NEW SILK ROUTE ADVISORS P.LTD, MUMBAI V. ACIT 7(2)(2), MUMBAI

ITA 1148/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0825 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2011-2012
• Appeal Filed On: 04-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH KUMAR SINGH
• Keywords: Related party transaction; Transfer pricing; International transaction
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER IT (TP) A NO. 1148/MUM./2016 ( ASSESSMENT YEAR : 20 1 1 12 ) NEW SILK R OUTE ADVISORS PVT. LTD. 407, CEEJAY HOUSE, SHIVSAGAR ESTATE DR. A.B. ROAD, WORLI MUMBAI 400 018 PAN AACCN4541N . APPELLANT V/S ASSTT . COMMISSIONER OF INCOME TAX CIRCLE 7 ( 2 )(2), MUMBAI . RESPONDENT IT (TP) A NO. 2092/MUM./2016 ( ASSESSMENT YEAR : 20 11 12 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 7(2)(2), MUMBAI . APPELLANT V/S NEW SILK ROUTE ADVISORS PVT. LTD. 407, CEEJAY HOUSE, SHIVSAGAR ESTATE DR. A.B. ROAD, WORLI MUMBAI 400 018 PAN AACCN4541N . RESPONDENT ASSESSEE BY : SHRI DHARMESH BAFNA A/W SHRI ARPIT AGGARWAL REVENUE BY : SHRI MANISH KUMAR SINGH DATE OF HEARING 25 . 1 0.2018 DATE OF ORDER 3 0 .11.2018 2 NEW SILK ROUTE ADVISORS PVT. LTD. O R D E R PER SAKTIJIT DEY, J.M. THE AFORESAID CROSS APPEALS ARISE OUT OF THE FINAL ASSESSMENT ORDER DATED 29 TH JANUARY 2016, PASSED UNDER SECTION 143(3) R/W 144C(13) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2011 12, IN PURSUANCE TO THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL 2 (DRP), MUMBAI. 2 . T HE ONLY ISSUE IN ASSESSEES APPEAL AND ONE OF THE ISSUES IN REVENUES APPEAL IS WITH REGARD TO SELECTION / REJECTION OF CERTAIN COMPARABLES WHILE DETERMINING THE ARMS LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTION WITH ASSOCIATED ENTERPRISE (AE) . 3 . THE ASSES S EE HAS CHALLENGED REJECTION OF C YBER MEDIA RESEARCH LTD., ( FORMERLY KNOWN AS IDC (INDIA) LTD. ) AND SELECTION OF LADDER UP CORPORATE ADVISORY PVT. LTD. AND MOTILAL OSWAL PRIVATE EQUITY ADVISORS PVT. LTD. AS COMPARABLE S . WHEREAS, THE DEPARTMENT HAS CHALLENG ED EXCLUSION OF MOTILAL OSWAL INVESTMENT ADVISORS LTD. AS A COMPARABLE. 4 . BRIEF FACTS ARE, THE ASSESSEE , AN INDIAN COMPANY , IS PROVIDING NON BINDING ADVISORY SERVICES IN RESPECT OF INVESTMENT OPPORTUNITIES TO ITS OV ERSEAS AE, M/S. NSR 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 3 NEW SILK ROUTE ADVISORS PVT. LTD. HAS EARNED REVENUE OF ` 31,33,86,888, FROM PROVISION OF NON BINDING RESEARCH AD VISORY 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 COND UCTING A SEARCH IN THE DATA BASE S HAS SELECTED FIVE COMPANIES AS COMPARABLE S WITH ARITHMETIC MEAN OF 15.20% . S INCE , THE MARGIN SHOWN BY THE AS SESSEE AT 20.21% IS HIGHER THAN THE ARITHMETIC MEAN OF THE FIVE COMPARABLE S 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 ASSE SSEE 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 ASSESSEE CLAIMED THE INTERNATIONAL TRANSACTION WITH A.E. TO BE AT ARMS LENGTH. THE TRANSFER PRICING OFFICER AFTER ISSUING A SHOW CAUSE NOTICE AND CALLING FOR VARIOUS DETAILS, FOUND THAT OUT OF