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2019 (6) TMI 1003 - BOMBAY HIGH COURTDiscount on issue of ESOP - whether allowable as deduction in computing the income under the head profit and gain of the business? - HELD THAT:- Appeal admitted :-“Whether on the facts and in the circumstances of the case and in law, the ITAT was right in holding that the discount on issue of ESOP is allowable as deduction in computing the income under the head profit and gain of the business?” TP Adjustment - comparable selection criteria - HELD THAT:- Motilal Oswal Investment Advisory Private Limited - We notice that similar issue had come up for consideration before the Tribunal in case of Carlyle India Advisors (P.) Ltd. Vs. Dy. CIT [2014 (11) TMI 91 - ITAT MUMBAI] . The Tribunal considered the instance of Motilal Oswal and discarded the same relying on the earlier decision in case of the very same assessee in which the Tribunal had inter-alia observed that the profit and loss account appears to be only consolidated account. The company is registered with SEBI as a merchant banker. It was further observed that the said company was engaged in merchant banking. This view has been confirmed by this Court in M/S. NVP VENTURE CAPITAL INDIA PVT. LTD. [2018 (9) TMI 1182 - BOMBAY HIGH COURT] Brescon Advisors - Tribunal had cited proper reasons for discarding this comparable. It was noticed that the audit report of Brescon Advisors shows that its income is earned from debt realization and debt syndication. The company also makes significant investments using its own funds. The Tribunal relied on its earlier decision holding that the company which mostly uses its own investments cannot be compared with the present case. The Tribunal also observed that overall profile of the company was not functionally similar. We are broadly in agreement with the view of the Tribunal. Khandwala Securities - overall operations included Investment Banking Corporation Advisory Services, Institutional Banking etc.. The annual report of the company showed that its performance was affected by global crises and resultant market melt down. These were the distinguishing features noticed by the Tribunal. The Tribunal also noted that the DRP also admitted the said company also engaged is corporate advisory services for which separate segmental are available. Primarily, on these grounds, the Tribunal discarded the said instance. We see no error in view of the Tribunal. Sundaram Finance Distribution Limited - Tribunal recorded that this company had no employees and had outsourced its activities. In similar circumstances, in case of Aptara Technology the Tribunal had found that the said was not comparable. The issue had traveled to the High Court at the hands of the revenue. This Court in case of Pr. CIT vs. Aptara Technology (P.) Ltd [2018 (4) TMI 404 - BOMBAY HIGH COURT] rejected the revenue’s appeal. Without recording separate reasons, therefore, this question is not considered. Integrated Capital Service Limited - DRP refused to exclude the said company only on the ground that same was included by the assessee in its transfer pricing study. The Tribunal was of the opinion that this cannot be a ground to bind the assessee. It was open for the assessee to bring correct facts on record and claim the exclusion of the said instance.This view has been consistently taken by this Court in several orders. No question of law in this respect therefore arises. Axis Private Equity Limited - The Tribunal therefore, held that this company was functionally different from the assessee-company and was therefore, excluded from the comparable. In that view of the matter, no question of law arises. Disallowance of penalty - for non compliance to clearing house trades and trades and client code modification - HELD THAT:- We notice that similar issue was considered by this Court in case of CIT VS ANGEL CAPITAL & DEBIT MARKET LTD. [2014 (5) TMI 584 - BOMBAY HIGH COURT] in favour of assessee. Hon'ble Court upheld the finding of fact recorded by the ITAT is that the amount paid as penalty was on account of irregularities committed by the assessee’s clients. Such payments were not on account of any infraction of law and hence allowable as business expenditure. In such a case the explanation to section 37 would not apply. Accordingly question raised by the Revenue cannot be entertained.
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