NVP VENTURE CAPITAL INDIA PRIVATE LTD., MUMBAI V. DCIT CIR-3(2)(2), MUMBAI

ITA 1564/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92308 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2010-2011
• Appeal Filed On: 16-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K CHAD
• Assessee Lawyers: AJEET JAIN
• Keywords: Business income; Transfer pricing; Business expenditure; International transaction
• Section: 143(3); 92F; 234B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI . . , , BEFORE SHRI G. S. PANNU , A M AND SHRI VIJAY PAL RAO, J M ./ I. T.A. NO. 1564/MUM/2015 ( / ASSESSMENT YEAR: 2010 - 11 ) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED 701/705, DALAMAL HOUSE, NARIMAN POINT, MUMBAI - 400 021 / VS. DY. CIT - 3(2)(2), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 ./ ./ PAN/GIR NO. AACCN 4149 C ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI AJEET JAIN / RESPONDENT BY : SHRI N. K. CHAD / DATE OF HEARING : 22.04.2015 / DATE OF PRONOUNCEMENT : 30 .04.2015 / O R D E R PER G. S. PANNU , A. M.: THIS IS AN APPEA L BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE ASSESSING OFFICER (A.O.) PASSED U/S. 143(3) R.W.S. 144C(1) & 144C(13) R.W.S. 92 CA OF THE I NCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 28.01.2015, WHICH HAS BEEN PASSED IN COMPLIANCE WITH THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL - II, MUMBAI (DRP FOR SHORT) DATED 28.11.2014 FOR THE ASSES SMENT YEAR (A.Y.) 2010 - 11. THE G ROUNDS OF APPEA L RAISED BY THE ASSESSEE READ AS UNDER: 1. THE ORDER DATED J ANUARY 28, 2015, PASSED BY THE L D AO UNDER SECTION 143(3) RWS 144C( 1) AND RWS 92CA OF THE INCOME - TAX ACT, 1961 2 ITA NO. 1564/MUM/2015 (A.Y. 2010 - 11) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED VS. DY. CIT ('ACT') IS NOT IN ACCORDANCE WITH THE LAW AND IS CONTRARY TO THE FACTS AND CIRCU MSTANCES OF THE PRESENT CASE. TRANSFER PRICING RELATED GROUNDS 2. THE ID AO/ DRP/TPO HAVE ERRED IN LAW AND ON FACTS IN PROPOSING AN ADJUSTMENT OF RS. 3,46,06,210 TO THE VALUE OF THE INTERNATIONAL TRANSACTION OF INVESTMENT ADVISORY SERVICES UNDERTAKEN BY THE APPELLANT WITH ITS ASSOCIATED ENTERPRISE. IN DOING SO, THE L D . AO / TPO HAS ERRED IN LAW AND IN FACTS AS FOLLOWS: - 2.1 REJECTING THE TRANSFER PRICING ANALYSIS UNDERTAKEN AND THE COMPARABLE COMPANIES IDENTIFIED BY THE APPELLANT. 