TMI Blog2016 (2) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of Ld. Commissioner of Income Tax (Appeals)-15, Mumbai {(in short Ld. CIT(A)} dated 27.10.2014 for the assessment year 2010-11, decided against the assessment order passed by the Assessing Officer (in short AO ) u/s 143(3) of the Act. 2. During the course of hearing, Shri Porus Kaka Shri Divesh Chawla Authorised Representative (Ld. Counsel) on behalf of the assessee and Shri N.K. Chand, CIT, Departmental Representative (Ld DR) on behalf of the Revenue, argued the case. 3. At the very outset, it has been noted that appeal filed by the assessee is late by one day. In response to our query, Ld. Counsel of the assessee has drawn our attention to the petition filed by the assessee requesting for condonation of the delay. We have gone through the said petition explaining the delay on the ground that managing director of the company was not available and that is how delay occurred. The assessee has supported the reason along with duly sworn affidavit. No serious objection has been raised by the department for condonation of delay. In view of these facts and in the interest of justice, the delay is condoned and appeal is admitted for adjudication. 4. Ground No.1: In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage. The assessee company s role is confined mostly in providing opinion to its clients for various investments options available in the market. How and it what manner advice/opinion of the assessee company would be implemented or executed by the client, in none of the business of the assessee company. Our attention has been drawn on various pages of the paper book to show Transfer Pricing Reports and Annual Reports of Motilal Oswal as well as the assessee company to show the distinction between the working mechanisms of both the companies. 4.3. Lastly, it has been submitted by the Ld. Counsel that this issue is no more res-integra. It has been decided in various judgments coming from the Tribunal and Hon ble Bombay High Court that Motilal Oswal is not pure advisory company and the same was rejected as comparable to pure advisory companies in following cases: 1. Carlyle India Advisors (P.) Ltd. v. Assistant Commissioner of Income- tax 10(1), Mumbai. (7901/Mum/2011) (Mumbai) 2.Commissioner of Income-tax-1 0, Mumbai v. Carlyle India Advisors (P.) Ltd. (32 taxmann.com 23) (Bombay) 3. Carlyle India Advisors (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle -10(1), M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion, functions and activities carried out by Motilal Oswal are different from the functions and activities of the assessee company. Accordingly, the risk profiles of the two are also different. It has been clearly mentioned in the annual report of Motilal Oswal that the said company is engaged in the business of merchant banking and investment, business advisory services. It is further noted by us that actually we need not labour much on this issue as various benches have already addressed this issue at great length and detail in the aforesaid precedents relied upon by the Ld. Counsel. In the case of Lehman Brothers Advisors Pvt. Ltd., in which one of us (i.e. Hon ble Judicial Member was a party), it was held, with regard to Motilal Oswal as under: 4. We have heard both the parties on the limited issue of if the MOIAPL is a good comparable and whether it passed the functional test. In this regard, we examined the directors‟ report placed on page 13 of the paper book and the following is reported by the directors under the heading review of operations and future outlook‟, which reads as under: The market for the services of the Company is buoyant and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the source3s of the advisory fees earned by the assessee. Assessee has also earned fees out of assessee‟s capability of the structured finance teams, financial markets, ie both equity and credit market, is another source of income for the assessee. These functions of the assessee were analyzed by the Tribunal during the proceedings in the case of Carlyle India Advisors (P) Ltd (supra). The detailed findings of the Tribunal in this regard are mentioned in para 12 of the said Tribunal‟s order (supra) and the same is reproduced as under: 12. ..........The only dispute is whether Motilal Oswal Investment Advisors Pvt Ltd can be considered as a comparable for the determination of ALP. A perusal of three comparables considered by the TPO shows that M/s. Future Capital Investment Advisors Ltd has operative 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 during the year under consideration, the said company has completed 23 assignments successfully as against 14 complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded from the list of comparables on the plea that it is engaged in diversified activities. In the case of Acumen fund Advisory Services (I) Pvt. Ltd. (supra), the Tribunal observed that M/s Motilal Oswal Investment Advisory Pvt. Ltd. is engaged in acquisition, disinvestment, IPO, etc, whereas the assessee is engaged in investment advisory services. In case of Carlyle India Advisors Pvt. Ltd.(supra), the Tribunal observed that M/s Motilal Oswal Investment Advisory Pvt. Ltd. is registered with SEBI as merchant banker and is engaged in diversified activities, acquisition, disinvestment, IPO etc. 8. As per the annual report of M/s Motilal Oswal Investment Advisory Pvt. Ltd. for the year ending on 31-3-2010 relevant assessment year 2010- 2011, the company derives its business income from four different business verticals viz. Equity Capital Markets, Mergers Acquisitions, Private Equity Syndications and Structured Debt. The income source across the four products was more or less evenly balanced. The company continues to perform well on advising Indian corporate on cross border acquisitions. The Private Equity business over the last three years has also resulted in a good pipeline of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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