TMI Blog2019 (6) TMI 1622X X X X Extracts X X X X X X X X Extracts X X X X ..... g market research and management consultancy services, and was also a premier provider of market intelligence and advisory services, therefore, it was functionally comparable to investment advisory providers. See NEW SILK ROUTE ADVISORS PVT. LTD. VERSUS ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 7 (2) (2) , MUMBAI AND VICE-VERSA [ 2018 (11) TMI 1769 - ITAT MUMBAI] Thus we direct the A.O to exclude the two comparables which were selected by the TPO viz. (i) Motilal Oswal Pvt. Equity Advisors Pvt. Ltd; and (ii) Ladder up Corporate Advisors Pvt. Ltd. from the final list of the comparables. At the same time, the A.O is directed to include Cyber Media Research Ltd. (formerly IDC India Ltd.) in the final list of comparables. - ITA No.1996/Mum/2016, ITA No.1776/Mum/2016 - - - Dated:- 11-6-2019 - SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER For the Appellant : Shri Ajit Kumar Jain Shri S iddhesh Chaugule, A.Rs For the Respondent : Shri Anand Mohan, D.R ORDER PER RAVISH SOOD, JM The present cross appeals filed by the assessee and the revenue are directed against the order passed by the A.O under Sec. 143(3) r.w.s 144C(13) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rise (for short AE‟) i.e Bain Capital, Mauritius, in respect of potential investment opportunity in India. The assessee had filed its return of income for A.Y. 2011-12 on 23.11.2011, declaring total income of ₹ 9,59,53,320/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2). 3. During the course of the assessment proceedings the A.O made a reference to the Transfer Pricing Officer (for short TPO‟) for computation of the Arm‟s Length Price‟ (for short ALP‟) of the international transactions of the assessee for the year under consideration. 4. The TPO in the course of the proceedings observed, that the assessee had entered into the following international transactions during the year under consideration: Sr. No. International Transaction Amount (INR) 1. Investment Advisory related support services 65,01,23,315/- 2. Reimbursement of remuneration of deputed employees 20,55,62,248/- It was observed by him that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution Panel-1, Mumbai (for short DRP‟). The assessee assailed the exclusion of its comparables viz. (i) Cyber Media Research Ltd (formerly IDC India Ltd.); (ii) Frontline Venture Services Private Ltd; and (iii) Primary Real Estate Advisors Pvt. Ltd. Further, the inclusion of the three new comparables by the DRP viz. (i) Motilal Oswal Investments Advisors Pvt. Ltd.; (ii) Ladder up Corporate Advisory Pvt. Ltd.; and (iii) Motilal Oswal Equity Advisors Pvt. Ltd. was also assailed before the DRP. The DRP was not persuaded to accept the claim of the assessee that the TPO had erred in rejecting the comparables which were selected by the assessee, and therein upheld the order of the TPO to the said extent. Insofar the inclusion of the three new comparables by the TPO was concerned, the DRP finding favour with the claim of the assessee rejected the inclusion of one of the comparable by the TPO, viz. Motilal Oswal Investment Advisory Pvt. Ltd. However, the inclusion of the remaining two comparables which were selected by the TPO was upheld by the DRP. Accordingly, the DRP directed the AO to give effect to his directions as per the provisions of Sec.144C(13) of the I-T Act. 6. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exclusion of Ladder up Corporate Advisors Pvt. Ltd. by the assessee from the final list of comparables for the reason that it being engaged in investment banking was functionally incomparable to the assessee, it was submitted by the ld. D.R that the said comparable was registered as a merchant banker only in the month of July, 2010 and was not in receipt of any income from investment banking during the year under consideration. 9. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, and also considered the judicial pronouncements relied upon by them. We shall first advert to the sustainability of the inclusion of two comparables by the TPO/DRP, as under: (A) Motilal Oswal Private Equity Advisors Pvt. Ltd.:- As is discernible from the order of the TPO, it was observed by him, that the aforementioned company viz. M/s Motilal Oswal Pvt. Equity Advisors Pvt. Ltd. was providing identical investment advisory services as were being rendered by the assessee. On the basis of information called for by the TPO under Sec.133(6), it was gathered by him that the assessee during the year had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n.com 406 (Mum); (ii) Temasek Holdings Advisors India Pvt. Ltd. Vs. DCIT, (2017) 87 taxmann.com 168; (iii) Well Fargo Real Estate Advisors Pvt. Ltd. Vs. DCIT, (2018) 90 taxmann.com 18; and (iv) Avenue Asia Advisors Pvt. Ltd. Vs. DCIT, (2017) 85 taxmann.com 311 (Del), had concluded that the aforementioned company could not be considered as a comparable to an investment advisory service provider due to difference in functional profile. The Tribunal while concluding as hereinabove had observed, as under: 