TMI Blog2020 (4) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... e cross appeals by the assessee and the Revenue are directed against the assessment order dated 25/01/2016 passed under section 143(3) r.w.s. 144(13) of the Income Tax Act, 1961 ( in short the Act ). 2. The brief facts of the case as emanating from records are: The assessee company is engaged in provision of Investment Advisory Services to its group company. The assessee is a subsidiary of Kitara Capital Investments Ltd. based in Cayman Islands which in turn is held by Helcon Capital Holdings Co. SAOC Oman. During the period relevant to assessment year under appeal, the assessee entered into international transactions with its Associated Enterprise(AE) in providing investment advisory services. To benchmark its transaction, the assessee selected TNMM as the most appropriate method. The assessee applied OP/OC as its PLI. The assessee selected six companies as comparables within average weighted margin of -0.19%. The assessee claimed that since the profit margin of the assessee is 17.50%, i.e. higher than the margin of the comparables, its transactions with AE may be treated at arms length price. The Transfer Pricing Officer(TPO) rejected all the six comparables selected by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent advice is given to the client, based on research and analysis in exchange of a nominal fee. This advice is provided irrespective of the whether its client wishes to follow the advice or not i.e. non binding. In merchant banking/investment banking business activities are carried out for or on behalf of the client in order to help its fund raising activities. In this business, revenues are earned as percentage of money raised for its clients. The Ld.Representative for the assessee submitted that primary difference between Investment Advisory Services and Merchant Banking Services is that in the investment advisory services remuneration is by way of fixed nominal fee. In the case of merchant banking services the remuneration is commission based. 4.1 The ld. Authorized Representative for the assessee supporting the findings of DRP qua exclusion of Motilal from the list of comparables submitted that Tribunal in the case of Carlyle India Advisors Pvt. Ltd. vs. DCIT in ITA No.7367/Mum/2012 for assessment year 2008-09 decided on 07/02/2014 has held that Motilal is not good comparable with a company engaged in investment advisory services. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /inclusion of comparables. The TPO has rejected all the comparables selected by the assessee and has introduced fresh two comparables i.e. Motilal and Ladderup . The DRP has directed to remove Motilal from the list of comparables and has upheld inclusion of Ladderup . Now, the assessee in appeal is seeking exclusion of Ladderup from the list of comparables and the Revenue in cross appeal wants inclusion of Motilal . Ladderup Corporate Advisory Pvt. Ltd. 7. The DRP has upheld inclusion of Ladderup merely on the ground that the said company has not reported segment wise breakup of income and no income has been reported from merchant banking advisory activities. We find that the Co-ordinate Bench of the Tribunal in the case of SUN-Ares Real Estate Pvt. Ltd.(supra) has directed exclusion of Ladderup in assessment year 2011-12 as is not functionally comparable with the entity engaged in providing non-binding Investment Advisory Services. The relevant extract of the findings of Tribunal on this issue are as under:- 4.1 We have carefully heard the rival contentions and perused relevant material on record including the decisions cited by respective representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, we exclude this company from the list of comparables. 8. Therefore, in view of the finding of the Tribunal excluding Ladderup from the list of comparables, in the case of companies engaged in Non-binding investment advisory services, we direct the Assessing Officer /TPO to exclude the said company from the list of comparables being functionally different. The grounds of appeal by the assessee are thus, allowed. 9. In the result, assessee succeeds in its appeal. Motilal Oswal Investment Advisors Pvt.Ltd. 10. The contention of the assessee is that Motilal is engaged in Merchant Banking Advisory Services, whereas, the assessee is engaged in providing nonbinding investment advisory services. In so far as nature of activities carried out by the assessee , the Revenue is not in dispute. The DRP has excluded Motilal from the list of comparables by placing reliance on the decision of the Tribunal in the case of Carlyle India Advisors (P) Ltd. vs. DCIT for assessment year 2008-09 (supra). We find that the Co-ordinate Bench of the Tribunal in the case of Carlyle India Advisors (P) Ltd.(supra) for assessment year 2011-12 has directed exclusion of Motilal , from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