THE 15 COMPARABLE S PROPOSED BY THE ASSESSEE , 12 COMPARABLES HAVE SALES AND RPT OF MORE THAN 25%. ACCORDINGLY, HE REJECTED THEM AS COMPARABLE. AS REGARDS THE REST OF THE T HREE COMPARABLES VIZ., CYBER MEDIA RESEARCH LTD. ( IDC (INDIA) LTD. ), FRONTLINE VENTURE SERVICES PVT. LTD. AND PRIMARY REAL ESTATE ADVISORS PVT. LTD., THE TRANSFER PRICING OFFICER OBSERVED THAT IDC INDIA 4 NEW SILK ROUTE ADVISORS PVT. LTD. LTD. IS NOT FUNCTIONALLY SIMILAR TO THE ASSESSEE. AS REGARDS FRON T LINE VENTURES PVT. LTD, THE TRANSFER PRICING OFFICER OBSERVED , IT HAS RELATED PARTY TRANSACTION OF MORE THAN 25% AND THE NATURE OF SERVICES PROVIDED IS NOT CLEAR. INSOFAR AS PRIMARY REAL ESTATE ADVISORS PVT. LTD. IS CONCERNED , THE TRANSFER PRI CING OFFICER OBSERVED THAT IT PROVIDES ADVISORY SERVICES IN THE FIELD OF REAL ESTATE , HENCE , FUNCTIONALLY NOT COMPARABLE. HE ALSO OBSERVED THAT IT HAS RELATED PARTY TRANSACTION ABOVE THE THRESHOLD LIMIT OF MORE THAN 25%. THUS, HE WAS OF THE VIEW THAT THIS COMPANY CANNOT BE TREATED AS COMPARABLE. FURTHER, THE TRANSFER PRICING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN WHY THREE COMPANIES PROPOSED BY HIM VIZ. MOTILAL OSWAL INVESTMENTS ADVISORS PVT. LTD., LADDER UP ADVISOR CORPORATE ADVISORS PVT. LTD. AND MOTILAL OSWAL PRIVATE EQUITY ADVISORS PVT. LTD. SHOULD NOT BE TREATED AS COMPARABLE S . THOUGH, THE ASSESSEE OBJECTED TO THE REJECTION OF COMPARABLE S SELECTED BY IT AND COMPARABLES PROPOSED BY THE TRANSFER PRICING OFFICER, HOWEVER, THE TRANSFER PRICING OFFIC ER REJECTING THE OBJECTIONS OF THE ASSESSEE REJECTED ALL THE COMPARABLES PROPOSED BY THE ASSESSEE AND SELECTED MOTILAL OSWAL INVESTMENTS ADVISORS PVT. LTD., LADDER UP CORPORATE ADVISORS PVT. LTD. AND MOTILAL OSWAL PRIVATE EQUITY ADVISORS PVT. LTD. AS COMPA RABLE S . APPLYING THE ARITHMETIC MEAN OF 54.64% OF THE AFORESAID COMPARABLE S , THE TRANSFER PRICING OFFICER DETERMINED THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION WITH THE A.E. AT ` 40,31,32,143, AS AGAINST THE PRICE 5 NEW SILK ROUTE ADVISORS PVT. LTD. CHARGED BY THE ASSESSEE OF ` 31,33,86,888. THE RESULTANT DIFFERENCE OF ` 8,97,45,255, WAS TREATED AS THE TRANSFER PRICING ADJUSTMENT. IN ACCORDANCE WITH THE ORDER PASSED BY THE TRANSFER PRICING OFFICER, THE ASSESSING OFFICER PASSED THE DRAFT ASSESSMENT ORDER MAKING THE ADDITION ON ACC OUNT OF TRANSFER PRICING ADJUSTMENT. BEING AGGRIEVED OF THE DRAFT ASSESSMENT ORDER SO PASSED, THE ASSESSEE RAISED OBJECTION S BEFORE THE DRP. 5 . THE DRP, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, UPHELD THE REJECTION OF THE COMPARABLE S SELECTED BY TH E 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 PROVIDI NG INVESTMENT 6 NEW SILK ROUTE ADVISORS PVT. LTD. ADVISORY SERVICES AND IS ALSO ENGAGED IN SALE OF PRODUCT, THE REFORE, FUNCTIONALLY DIFFERENT FROM THE ASSESSEE. 