17. We have considered rival submissions and perused materials record in the light of the decisions relied upon. As could be seen from the facts on record, though, the aforesaid 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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom SEBI, and had no actual income from the said activity during the year under consideration. In sum and substance, it was observed by the lower authorities that though the aforementioned company had stated itself to be an investment banking firm, however, no direct income was earned by it out of such activity. Accordingly, the lower authorities being of the view that the aforementioned company was functionally comparable to the assessee which was providing investment advisory services, thus included the same in the list of the comparables. 10. We find that the issue that the aforementioned company viz. Ladder up Corporate Advisory Pvt. Ltd. could not be treated as a comparable to an investment service provider, had been looked into by the Tribunal in the case of New Silk Route Advisors Pvt. Ltd. Vs. ACIT, Circle-7(2)(2), Mumbai [IT (TP) Appeal No. 1148/Mum/2016, dated 30.11.2018) for A.Y. 2011-12. The Tribunal in the aforementioned case taking cognizance of the functional profile of the aforementioned company which was registered as a Category-1 Merchant Banking company with SEBI, and was engaged in Merchant Banking Services with effect from July, 2010, had therein held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n observe that the ld. A.R has assailed before us the orders of the lower authorities to the extent they had excluded Cyber Media Research Ltd. (formerly IDC India Ltd.) from the final list of comparables. Accordingly, we restrict our adjudication to the aspect, as to whether the TPO/DRP had rightly excluded the comparable selected by the assessee i.e Cyber Media Research Ltd. (formerly IDC India Ltd.) from the final list of the comparables. 12. As is discernible from the orders of the lower authorities, we find that it was the claim of the assessee before them that as the aforementioned company i.e Cyber Media Research Ltd. (formerly IDC India Ltd.) was engaged in rendering market research and management consultancy services, and was also a premier provider of market intelligence and advisory services, therefore, it was functionally comparable to investment advisory providers. However, the TPO was not persuaded to subscribe to the aforesaid claim of the assessee. It was observed by him, that the market research and management consultancy services provided by the aforementioned company were not similar to investment advisory services which were being rendered by the assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is similar to the service provided by Carlyle India Ltd., wherein, IDC (India) Ltd. is accepted as a comparable there is no reason to defer with the decision of the Tribunal. It is necessary to observe, in case of other assesses engaged in providing non-binding investment advisory services akin to the assessee for the very same assessment year, the Tribunal has held that IDC (India) Ltd. is a good comparable. In this context, we refer to the decisions of the Tribunal in case of AGM India Advisory Pvt. Ltd. (supra) and Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, 87 taxmann.com 168 (Mum.). Moreover, in assessee's own case in the earlier assessment years, this company having been found to be functionally similar was accepted as a comparable. In view of the aforesaid, we direct the Assessing Officer to include this company as a comparable. 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. Apart there from, we find that a similar view had also been taken by the coordinate benches of the Tribunal viz. (i) M/s G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the order of the DRP, we find that he had observed that the aforementioned company, viz. M/s Motilal Oswal Investment Advisors Pvt. Ltd. was held by the Tribunal in the assesses own case for A.Y. 2010-11 in ITA No. 413/Mum/2015, dated 15.05.2015 as not a good comparable. The DRP observing that as the facts during the year under consideration were identical as against those for A.Y. 2010-11, thus directed the A.O to exclude the aforementioned company from the final list of comparables. 19. We have perused the order of the DRP, and are persuaded to subscribe to the view taken by him that now when the aforementioned company i.e Motilal Oswal Investment Advisors Pvt. ltd. was excluded by the Tribunal in the assesses own case for A.Y. 2010-11 in ITA No. 413/Mum/2015, dated 15.05.2015 from the list of the comparables, on the ground that the same was not a good comparable, therefore, in the absence of there being any shift in the during the year under consideration i.e A.Y. 2011-12, it would not be permissible to adopt an inconsistent approach and therein take a contrary view. Apart there from, we find that the aforesaid order of the Tribunal in the assesses own case for A.Y. 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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