aforesaid contention, relied on the following judgments of the Hon ble Supreme Court :- (i) Dalbir Singh Others Vs. State of Punjab (1979) 3 SCC 745 (ii). KTMTM Abdul Kayoom Anr Vs. CIT (1962) Supp (1) SCR 518 (iii). Fida Hussain Others Vs. Moradabad Dev. Authority (2011) 12 SCC 615 (iv). Executive Engineer, Dhenkanal Minor Irrigation Vs. N.C Budhiraja (2001) 2 SCC 721 The ld. D.R thus on the basis of material placed on record, therein submitted that ICRA Management Consultancy Services Limited could not be accepted as a comparable and had rightly been excluded by the TPO and upheld by the DRP. 9. We have heard the Ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material placed on record. We have given a thoughtful consideration to the facts of the case and find that the DRP as a matter of fact relying on the order passed by his predecessor in the case of the assessee for A.Y. 2010-11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R and are not persuaded to accept his contention that ICRA Management Consultancy Services Limited was functionally different as in comparison to the assessee before us. We have deliberated on the judgments of the Hon ble Apex Court and find that it has been held that a decision of this court on specific facts does not operate as a precedent for future cases. We are of the considered view that there cannot be a second view on the said aspect, but then, as held by the Hon ble Apex Court, if the court decides a certain issue for a certain set of facts, then, that issue stands determined for any other matter on the same set of facts. We are of the considered view that now when the ld. D.R had failed to establish as to how the facts involved in the present case are found to be distinguishable in context of the aforesaid comparable, viz. ICRA Management Consultancy Services Limited or the assessee in the year before us, as in comparison to those of the preceding years, therefore, the principle enunciated by the Hon ble Apex Court in the aforesaid cases would not assist the case of the department. We rather are of the considered view that now when the facts in respect of the assessee o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Private Limited is excluded and ICRA Management Consulting services Ltd., is included, the resultant margin of the comparables shall compare favourably with the margin of the assessee. Since we have accepted the pleas of the assessee for exclusion of M/s Ladderup Corporate Advisory Private Limited and inclusion of ICRA Management Consulting Services Ltd, the necessity for adjudication of the other pleas for inclusion of IDC (India) Ltd., and Informed Technologies Ltd has been rendered academic and is obviated. Thus, for the aforesaid reasons we do not deal any further. 21. In view of the aforesaid discussion we hereby direct the Assessing Officer to re-determine the total income of the assessee, keeping in view our aforesaid decision. 22. Before parting, we may also put on record another point made by the assessee. The Ld. Representative submitted a chart showing operating margins declared by the assessee from A.Y 2010-11 to A.Y 2015-16. It is pointed out that in the A.Y 2010-11 the margin was 20%, in A.Y 2012-13 the margin was 18.60%, in A.Y 2013-14 the margin was 17.21%, in A.Y 2014-15 the margin was 17.27% and in A.Y 2015-16 the margin was 20%. The aforesaid is sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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