7 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, IN A NUMBER OF DECISIONS RENDERED BY THE TRIBUNAL FOR THE VERY SAME ASSESSMENT YEAR THIS COMPANY HAS BEEN FOUND TO BE FUNCTIONALLY SIMILAR TO AN INVESTMENT ADVISORY SERVICE PROVIDER, HENCE, ACCEPTED AS A COMPARABLE. IN THIS CONTEXT, HE RELIED U PON THE FOLLOWING DECISIONS: I ) DCIT V/S GENERAL ATLANTIC PVT. LTD., 91 TAXMANN.COM 406; II ) AGM INDIA ADVISORS PVT. LTD. V/S DCIT, [2017] 79 TAXMANN.COM 86; AND III ) GOLDMAN SACHS (I) SECURITIES PVT. LTD. V/S ACIT, [2017] 78 TAXMANN.COM 142 (MUM.). 8 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE DRP AND THE TRANSFER PRICING OFFICER. 9 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. IT IS EVIDENT, THE DEPARTMENTAL AUTHORITIES HAVE EXCLUDED THIS COMPANY SELECTED BY THE ASSESSEE ON THE GROUND OF FUNCTIONAL DISSIMILARITY. HOWEVER, THE TRIBUNAL IN A NUMBER OF DECISIONS, INCLUDING, DECI SIONS PERTAINING TO THE IMPUGNED ASSESSMENT YEAR HAS HELD THAT THIS COMPANY IS A COMPARABLE TO AN INVESTMENT ADVISORY SERVICE PROVIDER. IN THIS CONTEXT, WE MAY REFER TO THE FOLLOWING 7 NEW SILK ROUTE ADVISORS PVT. LTD. OBSERVATIONS OF THE CO ORDINATE BENCH IN CASE OF GENERAL ATLANTIC LTD. (SUPRA): 15. INSOFAR AS IDC (INDIA) LTD. IS CONCERNED, IT IS OBSERVED, IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006 07, THE TRIBUNAL ACCEPTED THIS COMPANY AS A COMPARABLE WHICH WAS UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT WHILE DISMISSING THE APPEAL FILED BY THE ASSESSEE. WHILE UPHOLDING THE DECISION OF THE TRIBUNAL, THE HON'BLE JURISDICTIONAL HIGH COURT OBSERVED THAT SI NCE THE NON BINDING ADVISORY SERVICE PROVIDED BY THE 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 ASSESSEES 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 DEC ISIONS 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 ASSESSEES 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. 10 . SINCE, THE AFORESAID OBSERVATIONS OF THE TRIBUNAL PERTAIN TO THE VERY SAME ASSESSMENT YEAR, RESPECTFULL Y 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 SELECTIO N OF THE AFORESAID COMPANY BY THE TRANSFER PRICING OFFICER AND THE DRP, LEARNED AUTHORISED 8 NEW SILK ROUTE ADVISORS PVT. LTD. REPRESENTATIVE SUBMITTED, THE COMPANY BEING A MERCHANT / INVESTMENT BANKING COMPANY, IS FUNCTIONALLY DIFFERENT FROM THE ASSESSEE, HENCE, CANNOT BE TREATED AS COMPARA BLE 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 OBSERVATIONS OF THE TRANSFER PRICING OFFICER AND THE DRP. 14 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. FROM THE FUNCTIONAL PROFILE OF THE AFORESAID COMPANY IT APPEARS THAT IT IS REGISTERED AS CATEGORY 1 MERCHANT BANKING COMPANY WITH SEBI AND IS ENGAGED IN ME RCHANT BANKING SERVICES W.E.F. JULY 2010. CONSIDERING THE AFORESAID FACTUAL ASPECT, THE CO ORDINATE BENCH IN THE DECISIONS CITED BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAS HELD THAT THIS COMPANY CANNOT BE A COMPARABLE TO A COMPANY ENGAGE D IN THE ACTIVITY OF INVESTMENT 9 NEW SILK ROUTE ADVISORS PVT. LTD. ADVISORY SERVICES. SINCE, THE AFORESAID DECISIONS ARE FOR THE VERY SAME ASSESSMENT YEAR AND NO DISTINGUISHING FACT IN THE PRESENT APPEAL WAS BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, RESPECTFULLY FOLL OWING THE