TMI Blog2016 (3) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... Porus Kaka did not press the said ground and accordingly, ground no. 1 is dismissed as not pressed. 3. In other grounds of appeal, the assessee is mainly aggrieved by Transfer Pricing Adjustment of ₹ 14,11,60,326/- made to the arm s length price on provision of Advisory Services given to Associate Enterprises (AE). The dispute mainly revolves around inclusion and exclusion of certain comparables for the purpose of benchmarking the margin of arm s length price (ALP). 4. Brief facts of the assessee s case are that, assessee, Blackstone Advisors India Pvt. Ltd., is incorporated in India and is providing sub-advisory services to its AE, Blackstone Management Partners, VLLC. The Blackstone group is one of the world s leading alternative asset management group and is one of the largest operators within the profit equity market. As a sub-advisor, key function performed by assessee consists of following services/ functions: (a) Understanding the investment strategy of the fund as articulated in the prospectus so that it can identify investment opportunities that may be of interest to the AE on behalf of the Fund; (b) Identifying, investigating and evaluating potential in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total (B) 1,89,04,650 Recovery of expenses Blackstone Management Partners V LLC 20,21,479 Total (C) 20,21,479 Grand Total 41,45,59,488 For rendering Sub-Investment Advisory Services, the assessee was remunerated with cost plus mark-up. During the year, the assessee had shown the amount received at ₹ 39,36,33,359/- which included 18.44% mark-up and cost of ₹ 33,23,35,126/-. Thus mark-up of 18.44% over the cost was ₹ 6,12,98,233/-. In the Transfer Pricing Study Report, the assessee has benchmarked this mark-up by adopting Transactional Net Margin Method (TNMM) as Most Appropriate Method (MAM) by using external comparables. After detailed search analysis and qualitative analysis, the assessee short-listed 8 external comparables, the average mean margin of which was arrived at 8.72% and hence, it was reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After giving working capital adjustment of 0.76%, the TPO made the upward adjustment in the following manner:- Sr. No. Particulars Amount (Rs.) A Operating cost 33,23,35,126 B Mark up @ 60.92% 20,24,58,559 C ALP (A+B) 53,47,93,685 D Price actually charged 39,36,33,359 E Adjustment (C D) 14,11,60,326 The comparables which have been selected and rejected by the TPO and also the transfer pricing adjustment has been confirmed by the DRP also. 8. Before us, the Ld. Senior Counsel, Shri Porus Kaka, after explaining the entire facts of the case submitted that, he is mainly challenging the inclusion of 2 comparables by the TPO i.e., they should be excluded from the comparability list, viz.,; (i) Motilal Oswal Investment Advisors Pvt. Ltd.; and (ii) Brescon Corporate Advisors Pvt. Ltd Besides this, he submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 A separate compilation of case laws as referred above were also filed before us. 9. On merits also Mr. Kaka made his exhaustive submissions especially with regard to Motilal Oswal and Brescon Corporate Advisors Pvt Ltd. In short regarding, Motilal Oswal Investment Advisors Pvt. Ltd. He pointed out that it is mainly engaged in the business of Investment banking, merchant banking and offers comprehensive investment banking solutions and transactions expertise covering private placement of equity, debt, and convertible instruments covering international and domestic capital markets, mergers and acquisitions advisory and restructuring advisory and implementations. In catena of decisions (cited above) he submitted that, the Tribunals have been consistently holding that, Motilal Oswal Investment Advisors (I) Pvt. Ltd cannot be compared with the companies providing Investment Advisory Services simplicitor . 10. As regard Brescon Corporate Advisors Pvt Ltd, he submitted that, this company is one of the India s leading corporate advisor companies that assist companies in Special Situations through resolution, recapitalization, mergers acquisitions, infu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. However he submitted that in this year assessee is not seriously contesting this comparable, if TPO s two comparables as above are excluded. (iii) I D C India Ltd .:- The company is involved in a singlesegment. The company is in the business of Market Research and Management Consultancy . The company is a research company, primarily dealing in research and survey services and products. The company is regarded as country s most comprehensive, dependable and respected source for market intelligence and consulting in the fields of IT, telecommunications and consumer technology. It always takes initiatives to sell its research reports in the international markets. However, he submitted that in this year assessee is not seriously contesting this comparable, if TPO s two comparables as above are excluded. 12. On the other hand, Ld. CIT DR, Mr. N.K. Chand, submitted that the decisions of the Tribunal in other cases may not have a persuasive value in transfer pricing matters, because the functional analysis of each case are different, which have to be analysed independently. The selections of comparables have to be seen on FAR analysis of the company vis- -vis. the functionality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een accepted by the TPO and 3 of them have been contended to be included by the assessee before us. The TPO has rejected the entire search matrix of the assessee and has finally selected 4 comparable companies; one from the assessee s list and three from his own search. Out of the three comparables chosen by the TPO from his own search, two have been disputed before us at the time of hearing as discussed above. Regarding all the comparables, the ld. Senior Counsel besides arguing on merits has pointed out that all these comparables have been analyzed in series of decisions by the Tribunal while comparing them with companies rendering Investment Advisory Services. So far as FAR analysis is concerned, same is not in dispute. We are, therefore, confining ourselves with the dispute regarding inclusion/ exclusion of the comparables as discussed above. (a) Motilal Oswal Investment Advisors Pvt Ltd :- This comparable has been included by the TPO and while including the said comparable he has observed that its income is only from Advisory fees during the year and it is performing advisory services in various field and industries including advisory services like assessee. Before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discussed as above, we hold that Motilal Oswal cannot be put into the comparability list and is directed to be excluded. b) Brescon Corporate Advisors Pvt Ltd:- As stated by the Ld. Senior Counsel, this company is again rendering services of merchant banker and its income is mainly from financial restructuring and recapitalization and debts syndication. Equity related advisory and M A Advisory services are also in the capacity of a merchant banker and as a corporate advisor company its main function is to assist the companies in special situation through resolution, re-capitalization, M M, infusion of profit, equity or direct investment. Thus, like Motilal Oswal Investment Advisory Pvt Ltd, this company also cannot be compared with companies rendering investment advisory services simplicitor . The reasoning given in the Motilal Oswal for exclusion will apply here also. The decisions relied upon by the Ld. Senior Counsel, especially in the case of Tamasek Holdings Advisors India Pvt Ltd (supra), we find that this company has been especially excluded from being considered while comparing with the companies giving investment advisory services. Accordingly, we direct the TPO/AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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