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2018 (7) TMI 2106

..... tment advisory services thus companies functionally dissimilar with that of assessee need to be deselected from final list. - IT(TP)A No. 1552/Mum/2016 - 27-7-2018 - Shri G S Pannu, Accountant Member AND Shri Sandeep Gosain, Judicial Member For the Appellant : Shri Yogesh Thar & Ms. Aayushi Modani For the Respondent : Ms Amrita Ranjan ORDER Per G S Pannu, Accountant Member This appeal by the assessee is directed against the order of the DRP-3, Mumbai, dated 22.12.2015, u/s. 144C(5) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to A.Y. 2011-12. 2. In this appeal the assessee has raised the following concise Grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Dispute Resolution Panel ( DRP ) erred in upholding the action of the Assessing Officer ( AO )/transfer Pricing Officer ( TPO ) of making an adjustment of ₹ 81,80,657/- to the international transaction of provision of Investment Advisory Services by the Appellant. 2. Without prejudice to ground 1, on the facts and in the circumstances of the case, the AO erred in inadvertently adjusting an amount of ₹ 81,80,657/- instead of ₹ 81,08,657/- there .....

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..... ing the margins of the comparables selected, the assessee asserted that the stated value of its international transactions on account of provisions of non-binding investment advisory services was at an Arm s Length Price. The TPO however, differed with the assessee and adopted the following concerns as the final set of comparables:- Sr. No. Name of the Company OP/TC (%) 1 Motilal Oswal Investment Advisory Pvt. Ltd. 88.80% 2 Ladderup Corporate Advisory Pvt. Ltd. 55.52% 3 New Berry Advisors Ltd. 35.63% Average 59.98% By considering the aforesaid average margin of 59.98% and comparing that assessee s margin of 22%, an adjustment of ₹ 4,65,91,035/- was worked out to bring the stated value of the international transactions to the Arm s Length Price. The Assessing Officer passed a draft assessment order u/s. 143(3) r.w.s. 144C(1) r.w.s. 92CA of the Act, dated 03.03.2015, determining the total income after including the Transfer Pricing adjustment of ₹ 4,65,91,035/- worked out by the TPO against which the assessee raised various objections before the DRP. The DRP after considering the submissions of the assessee passed directions, dated 22.12.2015, in terms of which the Assess .....

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..... ubmissions on this aspect and find that the pleas raised by the assessee are quite potent. In so far as the assessee s nature of services are concerned, there is no dispute that it is engaged in providing non-binding investment advisory services. In this background, in the case of DCIT vs. General Atlantic (P.) Ltd (supra), wherein also our co-ordinate Bench was dealing with the tested transaction relating to proving of non-binding investment advisory services, the concern Ladderup Corporate Advisory Private Limited was found functionally incomparable. The co-ordinate Bench followed earlier decision of the Mumbai Bench in the case of Temasek Holdings Advisors (I)(P.) Ltd. vs. DCIT (supra), wherein it was found that Ladderup Corporate Advisory Private Limited was, inter alia, a Category-1, Merchant Banking Company registered with SEBI. It was noted that said company was engaged in Merchant Banking activities w.e.f. July 2010 onwards and, therefore, the Bench held that the same could not be treated as comparable to a concern engaged in provision of non-binding investment advisory services. In fact, the decision of our Co-ordinate Bench in the case of DCIT vs. General Atlantic (P.) Lt .....

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..... cision sought to be relied upon by the assessee is the judgment of Hon ble Bombay High Court in the case of Carlyle India Advisors (P.) Ltd, (supra), wherein the tested transaction was of providing investment advisory & related support services. In the said case also IDC (India) Ltd (later known as Cyber Media Research Ltd.) was found by the Tribunal to be functionally comparable. The judgment of Hon ble Bombay High Court in the case of DCIT v. General Atlantic (P.) Ltd. (supra), has also been referred to, wherein the Tribunal had found IDC (India) Ltd. (now known as Cyber Media Research Ltd.) to be a good comparable to the activity of providing investment advisory services. The decision of the Tribunal was founded on its earlier decision of Carlyle India Advisors (P.) Ltd.(supra). The aforesaid aspect was confirmed by the Hon ble Bombay High Court also. The aforesaid decision of Hon ble High Court has been referred by the learned representative to show that earlier decision in the case of Carlyle India Advisors (P.) Ltd (supra), has been further affirmed by the Hon ble Bombay High Court. The learned representative also referred to the decision of the Tribunal in the case of AG .....

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..... on the decision of Mumbai Bench of the Tribunal in the case of Tevapharm (P.) Ltd. vs. Addl. CIT (18 taxmann.com 148). Though the activities of Tevapharm (P.) Ltd are not in the field of non-binding investment advisory services but the learned CIT-DR pointed out that activities of IDC (India) Ltd. noted by the Tribunal clearly bring out that it is involved in market research and survey services, which cannot be considered to be comparable to the activities of the assessee under test before us. On this aspect also, we are unable to persuade ourselves to the plea of the learned CIT-DR. Firstly, the said decision is in the context of A.Y. 2007-08 and, therefore, the activities of IDC (India) Ltd, noted by the Tribunal, cannot ipso facto be construed as comparable to the activities of the assessee in the instant year which is A.Y. 2011-12. In fact, similar situation in the context of A.Y. 2009-10 itself has been considered by our Co-ordinate Bench in the case of TPG Capital India (P.) Ltd. v. DCIT (supra), wherein also the tested transaction was providing of investment advisory services. In the said decision reliance placed by the Revenue in the case of Tevapharm (P.) Ltd. (supra), in .....

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