CONSISTENT VIEW OF THE TRIBUNAL, WE HOLD THAT THIS COMPANY CANNOT BE TREATED AS COMPARABLE TO THE ASSESSEE. MOTILAL OSWAL PRIVATE EQUITY ADVISORS PVT. LTD. 15 . THIS COMPANY WAS SELECTED AS COMPARABLE BY THE TRANSFER PRICING OFFICER AND SUCH SELECTI ON WAS ALSO UPHELD BY THE DRP. OBJECTING TO THE SELECTION OF THE AFORESAID COMPANY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT SINCE THE COMPANY HAS FOUR DIFFERENT BUSINESS VERTICALS, SUCH AS, FINANCIAL ADVISORY, INVESTMENT ADVISORY, MANAGEMENT A ND FACILITATION SERVICES AND IDENTIFYING INVESTMENT OPPORTUNITIES, IT IS FUNCTIONALLY DIFFERENT FROM THE ASSESSEE. HE SUBMITTED, THOUGH, THE COMPANY HAS DIFFERENT SEGMENTS, HOWEVER, NO SEGMENTAL DATA IS AVAILABLE IN THE ANNUAL REPORT. THUS, HE SUBMITTED, T HE COMPANY CANNOT BE TREATED AS A COMPARABLE. IN SUPPORT OF SUCH CONTENTION, 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; 10 NEW SILK ROUTE ADVISORS PVT. LTD. 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.) . 16 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE TRANSF ER PRICING OFFICER AND THE DRP. 17 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON 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 ISS UE 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 11 NEW SILK ROUTE ADVISORS PVT. LTD. FOLLOWING THE AFORESAID DECISIONS OF THE CO ORDINATE BENCH, WE HOLD THAT THIS COMPANY CANN OT 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 COMPANY AS A COMPARABLE BY HOLDING THAT IT IS A MERCHANT BANKER. BEING AGGRIEVED WITH THE AFORESAID DECISION OF THE DRP, REVENUE IS IN APPEAL BEFORE US. 19 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE TRANSFER PRICING OFFICER. 20 . THE LEARNED AUTHORISED REPRESENTATIVE STRONGLY RELYING UPON THE OBSERVATIONS OF THE DRP SUBMITTED THAT THE COMPANY BEING A MERCHANT BANKER CANNOT BE TREATED AS A COMPARABLE TO THE ASSESSEE. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: I ) AGM INDIA ADVISORS PVT. LTD. V /S DCIT, [2017] 79 TAXMANN.COM 86; II ) GOLDMAN SACHS (I) SECURITIES PVT. LTD. V/S ACIT, [2017] 78 TAXMANN.COM 142 (MUM.) ; III ) DCIT V/S GENERAL ATLANTIC PVT. LTD., 91 TAXMANN.COM 406 ; 12 NEW SILK ROUTE ADVISORS PVT. LTD. 21 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD IN THE LIGHT OF THE DECISIONS RELIED UPON. AS COULD BE SEEN FROM THE FUNCTIONAL PROFILE OF THIS COMPANY AS REVEALED FROM THE MATERIAL BROUGHT ON RECORD, IT IS ENGAGED IN THE BUSINESS OF INVESTMENT BANKING, MERCHANT BANKING, MERGER AND ACQUISITION, PRIVATE EQUITY SYNDICATION, ETC., WHICH ARE NO WAY SIMILAR TO THE ASSESSEES 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 TH IS 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 T HE DRP ON THIS ISSUE. 22 . IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO WORK OUT THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE ASSESSEE WITH ITS A.ES FOLLOWING OUR OBSERVATIONS HEREIN ABOVE. 23 . THE ONLY OTHER SURVIVING ISSUE ARISING IN GROUND NO.4, IN REVENUES APPEAL RELATES TO ALLOWANCE OF ASSESSEES CLAIM OF PAYMENT OF BONUS TO SHARE HOLDER DIRECTORS . 