2.2 NOT COMPUTING T HE ARM S LENGTH PRICING ( ALP ) IN RESPECT OF THE INTERNATIONAL TRANSACTIONS AS COMPUTED BY THE APPELLANT AND IN IGNORING THE PROVISIONS OF THE RULE 10B(4) OF THE INCOME - TAX RULES, 1962 ('RULES') WHICH AUTHORIZES USAGE OF MULTIPLE YEAR DATA OF COMPARABLE C OMPANIES FOR THE PURPOSE OF DETERMINATION OF THE ALP UNDER SECTION 92F OF THE ACT. 2.3 REJECTING THE OBJECTIONS RAISED BY THE APPELLANT IN RELATION TO SELECTION/REJECTION OF COMPARABLE COMPANIES WHILE DETERMINING THE ALP. 2.4 REJECTING THE OBJECTIONS RAISED BY THE APPELLANT IN RELATION TO SELECTION/REJECTION OF FILTERS WHILE SELECTING COMPARABLE COMPANIES FOR DETERMINING THE ALP. 2.5 FAI LING TO GRANT THE BENEFIT OF + / - 5 PERCENT RANGE AS ENVISAGED BY THE PROVISIONS OF SECTION 92C(2) OF THE ACT. CORPORATE TAX RELATED GROUND 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID AO/DRP HAVE ERRED IN DISALLOWING 50 PERCENT OF THE EXPENSES O N FOREIGN TRAVEL TOTALING TO RS. 29,79,191. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO / DRP HAVE ERRED IN LEVYING INTEREST U/S 234B AND 234C. 2. ALTHOUGH, THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT SUBSTANTIVELY SPEAKING , THE GRIEVANCE IS WITH REGARD TO TWO ADDITIONS , NAMELY , RS.3,46,06,210/ - ON 3 ITA NO. 1564/MUM/2015 (A.Y. 2010 - 11) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED VS. DY. CIT ACCOUNT OF DETERMIN ATION OF ARMS LENGTH PRICE (ALP) IN RESPECT OF INTERNATIONAL TRANSACTIONS AND RS.29,79,191/ - REPRESENTING DISALLOWANCE OF EXPENSES ON FOREIGN TRAVEL. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELLANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS O F THE COMPANIES ACT, 1956, WHICH IS SINGULARLY ENGAGED IN PROVIDING NON BINDING INVESTMENT RESEARCH AND RELATED SERVICES TO M/S. NORWEST VENTURE PARTNERS ADVISORY - MAURITIUS (NVP, MAURITIUS), AN A SSOCIATED E NTERPRISE. IN FACT, THE APPELLANT IS A 100% OWNED SUBSIDIARY OF NVP, MAURITIUS AND I N TERMS OF ITS ARRANGEMENT WITH NVP, MAURITIUS, ASSESSEE PROVIDES INVESTMENT RESEARCH AND RELATED SERVICES TO NVP, MAURITIUS IN A WIDE RANGE OF SECTORS IN INDIA. THE PROVISION OF ADVISORY SERVICES TO NVP, MAURITIUS INTER - A LIA INVOLVE PROVIDING REPORTS ON A TIMELY BASIS CONTAINING NEWS AND INFORMATION ON INVESTMENT AREAS, INDUSTRIES , COMPANIES AND/OR OTHER SPECIFIED AREAS THAT MAY INTEREST NVP MAURITIUS; PROVIDING NON - BANKING ADVISORY SERVICES TO NVP MAURITIUS IN RESPECT OF POTENTIAL INVESTMENT AND DISINVESTMENT OPPORTUNITIES IN INDIA OR ELSEWHERE, INCLUDING ADVICE ON THE STRUCTURING OF SUCH OPPORTUNITIES; RESEARCH, ANALYSE AND IDENTIFY INVESTMENT OPPORTUNITIES AND, ON SPECIFIC INSTRUCTIONS FROM NVP MAURITIUS, CONDUCT DUE DIL IGENCE OF SUCH OPPORTUNITIES AND P ROVIDE REPORTS TO NVP MAURITIUS ; PROVIDING OF NECESSARY REPORTS , INFORMATION AND FEEDBACK IN RESPECT OF PERFORMANCE OF INVESTMENTS IN INDIA; AND , PROVIDING SUCH OTHER NON - BINDING ADVISORY SERVICES AS MAY BE AGREED UPON BET WEEN NVP MAURITIUS AND NVP INDIA FROM TIME TO TIME. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD EARNED A REVENUE OF RS. 20,56,64,037/ - ON ACCOUNT OF P ROVISION OF INVESTMENT ADVISORY SERVICES TO ITS ASSOCIATED ENTERPRISE. O N THE BASIS OF ITS T RANSF ER P RICING S TUDY , ASSESSEE ASSERTED THAT THE STATED VALUE OF THE AFORE - SAID INTERNATIONAL TRANSACTIONS WAS AT AN ALP. THE ASSESSEE HAD UNDERTAKEN B ENCHMARKING ANALYSIS OF IT S INTERNATIONAL TRANSACTION OF P ROVISION OF INVESTMENT ADVISORY SERVICES BY SELECT I NG THE T RANSACTIONAL N ET MARGIN M ETHOD ( TNM ) , AS THE MOST APPROPRIATE METHOD AND ADOPTED OPERATING PROFIT/TOTAL COST (OP/TC) AS ITS PROFIT LEVEL INDICATOR (PLI). THE MARGIN OF THE ASSESSEE WAS DETERMINED AT 20.10% AND THE ASSESSEE COMPARED IT WITH THE WEIGHTED AVERAGE MEAN OF 15.68% OF THE 6 COMPARABLE C OMPANIES SELECTED BY IT IN ITS T RANSFER 4 ITA NO. 1564/MUM/2015 (A.Y. 2010 - 11) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED VS. DY. CIT P RICING S T UDY. ON THIS BASIS, IT WAS ASSERTED THAT THE STATED VALUE OF THE INTERNATIONAL TRANSACTION OF P ROVISION OF INVESTMENT ADVISORY SERVICES WAS AT AN ALP. TH E T RANSFER PRICING OFFICER (T PO ) HAS NOT D IFFERED WITH THE ASSESSEE EI THER ON THE ADOPTION OF THE TNM METHOD AS THE MOST APPROPRIATE METHOD OR ON CONSIDERING OP/TC AS THE PLI FORMULA. HOWEVER, THE TPO DISAGREED WITH THE ASSESSEE ON ADOPTION OF THE MULTIPLE YEARS FINANCIAL DATA OF THE COMPARABLES AND INSTEAD CONSIDERED THE SINGLE YEAR FINANCIAL DATA OF THE COMPARABLES RELATING TO THE FINANCIAL YEAR UNDER CONSIDERATION. THE TPO SELECTED THE FOLLOWING FINAL SET OF COMPARABLES: - SR. NO. COMPANY NAME OP/TC F.Y . 2009 - 10 (%) 1 FUTURE CAPITAL INVESTMENT ADVISORS LTD. 16.75 2 KSHITJI INVESTMENT ADVISORS CO. LTD. 31.59 3 FUTURE CAPITAL HOLDINGS LTD. 15.21 4 MOTILAL OSWAL INVESTMENT ADVISORS P. LTD. 97.67 ARITHMETIC MEAN 40.31% 4. BY CONSIDERING THE ASSES SEES MARGIN AS AT 20.10% AND THE ARITHMETIC MEAN OF THE MARGIN OF THE COMPARABLE S OF 40.31%, THE TPO DETERMINED AN ADJUSTMENT OF RS.4,84,81,561/ - VIDE HIS ORDER U/S.92CA (3) DATED 27.01.2014, WHICH ACCORDING TO HIM WAS NECESSARY TO BRING THE STATED VALUE O F THE INTERNATIONAL TRANSACTION S TO ITS ALP . SUBSEQUENTLY, THE TPO VIDE ORDER PASSED U/S. 154 OF THE ACT DATED 06.02.2014, RECTIFIED SUCH ADJUSTMENT TO RS.3,46,06,210/ - . THIS FORMED THE BASIS FOR THE A.O. TO PASS A DRAFT ASSESSMENT ORDER U/S.143(3) R.W.S. 1 44C(1) DATED 26.02.2014 , WHEREBY