TMI Blog2018 (11) TMI 1769X X X X Extracts X X X X X X X X Extracts X X X X ..... omparable to the assessee. MOTILAL OSWAL PRIVATE EQUITY ADVISORS PVT. LTD. Company has four business verticals, however, the segmental details are not available in the annual report. Further, in case of Temasek Holding Advisors India Pvt. Ltd. [ 2017 (8) TMI 1490 - ITAT MUMBAI] the Tribunal, while considering the comparability of the aforesaid company to an investment advisory services provider held that this company cannot be a comparable due to differences in functional profile. MOTILAL OSWAL INVESTMENT ADVISORS LTD. is engaged in the business of investment banking, merchant banking, merger and acquisition, private equity syndication, etc., which are no way similar to the assessee s activities of non binding investment advisory services. In a number of decisions including decisions relating to the impugned assessment year, as referred to above, the Tribunal has held that this company cannot be a comparable to an investment advisory service provider. Therefore, considering the overall facts and circumstances of the case, we hold that this company cannot be a comparable to the assessee. Accordingly, we uphold the decision of the DRP on this issue. Allowance of assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mauritius. From the transfer pricing study report as well as other details furnished by the assessee, the Transfer Pricing Officer found that in the relevant previous year, the assessee has earned revenue of Rs.₹ 31,33,86,888, from provision of non binding research advisory services to the A.E. He also found that the assessee has bench marked the international transaction with the A.E. by selecting Transactional Net Margin method (TNMM) as the most appropriate method with operating profit / total cost (OP/TC) as profit level indicator (PLI). He also noticed that the assessee has considered itself as the tested party and after conducting a search in the data bases has selected five companies as comparables with arithmetic mean of 15.20%. Since, the margin shown by the assessee at 20.21% is higher than the arithmetic mean of the five comparables selected, the assessee claimed the international transaction with the A.E. to be at arm's length. Further, in course of the proceedings before the Transfer Pricing Officer the assessee furnished a fresh set of 15 comparables with arithmetic mean of 17.50% as against the margin shown by the assessee at 20.21%. Accordingly, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order making the addition on account of transfer pricing adjustment. Being aggrieved of the draft assessment order so passed, the assessee raised objections before the DRP. 5. The DRP, after considering the submissions of the assessee, upheld the rejection of the comparables selected by the assessee. However, out of the three comparables selected by the Transfer Pricing Officer, the DRP excluded Motilal Oswal Investments Advisors Pvt. Ltd. from the list of comparables while upholding the selection of Ladder up Advisor Corporate Advisors Pvt. Ltd. and Motilal Oswal Private Equity Advisors Pvt. Ltd. proposed by the Transfer Pricing Officer. Herein after we will deal with each of the comparables disputed by the parties before us. CYBER MEDIA RESEARCH LTD. (Formerly, IDC (INDIA) LTD.) 6. This company has been rejected by the Transfer Pricing Officer and the DRP on the ground that as per the information available in the website of the company, it is not engaged in providing investment advisory services and is also engaged in sale of product, therefore, functionally different from the assessee. 7. The learned Authorised Representative submitted, in a number of decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer to include this company as a comparable. 10. Since, the aforesaid observations of the Tribunal pertain to the very same assessment year, respectfully following the same, we direct the Assessing Officer to include this company as a comparable. LADDER UP CORPORATE ADVISORY PVT. LTD. 11. This company was selected by the Transfer Pricing Officer and was also retained by the DRP. 12. Objecting to the selection of the aforesaid company by the Transfer Pricing Officer and the DRP, learned Authorised Representative submitted, the company being a merchant / investment banking company, is functionally different from the assessee, hence, cannot be treated as comparable to an investment advisory service provider like the assessee. In this context, he relied upon the following decisions: i) DCIT v/s General Atlantic Pvt. Ltd., 91 taxmann.com 406 (Mum.); ii) Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2017] 87 taxmann.com 168; iii) Well Fargo Real Estate Advisors Pvt. Ltd. v/s DCIT, [2018] 90 taxmann.com 18 iv) Avenue Asia Advisors Pvt. Ltd. v/s DCIT, [2017] 85 taxmann.com 311 (Del.) 13. The learned Departmental Representative relied upon the obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available in the annual report. Further, in case of Temasek Holding Advisors India Pvt. Ltd. (supra), the Tribunal, while considering the comparability of the aforesaid company to an investment advisory services provider held that this company cannot be a comparable due to differences in functional profile. The same view was reiterated by the Co ordinate Bench while deciding this particular issue in case of Well Fargo Real Estate Advisors Pvt. Ltd. (supra). Since, the aforesaid decisions of the Co ordinate Bench are for the very same assessment year and no distinguishing facts have been brought to our notice by the learned Departmental Representative, in our considered opinion, the ratio laid down in the above referred decisions clearly apply to the facts of the present case. There being no dissimilarity in facts brought to our notice by the learned Departmental Representative, respectfully following the aforesaid decisions of the Co ordinate Bench, we hold that this company cannot be a comparable to the assessee. MOTILAL OSWAL INVESTMENT ADVISORS LTD. 18. This company, though, was selected as a comparable by the Transfer Pricing Officer, however, the DRP excluded this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be disallowed in view of provisions of section 36(1)(ii) of the Act. Though, the assessee justified payment of bonus by submitting that it was on the basis of performance evaluation, however, the Assessing Officer was not convinced with the submissions of the assessee. He observed that while total bonus of Rs.₹ 3,58,27,411, was paid to 12 employees drawing approximate salary of Rs.₹ 4,33,00,000, whereas bonus paid to four Directors stood at Rs.₹ 5,33,93,654, as against salary drawn by them of Rs.₹ 3,72,00,000. Thus, the Assessing Officer was of the view that the assessee has made payment to shareholders in the guise of bonus to avoid overall tax liability. He observed, instead of paying the accumulated profit as dividend, the assessee has paid bonus which clearly attracts the provisions of section 36(1)(ii) of the Act. Thus, ultimately, the Assessing Officer disallowed an amount of Rs.₹ 1,49,25,172, under section 36(1)(ii) of the Act. The assessee challenged the aforesaid disallowance before the DRP. 25. The DRP after considering the submissions of the assessee and taking note of the fact that the Tribunal has deleted similar disallowance made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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