BAIN CAPITAL ADVISORS (I) P.LTD, MUMBAI V. DCIT CIR 3(1), MUMBAI

ITA 1360/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87845 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 05-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S D SHRIVASTAVA
• Assessee Lawyers: A V SONDE
• Keywords: Transfer pricing; International transaction
• Section: 92C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL K , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA, AM & SHRI AMIT SHUKLA , JM ITA NO. 1360 / MUM/20 1 4 ( ASSESSMENT YEAR : 200 9 - 10 ) BAIN CAPITAL ADVISORS (INDIA) PRIVATE LIMITED, 215, 2 ND FLOOR, FREE PRESS HOUSE, FREE PRESS JOURNAL MARG, NARIMAN POINT, MUMBAI - 21 VS. DCIT,CIR - 3(1), MUMBAI PAN/GIR NO. : A A DCB 4464 B ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI A.V.SONDE /REVENUE BY : SHRI S.D.SHRIVASTAVA DATE OF HEARING : 05 / 01 /201 5 DATE OF PRONOUNCEMENT : 05/01/2015 O R D E R PER R.C.SHARMA ( A .M.) : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF PASSED U/S.143(3) R.W.S.144C , FOR THE ASSESSMENT YEAR 200 9 - 10 . 2 . THE GRIEVANCE OF THE ASSESSEE REL ATES TO COMPUT ATION OF THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION IN RESPECT OF A PROVISION OF INVESTMENT ADVISORY SERVICES. 3 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ADJUSTMENT HAS BEEN MADE BY THE AO/TPO BY COMPARING ASSESSEES CASE WITH MOTILA L OSWAL INVESTMENT ADVISORS PVT. LTD. ITA NO. 1360 /20 1 4 2 4. LD. AR PLACED ON RECORD VARIOUS DECISION S OF TRIBUNAL, WHEREIN M/S MOTILAL OSWAL INVESTMENT ADVISORS PVT. LTD. WAS EXCLUDED AS COMPARABLE AFTER HAVING FOLLOWING OBSERVATIONS : - 12. ..THE ONLY DISPUTE IS WHETHER MOTILAL OSWAL INVESTMENT ADVISORS PVT LTD CAN BE CONSIDERED AS A COMPARABLE FOR DETERMINATION OF ALP. A PERUSAL OF THREE COMPARABLES CONSIDERED BY THE TPO SHOWS THAT M/S. FUTURE CAPITAL INVESTMENT ADVISORS LTD., HAS OPERATING PROFIT AT 21.79% WHEREAS OPM OF MOTILAL OSWAL INVESTMENT ADVISORS PVT LTD IS 72.33%. THE COMPARABLES USED BY THE TPO THEMSELVES ARE SHOWING EXTREME OPM. A PERUSAL OF THE DIRECTOR S REPORT OF MOTILAL OSWAL INVESTMENT ADVISORS PVT LTD SHOWS THAT DURING THE YEAR UNDER CONSIDERATION, THE SAID COMPANY HAS COMPLETED 23 ASSIGNMENTS SUCCESSFULLY AS AGAINST 14 COMPLETED IN THE IMMEDIATELY PRECEDING YEAR. A CLOSE LOOK AT THE FINANCIAL STATE MENTS OF THE SAID COMPANY SHOW THAT THE INCOME FROM OPERATIONS HAVE BEEN SHOWN ONLY AS ADVISORY FEES WHEREAS IT IS ADMITTEDLY AN UNDISPUTED FACTS THAT THE SAID COMPANY IS ENGAGED IN DIVERSIFIED ACTIVITIES. SEGMENTAL REPORTING IS NOT AVAILABLE. PROFIT AND L OSS ACCOUNT APPEARS TO BE ONLY OF CONSOLIDATED ACCOUNTS. THE SAID COMPANY IS REGISTERED WITH SEBI AS A MERCHANT BANKER AND THE DIRECTOR S REPORT SHOW THAT IT IS INTO TAKEOVER, ACQUISITIONS, DISINVESTMENTS ETC. IN THE ABSENCE OF SPECIFIC DATA IT IS NOT POSSIBLE TO MAKE COMPARISON. IT CAN THEREFORE, BE SAFELY SAID THAT THE SAID COMPANY BEING INTO MERCHANT BANKING AND CANNOT BE CONSIDERED AS A COMPARABLE. WE, ACCORDINGLY, DIRECT THE AO NOT TO CONSIDER MOTILAL OSWAL INVESTMENT ADVISORS PVT LTD AS A COMPARABLE FOR DETERMINATION OF ALP. OTHER DECISION S RELIED UPON BY THE LEARNED AR ARE AS UNDER : - I) TEMASEK HOLDINGS ADVISORS (P) LTD.( ITA NO. 4203/M/2012 , DATED 30 - 8 - 2013 ) ; AND II) ACUMEN FUND ADVISORY SERVICES (I) PVT. LTD .(ITA NO. 143/M/14, DATED 4 - 7 - 2014) . 5 . IN VIEW OF THE ABOVE , RESPECTFULLY FOLLOWING THE VARIOUS ORDERS OF THE TRIBUNAL, AS PLACED ON RECORD, WHEREIN CONSISTENTLY MOTILAL OSWAL INVESTMENT ADVISORS PVT. LTD HAS BEEN EXCLUDED FROM COMPARABLES ON THE PLEA THAT IT WAS ENGAGED IN DIVERSIFIED ACTIVITIES , WE DIRECT THE AO TO EXCLUDE M/S MOTILAL OSWAL INVESTMENT ADVISORS PVT. LTD FROM THE ITA NO. 1360 /20 1 4 3 COMPARABLES AND TO RECOMPUTE THE ADJUSTMENT TO BE MADE U/S.92C(1) & 92C OF THE ACT. 6 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH JANUARY . 201 5 . 5 TH JAN,201 5 SD/ - SD/ - ( ) ( AMIT SHUKLA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MU MBAI ; DATED 05 / 01/201 5 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//