THE TRANSFER PRICING ADJUSTMENT IN RELATION TO THE TRANSACTION OF P ROVISION OF INVESTMENT ADVISORY SERVICES TO THE ASSOCIATED ENTERPRISES WAS PROPOSED AT RS.3,46,06,210/ - . THE OBJECTIONS RAISED BY THE ASSESSEE BEFORE THE DR P DID NOT ELUCIDATE ANY FAVOUR AND INSTEAD THE DRP VIDE ITS ORDER DATED 28.11.2014 AFFIRMED THE ADJUSTMENT AS DETERMINED BY THE TPO WITH RESPECT TO THE INTERNATIONAL TRANSACTION OF P ROVISION OF INVESTMENT ADVISORY SERVICES TO ASSOCIATED ENTERPRISES. THE A. O. HAS THEREAFTER PASSED AN ORDER U/S.143(3) R.W.S. 144C OF THE ACT DATED 28.01.2015 , MAKING THE ADDITION OF RS ,3,46,06,210/ - T O THE RETURNED INCOME ON ACCOUNT OF DETERMINATION OF THE ALP OF INTERNATIONAL TRANSACTION OF P ROVISION 5 ITA NO. 1564/MUM/2015 (A.Y. 2010 - 11) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED VS. DY. CIT INVESTMENT ADVISORY SERVIC ES TO ITS ASSOCIATED ENTERPRISE , WHICH IS THE SUBJECT MATTER OF THE APPEAL BEFORE US. 5. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE FOR THE ASSESSEE RAISED A SOLITARY GRIEVANCE WHICH IS TO BE EFFE CT THAT THE INCOME TAX AUTHORITIES HAVE ERRED IN INCLU D ING MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE L IMITED IN THE FINAL SET OF COMPARABLES. ON THIS ASPECT, THE PLEA SET UP BY THE ASSESSEE IS THAT THE ACTIVITIES OF THE SAID CONCERN ARE FUNCTIONALLY IN - COMPARABLE TO THE ACTIVITY OF THE P ROVISION OF THE INVEST MENT ADVISORY SERVICES RENDERED BY THE ASSESSEE TO ITS ASSOCIATED ENTERPRISES. IN SUPPORT, REFERENCE HAS BEEN INVITED TO THE BUSINESS PROFILE OF THE SAID CONCERN AS EMERGING FROM THE A N N UAL R EPORT FOR THE INSTANT FINANCIAL YEAR, A COPY OF WHICH HAS BEEN PL ACED IN THE P APER B OOK AT P A G E S 94 TO 116. IN PARTICULAR, OUR ATTENTION WAS INVITED TO THE CONTENTS OF THE DIRECTORS R EPORT WHICH , INTER ALIA , SHOW THAT THE BUSINESS INCOME HAS BEEN DERIVED FROM FOUR DIFFERENT BUSINESS VERTICAL S , VIZ. E QUIT Y C APITAL M AR KE TS, MERGERS & ACQUISITION S , PRIVATE EQUITY SYNDICATIONS AND STRUCTURED DEBT. IT IS FURTHER STATED IN THE DIRECTORS REPORT THAT THE SAID CONCERN IS ALSO ENGAGED IN ADVISING INDIAN CORPORATE S ON CROSS BORDER ACQUISITIONS AND THAT ITS PRIVATE EQUITY BUSINESS HAD ALSO RESULTED IN A GOOD PIPELINE OF IPOS IN THE ENSUING YEAR . ON THIS BASIS, IT IS SOUGHT TO BE JUST IFIED THAT THE AFORESAID SET OF ACTIVITIES UNDERTAKEN BY THE SAID CONCERN ARE N OT COMPARABLE TO THE ASSESSEES INTERNATIONAL TRANSACTION WHICH IS CONFI NED TO PROVIDING NON - BINDING INVESTMENT ADVISORY SERVICES AND FOR THAT MATTER, THE ASSESSEE IS NOT ENGAGED IN ANY ADVISORY SERVICES IN RELATION TO EQUITY CAPITAL MARKETS, MERGERS & ACQUISITION S , PRIVATE EQUIT Y SYNDICATIONS OR STRUCTURED DEBT . THE LD. REPRE SENTATIVE ALSO POINTED OUT , BY REFERRING TO THE P ROFIT AND LOSS ACCOUNT OF THE SAID CONCERN AND ALSO SCHEDULE P OF THE F INANCIAL S TATEMENTS RELATING TO THE SEGMENT AL ACCOUNTING POLICY AND N OTES TO ACCOUNTS , THAT NO SEPARATE REPORTABLE SEGMENTS HAVE BEEN DR AWN OUT IN THE A NNUAL F INANCIAL S TATEMENTS AND, THEREFORE, IT IS ALSO NOT POSSIBLE TO CULL OUT THE FINANCIAL RESULTS OF THE SEGMENT OF ACTIVITY WHICH IS RELATABLE TO THE ACTIVITY UNDERTAKEN BY THE ASSESSEE FOR ITS ASSOCIATED ENTERPRISES. ON THIS ASPECT, TH E LD. REPRESENTATIVE SUBMITTED THAT THE MUMBAI BENCH OF THE TRIBUNAL IN THE 6 ITA NO. 1564/MUM/2015 (A.Y. 2010 - 11) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED VS. DY. CIT FOLLOWING CASES HA S HELD THAT MOTILAL OSW AL INVESTMENT ADVISORS PRIVATE L IMITED WAS NOT INCLUD I BLE AS A COMPARABLE , WHILE BENCHMARKING TRANSACTIONS WHICH ARE SIMILAR TO THOSE CARRI ED OUT BY THE ASSESSEE : - 1) ARISAIG PARTNERS INDIA PRIVATE LIMITED (ITA NO. 1083/MUM/2014 DATED 25.03.2015); 2) ACUMEN FUND ADVISORY SERVICES INDIA PRIVATE LIMITED (ITA NO. 143/MUM/2014 DATED 04.07.2014); 3) CARLYLE INDIA ADVISORS PRIVATE LIMITED (A.Y. 2 008 - 09) (ITA NO. 7367/MUM/2012 DATED 07.02.2014); 4) CARLYLE INDIA ADVISORS PRIVATE LIMITED (A.Y. 2009 - 10) (ITA NO. 2200/MUM/2014 DATED 22.08.2014); AND , 5) BAIN CAPITAL (INDIA) PVT. LTD. (ITA NO. 1360/MUM/2014 DATED 05.01.2015). IT WAS ALSO POINTED OUT THAT IN THE CASE OF ARISAIG PARTNERS INDIA PRIVATE LIMITED (SUPRA), THE NATURE OF THE TESTED TRANSACTIONS WAS SIMILAR TO TH E ACTIVITIES UN DERTAKEN BY THE ASSESSEE FOR ITS ASSOCIATED ENTERPRISES. FOR ALL THE ABOVE REASONS, IT WAS AS SERTED THAT THE SAID CONC ERN BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. 6. ON THE OTHER HAND, THE LD. CIT(DR) APPEARING FOR THE REVENUE POINTED OUT THAT THE DRP HAS DEALT WITH THE ARGUMENTS OF THE ASSESSEE FOR EXCLUSION OF MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE L IMITED AN D IN THIS CONNECTION OUR ATTENTION WAS INVITED TO THE RELEVANT DISCUSSION CONTAINED IN PARA 10 OF THE ORDER OF THE DRP. ACCORDING TO THE DRP , THE SERVICES WHICH ARE BEING RENDERED BY THE SAID CONCERN ARE IN THE AREAS OF STRATEGIC AND FINANCIAL ADVISORY SER VICES WHICH ARE QUITE COMPARABLE WITH THE INVESTMENT ADVISORY SERVICE BEING RENDERED BY THE ASSESSEE TO ITS ASSOCIATED ENTERPRISES. ON THIS BASIS, IT IS SOUGHT TO BE CANVASSED THAT THE PLEA OF THE ASSESSEE IS NO T JUSTIFIED. 7. WE HAVE CAREFULLY CONSIDERE D THE RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSEE HAS BEEN CONSISTENTLY CANVASSING BEFORE THE LOWER AUTHORITIES THAT MOTILAL OSWAL INVESTMENT 7 ITA NO. 1564/MUM/2015 (A.Y. 2010 - 11) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED VS. DY. CIT ADVISORS PRIVATE LIMITED BE EXCLUDED FROM THE FINAL SET OF COMPARABLES ON THE GROUND THAT ITS ACTIVITIES ARE FUN CTIONALLY INCOMPARABLE TO THE ACTIVITY OF P ROVISION OF INVESTMENT ADVISORY SERVICES BEING RENDERED BY THE ASSESSEE TO ITS A SSOCIATED E NTERPRISES. IN FACT, BEFORE THE TPO , ASSESSEE POINTED OUT THAT THE SAID CONCERN WAS ENGAGED IN PROVIDING COMPREHENSIVE INV ESTMENT BANKING SOLUTION S AND THAT IT WAS RENDERING SERVICES ACROSS VARIOUS PRODUCTS, VIZ. EQUITY CAPITAL MARKETS, MERGERS & ACQUISITION S , PRIVATE EQUITY SYNDICA TIONS AND STRUCTURED DEBT , ETC. THE APPELLANT R ELIED UPON THE DECISION OF THE T RIBUNAL IN THE C ASE OF CARLYLE INDIA ADVISORS PRIVATE LIMITED ( 214 TAXMANN 492 ), TO SUPPORT ITS PLEA FOR EXCLUSION OF THE SAID CONCERN FROM THE FINAL SET OF COMPARABLES. THE TPO REJECTED THE AFORESAID PLEA ON THE GROUND THAT THE PROFIT AND L OSS ACCOUNT OF THE SAID CONCERN FOR THE YEAR UNDER CONSIDERATION SHOWED THAT THE ONLY STREAM OF INCOME WAS FROM ADVISORY SERVICES AND NOT FROM ANY ACTIVITY OF MERCHANT BANKING AND , THEREFORE , THE SAID CONCERN WAS CARRYING OUT ONLY AD VISORY SERVICES AND, ACCORDING T O HIM, THE SAID CONCER N WAS INCLUDIBLE IN THE FI NAL SET OF COMPARABLES. THE DRP ALSO ACC EPTED THE POSITION THAT THE SAID CONCERN WAS ENGAGED IN ADVISORY SERVICES WHICH ARE BROADLY COMPARABLE TO THE ASSESSEES ACTIVITIES UNDER TE S T. 8. WE HAVE PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS STARKLY EVIDENT THAT THE SAID CONCERN M/S. MOTILAL OSWAL INVES TMENT ADVISORS PRIVATE LIMITED IS ENGAGED IN QUALITATIVELY DIFFERENT AND DIVERSIF IED BUSINESS ACTIVIT IES , WHEREAS THE ACTIVI TI ES OF THE ASSESSEE ARE CONFINED TO RENDERING NON - BIND ING INVESTMENT ADVISORY FOR ITS ASSOCIATED ENTERPRISES. NO DOUBT, BOTH THE CONCERNS MAY BE IN THE BUSINESS OF RENDERING ADVISORY SERVICES , S O, HOWEVER, IT WOULD ALSO BE NECESSARY TO EVALUATE THE MANNER AND THE SPECIFIC SECTORS , IN WHICH SUCH SERVICES ARE B EING RENDERED BY THE TWO CONCERNS . I T IS REVEALED FROM THE A NNUAL F INANCIAL S TATEMENT OF MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE LIMITED THAT THE SAID CONCERN IS ENGAGED IN RENDERING SERVICES IN DIVERSIFIED FIELDS, VIZ., EQUITY CAPITAL MARKETS, MERGERS & ACQUISITION S , PRIVATE EQUITY SYNDICATIONS AND STRUCTURED DEBT, ETC. IN THE CASE OF CARLYLE INDIA ADVISORS