24 . BRIEF FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON VERIFYING THE DETAILS OF EXPENDITURE CLAIMED BY THE ASSESSEE 13 NEW SILK ROUTE ADVISORS PVT. LTD. FOUND THAT AN AMOUNT OF ` 5,33,93,654, WAS PAID TO FOUR EMPLOYEES WHO ARE DIRECTORS AND SUBSTANTIAL SHAREHOLDERS IN THE ASSESSEE COMPANY. HE, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE BONUS PAID T O THE DIRECTOR S SHOULD 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 CONVINC ED WITH THE SUBMISSIONS OF THE ASSESSEE. HE OBSERVED THAT WHILE TOTAL BONUS OF ` 3,58,27,411, WAS PAID TO 12 EMPLOYEES DRAWING APPROXIMATE SALARY OF ` 4,33,00,000, WHEREAS BONUS PAID TO FOUR DIRECTORS STOOD AT ` 5,33,93,654, AS AGAINST SALARY DRAWN BY THEM OF ` 3,72,00,000. THUS, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS MADE PAYMENT TO SHAREHOLDER S 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 ` 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 IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009 14 NEW SILK ROUTE ADVISORS PVT. LTD. 10 BY RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT IN SHAHZADA NAND & SONS V/S CIT, [1977] 108 ITR 358 (SC), DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 26 . AT THE TIME OF HEARING, THE LEARNED COUNSEL S APPEARING FOR THE PARTIES SUBMITTED BEFORE US THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED NOT ONLY BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009 10 BUT ALSO BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT FOR THE VERY SAME ASSESSMENT YEAR. 27 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. AS COULD BE SEEN FROM THE MATERIAL PLACED BEFORE US, IDENTICAL ISSUE RELATING TO DISALLOWANCE MADE UNDER SECTION 36(1)(II) OF THE ACT ON ACCOUNT OF BONUS TO DIRECTORS CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMEN T YEAR 2009 10. THE TRIBUNAL WHILE DECIDING THE ISSUE IN ITA NO.1327/MUM./2014, DATED 20 TH FEBRUARY 2015, ALLOWED ASSESSEES CLAIM TOWARDS PAYMENT OF BONUS TO DIRECTORS FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN SHAHZADA NAND & SONS (SUPRA). NO TABLY, THE AFORESAID DECISION OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT IN AN APPEAL FILED BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT. THE HON'BLE HIGH COURT WHILE DECIDING REVENUES APPEAL IN INCOME TAX APPEAL NO.216/2016, PASSED AN ORDER ON 31 ST JULY 2018, UPHOLDING THE DECISION OF THE TRIBUNAL ON THE ISSUE. NO DISSIMILARITY IN FACTS HAVING BEEN BROUGHT TO 15 NEW SILK ROUTE ADVISORS PVT. LTD. OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE IMPUGNED ASSESSMENT YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE CO ORDINATE BENCH AND HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE AS REFERRED TO ABOVE, WE UPHOLD THE ORDER OF THE DRP ON THIS ISSUE. GROUND RAISED IS DISMISSED. 28 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2018 SD/ - RAJESH KUMAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 30.11.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI