Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (11) TMI 91 - AT - Income TaxSelection of comparables - Determination of ALP u/s 92C(2) r.w. Section 92C(2A) of the Act – Extreme OPM - Held that:- The assessee is engaged in the business of rendering investment advisory and related support services to its principal Carlyle Hong Kong – Following the decision in assessee’s own case for the earlier assessment year as decided in M/s. Carlyle India Advisors Pvt. Ltd. Versus The DCIT, Circle-10(1), Mumbai [2014 (2) TMI 648 - ITAT MUMBAI] the three comparables considered by the TPO shows that M/s. Future Capital Investment Advisors Ltd., has operating profit at 21.79% whereas OPM of Motilal Oswal 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 the company has completed 23 assignments successfully as against 14 completed in the immediately preceding year - 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 accounts - The company is registered with SEBI as a merchant banker and the Director’s report show that it is into takeover , acquisitions, disinvestments etc. - In the absence of specific data it is not possible to make comparison - the company being into merchant banking and cannot be considered as a comparable - the AO is directed to exclude the MOIAPL from the list of the comparables for determination of ALP of the transaction - Decided in favour of assessee. KGL and KJMC – Functionally different companies - Held that:- Following the decision of the High Court in assessee’s own case Commissioner of Income-tax-10, Mumbai Versus Carlyle India Advisors (P.) Ltd. [2013 (4) TMI 486 - BOMBAY HIGH COURT] - the functions of the assessee cannot be compared with that of the list of comparables picked up by the TPO which includes the said KGL and KJMC - the business of investment, merchant banking, corporate finance and similar activities cannot be compared to the investment advisory activities of the assessee – thus, the KGL and KJMC are functionally different which cannot be considered for determination of the ALP of the assessee – the AO is directed to exclude the two comparables too – Decided in favour of assessee.
|