TMI Blog2018 (11) TMI 1731X X X X Extracts X X X X X X X X Extracts X X X X ..... 011-12 in the matter of order passed u/s.143(3) r.w.s. 144C(3) of the IT Act, 1961. 2. Facts in brief are that the assessee is a company incorporated in India and is a subsidiary of Carlyle Asia Investment Advisors Limited (Carlyle Hong Kong) and is engaged in rendering non-binding investment advisory services to Carlyle Hong Kong. The assessee has rendered non-binding investment advisory services to its AE. The services offered are in the nature of identifying potential investment opportunities in India for the Group. The economic analysis of the transaction is discussed in the TP Report. It has considered TNMM as the most appropriate method by conducting analysis wherein the operating margin over operating cost is used as the profit level indicator. 3. In respect of the investment advisory services rendered, the assessee has used TNMM analysis for benchmarking the price. The Profit level indicator (PLI) used is Operating Profit to Operating Cost. The assessee's margin was 15 percent and the arithmetic mean of the comparables was computed at 15.20 percent. On the basis of this analysis, the assessee has concluded that transaction with its AEs is at arm's length. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lowest margins and/or negative margins as compared to the mark up of 15% to substantiate their cases and (2) the TPOs , year after year have always included those cases as comparables which have either high margins or substantially high margins than the mark up of 15% to substantiate their selection of the comparables and to negate the very case of the comparability analysis of functionally similar business cases in total disregards to the ITAT and the High Court decisions in assessee's own case for earlier assessment years and functionally similar business case of other cases reported and in public domain and even those cases which have been quoted and relied upon by the [TATs in assessee's own case for earlier A Y.s from A.Y. 2007-08 to A.Y, 2010-3 1 as follows: Six cases quoted on Page 10 (Para 12) of the ITAT order dated 18/11/2015 for A.Y.2010-11 areas under: [1] Acumen Fund Advisory Services Pvt.Ltd. (ITA 143/Mum/2014] dated 04.07.2014 (2) Bain Capital Advisors (India] Pvt. Ltd. (ITA 1360/Mum/2014) dated 05.01,2015 (3) Q-India Investment Advisors PvtUd. (ITA 923/Mum/2015) dated 20.04,2015 (4) NVP Venture Capital India Pvt.Ltd, (ITA 1564/Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of ground numbers 4, 4.1 to 4.6 is Partly Allowed. 5.1 In the result, assesssee's appeal is Partly Allowed. 7. Against the above order of CIT(A) assessee and Revenue are in further appeal before us. 8. At the outset, learned AR placed on record the order of the Tribunal in assessee s own case as well as order passed by different Benches wherein the issues under consideration are covered in favour of the assessee in so far as exclusion of Motilal Oawal Investment Advisors Pvt. Ltd., and Ladderup Corporate Advisory Pvt. Ltd., is concerned. Learned AR also placed on record the order of the Co-ordinate Bench wherein Icra Management Consulting Services Limited and IDC (India) Limited were allowed to be included as comparable in the case of companies engaged in rendering non-banking investment advisory services. 9. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also gone through the order of the Tribunal in assessee s own case dated 22/08/2014 for the A.Y.2009-10 and other Co-ordinate Bench decision wherein exactly similar issue was dealt with. We found that in assessee s own case for the A.Y.2009-10 and 2010- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 said 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. It can therefore, be safely said that the said company being into merchant banking and cannot be considered as a comparable. We, accordingly, direct the AO not to consider Motilal Oswal Investment Advisors Pvt Ltd as a comparable for determination of ALP . 9. Considering the above, we direct the AO to exclude the MOIAPL from the list of the comparables for determination of ALP of the said transaction. 10. We further observe that against the order of the Tribunal, the department has filed appeal before the Hon ble Bombay High Court and the Bombay High Court has dismissed the revenue s appeal. Respectfully following the order of the Tribunal and also the order of the Hon ble B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances in the instant case during the year under consideration are same, respectfully following the judicial pronouncements of Co-ordinate Bench as listed above, we do not find any merit in the action of CIT(A) for not allowing inclusion of IDC(India) Ltd., in the list of comparables. 16. In respect of future capital investment advisories and future capital holding which was included by TPO in the list of comparables, we observe that these companies did not have any operations during the year, hence cannot be used in the benchmarking analysis. Thus, the ground raised by Revenue becomes infructuous. 17. Assessee has also taken ground to the effect that order passed by AO is barred by limini and that assessment abated in assessee s case. Since, we have already adjudicated the issue on merit, we are not dealing with the ground taken by the assessee. During the course of hearing, assessee has also taken the following additional ground. On the facts and circumstances of the case and in law, the Commissioner of Income-Tax (Appeals) [XCIT(A)'] has erred in upholding the final assessment order passed by the learned Assessing Officer ('AO') without appreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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