PRIVATE LIMITED (SUPRA) FOR A.Y. 2008 - 09, THE T RIBUNAL CONCLUDED THAT THOUGH THE SAID CONCERN WAS DECLARING A 8 ITA NO. 1564/MUM/2015 (A.Y. 2010 - 11) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED VS. DY. CIT SOLITARY STREAM OF OPERATING INCOME UND ER THE HEAD ADVISORY FEE , BUT UNDISPUTEDLY I T WAS ENGAGED IN DIVERSIFIED FIELDS AND THE FINANCIAL RESULTS FOR EACH SEGMENT WERE NOT AVAILABLE. THE T RIBUNAL A LSO FOUND THAT THE SAID CONCERN WAS REGISTERED WITH SEBI AS A MERCHANT BANKER , AND THAT IT WAS CA RRYING ON MERCHANT BANKING ACTIVIT IES . IN OUR CONSIDERED OPINION, THE AFORE - SAID FEATURE S WITH RESPECT TO THE ACTIVITIES OF THE M/S. MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE LIMITED (SUPRA) NOTED BY THE T RIBUNAL IN THE CASE OF CARLYLE INDIA ADVISORS PRIVA TE LIMITED (SUPRA) FOR ASSESSMENT YEAR 2008 - 09, ARE CLEARLY EMERGING IN THE INSTANT YEAR TOO AND, THEREFORE, IT CANNOT BE SAID TO BE A CONCERN WHICH IS COMPARABLE T O A N ENTITY WHICH IS RENDERING NON - BINDING ADVISORY INVESTMENT SERVICE S ALONE. THUS, IN OUR CONSIDERED OPINION, THE ASSESSEE IS JUSTIFIED IN SEEKING THE EXCLUSION OF THE SAID CONCERN FROM THE FINAL SET OF COMPARABLES ON ACCOUNT OF FUNCTIONAL DISSIMILARITIES. IN FACT, IN OTHER PRECEDENTS CITED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE, THE SAID C ONCERN HAS ALSO BEEN EXCLUDED FROM THE SET OF COMPARABLES UNDER SIMILAR CIRCUMSTANCES. 9. IN CONCLUSION, ON THE BASIS OF THE AFORE - SAID DISCUSSION AND HAVING REGARD TO THE PRECEDENT S NOTED A BOVE, WE HOLD THAT M/S. MOTILAL OSWAL INVESTMENT ADVISORS PRIVAT E L IMITED (SUPRA) IS LIABLE TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. 10. APART FROM THE AFORE - SAID, NO OTHER ISSUE HAS BEEN RAISED BY THE ASSESSEE WITH REGARD TO THE COMPUTATION OF ALP OF THE TRANSACTION OF THE P ROVISION OF INVESTMENT ADVISORY SE RVICES TO ITS ASSOCIATED ENTERPRISES AND, THEREFORE, WE DIRECT THE A.O. TO RECOMPUTE THE ADJUSTMENT, IF ANY, THAT IS REQUIRED TO BE MADE TO THE STATED VALUE OF THE INTERNATIONAL TRANSACTIONS IN RESPECT OF THE PROVISION INVESTMENT ADVISORY SERVICES TO ITS A SSOCIATED ENTERPRISES ON THE BASIS OF OUR AFORE - SAID DISCUSSION. THUS, ON THIS ASPECT OF THE MATTER, THE ASSESSEE PARTLY SUCCEEDS. 11. THE ONLY OTHER ISS UE AGITATED BY THE ASSESSEE IS THE DISALLOWANCE OF RS.29,79,191/ - MADE OUT OF EXPENSES ON FOREIGN TR AVEL. IN THIS CONTEXT, THE RELEVANT FACTS ARE THAT THE A.O. REQUIRED THE ASSESSEE TO FURNISH THE COMPLETE DETAILS OF EXPENSES OF RS.59,58,382/ - 9 ITA NO. 1564/MUM/2015 (A.Y. 2010 - 11) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED VS. DY. CIT INCURRED ON FOREIGN TRAVEL AND THE BUSINESS JUSTIFICATION FOR THE SAME. THE EXPLANATION FURNISHED BY THE ASSESSE E WAS NOT FOUND TO BE SATISFACTORY BY THE A.O. AND, THEREFORE, HE DISALLOWED 50% OF THE TOTAL EXPENSES, I.E., RS.29,78,191/ - . AGAINST THE AFORE - SAID, THE ASSESSEE IS IN APPEAL BEFORE US. 12. