9911796707
TMI Blog2019 (3) TMI 1883X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal business of the assessee is to act as an Investment Manager to Tata Mutual Fund (TMF). As noted by the Transfer Pricing Officer, the assessee has entered into international transaction with Tata Mauritius, an overseas Associated Enterprise (AE), wherein the assessee holds 100% shares. As noted by the Transfer Pricing Officer, in the previous year relevant to the assessment year under dispute, the assessee provided investment advisory services and investment management services to its AE amounting to Rs. 1,59,23,669, and Rs. 16,63,35,682, respectively. However, in the present appeal, the dispute arises only with regard to the adjustment made to arm's length price of investment advisory services provided to the AE. It is evident, in the transfer pricing study report the assessee had benchmarked the arm's length price of investment advisory services segment by adopting Transactional Net Margin Method (TNMM) as the most appropriate method. The assessee selected five companies as comparable with average net cost plus margin of 12.26% on single year data. Since, the net cost plus margin shown by the assessee @ 20% is more than the average margin of comparables, the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration in case of various other assessee's providing investment advisory services and the Hon'ble Jurisdictional High Court as well as different Benches of the Tribunal have consistently held that this company is comparable to an investment advisory service provider. In support of his contention, learned Authorised Representative relied upon the following decisions:- i) CIT v/s Temasek Holdings Advisors India Pvt. Ltd., ITA no.1051/2014, dated 17.11.2016; ii) Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2013] 38 taxmann.com 80 (Mum.); iii) M/s. Carlyle India Advisors Pvt. Ltd. v/s ACIT, IT(TP)A no.2410/Mum./2017, dated 20.11.2018; iv) DCIT v/s General Atlantic Pvt. Ltd., ITA no.1717/Mum./2016, dated 21.02.2018; v) ACIT v/s Blackstone Advisors India Pvt. Ltd., ITA no. 928/Mum./2016; vi) SBI Macquarie v/s DCIT, ITA no.324/Mum./2016, dated 16.11.2018. 10. Shri M.K. Singh, the learned Departmental Representative, strongly relying upon the observations of the Transfer Pricing Officer and the DRP submitted that this company has been rejected by the departmental authorities on valid reasoning. He submitted, on proper analysis of facts on record, it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Atlantic Pvt. Ltd., ITA no.1717/Mum./2016 & Anr., dated 21st February 2018, the Tribunal has held as under:- "14. We have heard rival submissions and perused material available on record. Insofar as ICRA Management Consulting Services Ltd. is concerned, the Transfer Pricing Officer has rejected it as a comparable basically on the reasoning that unlike the assessee this company is providing management consulting service. One more reason by the Transfer Pricing Officer to exclude this company is difference in skill set of employees. However, we find nothing new in the argument of the Department as upon consideration of the very same argument, this company has been found to be a comparable to a non-binding investment advisory service provider. It is relevant to observe, in case of AGM India Advisors Pvt. Ltd. v/s DCIT, [2017] 79 taxmann.com 86 which is for the very same assessment year, the Tribunal after considering argument advanced by the Department regarding difference in skill set held that ICRA Management Consultancy Services is a valid comparable to a company providing non-binding investment advisory services. It is also relevant to note, in assessee's own case for assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Revenue's appeal on the issue, the Hon'ble Jurisdictional High Court in ITA no.1051 of 2014, dated 17th November 2016, upheld the decision of the Tribunal. That being the case, we direct the Assessing Officer to include this company as a comparable. 16. Insofar as IDC (India) Ltd. is concerned, consistent view of the Tribunal is in favour of including this company as a comparable in case of an investment advisory service provider. In case of General Atlantic Pvt. Ltd., ITA no.1717/Mum./2016 & Anr., dated 21st February 2018, the Tribunal has accepted this company as a comparable holding as under:- "15. Insofar as IDC (India) Ltd. is concerned, it is observed, in assessee's own case for assessment year 2006-07, the Tribunal accepted this company as a comparable which was upheld by the Hon'ble Jurisdictional High Court while dismissing the appeal filed by the assessee. While upholding the decision of the Tribunal, the Hon'ble Jurisdictional High Court observed that since the non-binding advisory service provided by the assessee is similar to the service provided by Carlyle India Ltd., wherein, IDC (India) Ltd. is accepted as a comparable there is no reason to defer wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Motilal Oswal Private Equity Advisors Pvt. Ltd. 20. The learned Authorised Representative submitted, Ladderup Corporate Advisory Pvt. Ltd. is carrying the activity of merchant / investment banking, hence, cannot be treated as comparable to the assessee. In support, he relied upon the following decisions:- i) M/s. Carlyle India Advisors Pvt. Ltd. v/s ACIT, IT(TP) no. 2410 and 2506/Mum./2017; ii) DCIT v/s General Atlantic Pvt. Ltd., ITA no.1717/Mum./2016, dated 21.02.2018; iii) ACIT v/s Blackstone Advisors India Pvt. Ltd., ITA no. 928/Mum./2016; and iv) SBI Macquarie v/s DCIT, ITA no.324/Mum./2016, dated 16.11.2018. 21. As regards Motilal Oswal Private Equity Advisors Pvt. Ltd., the learned Authorised Representative submitted, the company is involved in various activities including merchant banking/investment banking. Therefore, it cannot be considered as a comparable. In support of such contention, he relied upon the following decisions:- i) ACIT v/s Blackstone Advisors India Pvt. Ltd., ITA no. 928/ Mum./2016; and ii) Wells Fargo Real Estate Advisors Pvt. Ltd. v/s DCIT, ita no.1520/Mum./2016, dated 15.04.2016. 22. The learned Departmental Representative strongly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed from the facts on record that this company is engaged in the activity of merchant banking and investment banking. Therefore, the functionality of this company is different from the assessee. Considering the aforesaid aspect, the Tribunal in General Atlantic Pvt. Ltd. (supra) has excluded this company as a comparable. The relevant observations of the Tribunal is reproduced below:- "16. Insofar as Ladderup Corporate Advisory Pvt. Ltd. is concerned, it is seen that the comparability of this company to an investment advisory service provider came up for consideration before the Tribunal, Mumbai Bench, in Temasek Holding Advisors India Pvt. Ltd. (supra). The Bench after considering the submissions of the parties having found that the company is registered as a Category-1 Merchant Banking Company with SEBI and is engaged in Merchant Banking service w.e.f. July 2010 held that the company cannot be treated as comparable to non-binding investments advisory provider. Respectfully following the aforesaid decision of the Co-ordinate Bench, we exclude this company from the list of comparables." 26. The same view has been reiterated by the Tribunal in Blackstone Advisors India Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