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESSEE REFERRED TO P A G E S 129 TO 137 OF THE P APER B OOK, WHEREIN IS PLACED THE DETAILS OF SUCH EXPENDITURE. THE CASE SET UP BY THE ASSESSEE IS THAT IT IS A SUBSIDIARY OF A FOREIGN COMPANY AND, THEREFORE, ITS DIRECTOR S ARE OFTEN REQUIRED TO TRAVEL ABROAD TO GENERATE BUSINESS A ND, THEREFORE, THE IMPUGNED EXPENSES ON FOREIGN TRAVEL, WHICH HAV E BEEN INCURRED BY THE DIRECTOR S SHOULD BE CONSIDERED AS BUSINESS EXPENSES AND, ACCORDINGLY, NO DISALLOWANCE IS CALLED FOR. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON THE ORDER OF THE A.O. IN SUPPORT OF THE CASE OF THE REVENUE. 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE A.O. DISALLOWED 50% OF THE EXPENDITURE PRIMARILY ON THE GROUND THAT THE ASSESSEE DID NOT FURNISH EVIDENCE TO PROVE BUSINESS JUSTIFICATION FOR THE FOREIGN TRAVEL. IN THIS CONTEXT, WE HAVE PERUSED THE DETAILS OF SUCH EXPENDITURE AND FIND THAT EVIDENTLY T HE BUSINESS PURPOSE RELATING TO INCURRENCE OF IMPUGNED EXPENDITURE IS MISS ING . THE DETAILS PROVIDED, WHICH ARE PLACED IN THE P APER B OOK, DO NOT CO NTAIN ANY REFERENCE TO THE BUSINESS PURPOSE FOR WHICH THE TRAVEL HAD BEEN UNDERTAKEN BY THE CONCERNED DIRECTORS . NO DOUBT, THE ASSESSEE IS RENDERING SERVICES TO ITS GROUP COMPANIES ABROAD AND NECESSARILY THE DIRECTORS WOULD BE REQUIRED TO TRAVEL, SO HOWEVE R WHERE THE A.O. HAS REQUIRED THE ASSESSEE TO POINT OUT THE BUSINESS PURPOSE FOR WHICH THE VARIOUS TOURS WERE UNDERTAKEN, THEN , IN OUR VIEW, THE FAILURE ON THE PART OF THE ASSESSEE TO PROVIDE SUCH DETAILS DOES INVITE A DISALLOWANCE. THEREFORE, IN OUR CONSI DERED OPINION, HAVING REGARD TO THE MATERIAL AND EVIDENCE ON RECORD, THE A.O. WAS JUSTIFIED IN DISALLOW ING A SUM OF RS .29,78,191/ - OUT OF THE FOREIGN TRAVEL EXPENSES. THE SAID ACTION OF THE A.O. IS HEREBY AFFIRMED. THUS, ON THIS ASPECT ASSESSEE FAILS. 10 ITA NO. 1564/MUM/2015 (A.Y. 2010 - 11) NVP VENTURE CAPITAL INDIA PRIVATE LIMITED VS. DY. CIT 14 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 30 TH , 201 5 SD/ - S D / - ( VIJAY PAL RAO ) ( G. S. PANNU ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 30 . 0 4 .201 5 . . ./ ROSHANI , SR. PS / COPY OF THE O RDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI