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Income Tax Appellate Tribunal, MUMBAI BENCHES “J”, MUMBAI
Before: Shri Saktijit Dey & Shri Rajesh Kumar
O R D E R Per Rajesh Kumar, Accountant Member
The aforesaid appeal has been filed by the Revenue and the Cross- objection by the assessee against the order of the CIT(A)-57, Mumbai, which 2 Orbimed Advisors India Private Limited in turn arises out of the assessment order passed u/s 143(3) r.w.s 144C(3) of the I.T. Act, 1961 for A.Y. 2011-12.
The Revenue has raised the following Grounds of appeal:-
1. "Whether on the facts and circumstances of the case, the CIT(A) has erred in considering Crisil Risk and Infrastructure Solutions Ltd as functionally comparable company to the assessee."
2. "Whether on the facts and circumstances of the case, the CIT(A) has erred in considering Crisil Risk and Infrastructure Solutions Ltd as functionally comparable company to the assessee without adjudicating, the finding of the TPO that the comparable was following different financial year ending 31st December as against the assessee following financial year ending 31st March."
3. "Whether on the facts and circumstances of the case, the CIT(A) has erred in considering ICRA Management consulting services Ltd as functionally comparable company to the assessee."
4. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO/TPO to exclude M/s Motilal Oswal Investment Advisors Pvt. Ltd and M/s LadderUp Corporate Advisory Pvt Ltd as the comparables for benchmarking the transaction of Provision of Investment Advisory Services." 3. The facts in brief are that the assessee is engaged in the business of providing non-binding investment advisory and related services to its Associated Enterprises (AE). During the year under consideration, the assessee entered into international transaction of providing non-binding investment advisory services to its AE amounting to ` 5,80,54,150/-, which was reported in Form 3CEB as international transaction, which was bench marked by applying Transactional Net Margin Method (TNMM). In order to bench mark, the assessee carried out detailed search analysis on the Prowess
Orbimed Advisors India Private Limited and Capitaline databases and identified a set of six comparable companies, which are as under:
Sr No Name of the Company OP/OC 1 A R Venture Funds Management Private Limited 22.92 2 I D F C Investment Advisors Private Limited 6.37 3 India Securities Limited -8.97 4 Crisil Risk & Infrastructure Solutions Limited 15.51 5 I C R A Management Consulting Services Limited 15.54 6 Motilal Oswal Private Equity Advisors Private Limited 27.46 Mean Margin 13.14 The mean margin was calculated at 13.14%. The assessee computed its margin at 18.03% and, hence, the transaction was considered at arm’s length. The Assessing Officer during the course of assessment proceedings observed that assessee had entered into international transaction and, accordingly, the matter was referred to the TPO to determine the ALP of international transaction of investment advisory payment of Rs 5,80,54,150/-
Sr No Name of the Company Reasons for rejection by TPO 1 A R Venture Funds Management Private Limited High Related Party Transactions 2 I D F C Investment Advisors Private (‘RPT’) Limited 3 India Securities Limited 4 Crisil Risk & Infrastructure Solutions Advisory fee less than 75% and Limited different year ending 5 I C R A Management Consulting Functional dissimilar- Engaged in Services Limited management consultancy and advisory services and no segmental information is available.
4 Orbimed Advisors India Private Limited The TPO selected only one comparable i.e. Motilal Oswal Private Equity Advisors Private Limited. However, while computing margin of the said company the TPO treated the receipt of referral fees as operating in nature and thereby re-computed the margin at 32.38% instead of 27.46% taken by the assessee. Further the TPO included two additional companies viz Motilal Oswal Investment Advisors Private Limited and Ladderup Corporate Advisory Private Limited and computed the Arithmetic Mean at 55.68% as under:
Sr. No Name of the company Selected by Net Cost Plus Mark-up% (OP/OC) 1 Motilal Oswal Private Equity Assessee 32.38% Advisors Private Limited 2 Motilal Oswal Investment TPO 82.23% Advisors Private Limited 3 Ladderup Corporate Advisory TPO 52.42% Private Limited Arithmetic Mean 55.68% The learned TPO considering the assessee’s margin at 17.83% proposed an adjustment of ` 1,86,48,473/-. Accordingly, assessment was framed by the AO by making the said addition on account of ALP adjustment by framing assessment u/s. 143(3) r.w.s. 144C(3) of the Income tax Act dated 10.05.2015.
In this background, we would like to adjudicate various grounds raised by the Revenue. The issue raised in ground nos. 1 and 2 is against the order of the CIT(A) considering Crisil Risk and Infrastructure Solutions Ltd., as 5 Orbimed Advisors India Private Limited functionally comparable company to the assessee without adjudicating the finding of the TPO that the comparable was following different financial year ending 31st Dec. as against the assessee following financial year ending 31st March. The learned CIT(A) after considering the submissions of the assessee held as under:
5. Decision:-
I have considered the facts of the case and submissions made by the assessee. With respect to computation of RPT, I agree with the reasoning provided by the TPO and uphold that reimbursement transactions should also be considered while computing the percentage of related party transactions. On perusal of the financials of the company, it is clear that these reimbursements are not just pass through costs. Rather, the reimbursements are an integral part of the function that the said company performs. Accordingly, I agree with the TPO's view that reimbursement transactions should also be considered while computing the percentage of related party transactions. Hence, A R Venture Funds Mgrnt Pvt Ltd, I D F C Investment Advisors Ltd and India Securities Ltd cannot be considered as comparable to the appellant.
With respect to Crisil Risk & Infrastructure Solutions Ltd, the appellant has submitted that the Company is engaged in the business similar to that of the appellant i.e. provision of investment advisory services. I am of the opinion that the company is functionally comparable to the appellant and cannot be rejected. The revenue earned from advisory services is approximately 70% which is substantial revenue earned from the said service. Further, I observed that the company has earned 86% of its total revenue in the preceding year from investment advisory services. TPO’s contention of rejecting the said company applying the filter of 75% is not justified. Given the above discussion and placing reliance on the Hyderabad ITAT decision submitted by the appellant in the case of International Speciality Products (I) Pvt. Ltd., Hyderabad Vs. Income-tax Oficer 2(1), I am of the opinion that this Company is functionally comparable to the appellant and should be considered in the final set of companies.”
6 Orbimed Advisors India Private Limited
We have heard both the parties and considered their rival submissions.
We have also perused the material available on record. We find merit in the arguments of the assessee that Crisil Risk and Infrastructure Solutions Ltd., should be accepted as a comparable, as the mere fact that the said company is following a different financial year should not be a ground to reject a company that is functionally comparable. As per rule 10B(4), the data to be used in analysing the comparability of uncontrolled transactions with the international transactions shall be the data relating to financial year in which the international transactions have been entered into. Thus, as per the plain reading of the aforesaid rule, if the data of the comparable relating to financial year corresponding to the financial year followed by the assessee is available it can be compared. Therefore, merely because the assessee and the comparable followed different financial years that by itself does not make the company incomparable, if otherwise, it is functionally similar to the assessee. This view has been accepted by the Hon’ble Gujrat High Court in Mercer Consulting India Pvt. Ltd. 390 ITR 615. Therefore, following the decision of Hon’ble Gujarat High Court in the case of Mercer Consulting India Pvt. Ltd. (supra) we in principle agree that even though the comparable may be following a different financial year, however, if the financial data of the comparable relating to the financial year followed by the assessee is available and which is authentic and can be relied upon, then, the company should be rejected as comparable. Even the coordinate bench following the various
Orbimed Advisors India Private Limited high courts vide its order dated 19.04.2018, in the case of ACIT 15(2)(2) vs. Maersk Global Services Centre (I) P. Ltd. (ITA No. 944/Mum/2016 for A.Y. 2011-12) has held that a comparable cannot be rejected merely on the basis of different financial year being followed. The relevant portion of the said order is as under:
“6.. ... We have heard rival contentions and perused the material on record. We have observed that the tribunal has in assessee’s own case already adjudicated w.r.t. comparable R System International Ltd. in 1082/M/2015 dated 29.07.2016 for AY 2010-11 for inclusion of this comparable, by holding as under:- “19. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon. We find from the record that the Transfer Pricing Officer rejected this company as a comparable on the ground that the assessee is a KPO service provider whereas this company is into low end BPO service. However, the aforesaid objection of the Transfer Pricing Officer was not accepted by the DRP in assessee’s own case for assessment year 2008–09 and, in fact, DRP held R. Systems International Ltd. as comparable to the assessee. Taking note of the aforesaid observations of the DRP, the Transfer Pricing Officer himself in assessment year 2007–08, accepted R. Systems International Ltd. as a comparable. It further appears from record that in assessment year 2009–10, the Assessing Officer again rejected R. Systems International Ltd. as comparable on the ground that it is not comparable to KPO service provider like assessee and secondly it has a different accounting period. However, the Tribunal while deciding assessee’s appeal for assessment year 2009–10, ITA no.2594/Mum./2014 dated 16th January 2015, accepted R. Systems International Ltd. as comparable to the assessee observing as under:– “13. Now coming to the two comparables included by the assessee. So far as R. System International Ltd. (Segmental) is concerned, it has been pointed out by the learned senior counsel that this company was accepted as a comparable by the TPO in assessee’s own case in the A.Y. 2007-08 and also by the DRP in A.Y. 2008-09. The TPO has rejected this comparable in this year, simply on Orbimed Advisors India Private Limited the ground that it is not purely a KPO service provider and having calendar year ending. On the contrary the BPO segment of R. System is functionally comparable to the assessee and simply because it is following calendar year accounting it cannot be rejected. In A.Y. 2008-09, the DRP in the light of functions performed by the assessee as well as BPO segment of R. System International, has accepted the same to be comparable company. This fact has also been noted by the Special Bench in para 12 of the order.
Thus, consistent with the fact that in A.Y. 2007-08, TPO himself has accepted R. System as a good comparable and DRP in A.Y. 2008-09 has also accepted the same to be comparable, which has been upheld by the Special Bench, therefore, we do not find any reasons to deviate from such a precedence of the earlier years, so as to come to a different conclusion without any material difference on record for this year. Thus, we direct the TPO/AO to include R. System International Ltd. in the list of final comparables for bench marking the assessee’s margin.” 20. Following the aforesaid decision of the Tribunal, the DRP also in assessee’s own case for assessment year 2011–12 has accepted R. Systems International Ltd. as a comparable. As could be seen from the impugned order of the DRP, the only reason on which the company was rejected is on account of different financial year. As already stated while assessee is following financial year as accounting period this company follows calendar year as it’s accounting year. However, there is no dispute that contemporaneous data relating to nine months i.e., April to December is available in public domain. Therefore, the data available for nine months in public domain can be extrapolated to make a reasonable comparability analysis. This view was expressed by the Hon'ble Delhi High Court in Mckinscy Knowledge Centre India Pvt. Ltd. (supra) while approving the decision of the Tribunal. Therefore, this company having been found to be functionally similar to the assessee thereby accepted as a comparable by the Tribunal as well as the Departmental Authorities in assessee’s own case in earlier and subsequently assessment years, we do not find any reason to exclude the same as a comparable. Accordingly, accepting assessee’s plea, we direct the Assessing Officer / Transfer Pricing Officer to consider R. Systems International Ltd. as a comparable. Thus, ground no.6, is partly allowed.”
Orbimed Advisors India Private Limited
The assessee has also relied on the following case laws to contend that merely because the financial year of the comparable is ending on different date falling within the same financial year as that of the assessee , the comparable will not be liable to be rejected on this short ground only. The assessee relied upon following decision:- “ Hon'ble Delhi High Court in case of Mckinsey Knowledge Centre India Private Limited (ITA 217/2014) (Page no. 264 of PB II) confirming Hon’ble Delhi Tribunal decision (ITA No. 2195/ Del/2011) (Page no. 286 of PB II) Hon'ble Punjab and Haryana High Court in the case of Mercer Consulting (India) Pvt Ltd [TS-664-HC-2016(P & H)-TPJ (Page no. 246ofPB II) Hon'ble Mumbai Tribunal in the case of Aegis Limited (ITA No. 7694/Mum/20l4) - (Page no. 309 of PB II) Hon'ble Mumbai Tribunal in the case of Pangea3 & Legal Database Systems Pvt. Lid [ITA Nos.2128 &1958/M/2014] The Revenue on the other hand has relied upon decision of Hon’ble Bombay High Court in the case of CIT v. PTC Software India P. Ltd.(2017) 395 ITR 176(Bom.) , wherein Hon’ble Bombay High Court held as under:- “(a) The Assessing Officer on the basis of the order of the TPO included M/s. Transworks Information Services Ltd. (Transworks Ltd.) in his comparability analysis. The grievance of the respondent assessee before the Tribunal was that Transwork Ltd. cannot be a comparable as the respondent assessee's financial period is from 1st April, 2006 to 31st March, 2007 while the financial period in respect of the comparable is from 1st July, 2006 to 30th June, 2007. This grievance based on fact was not disputed by the Revenue before the Tribunal or even before us. In terms of Rule 10B(4) of the Income Tax Rules, 1962, the analysis for comparison shall be on the data relating to the financial year in which the international transaction has been entered into. In the above view, the Tribunal held that as the financial period during which the international transaction was entered into is different, M/s. Transwork Ltd. could not be treated as comparable and thus not includable. (b) We find that the provisions of Section 10B(4) of the Rules are clear in as much as it obliges that the data to be used for comparability analysis should be of the same financial year in which the international transactions were entered into by the tested party. In fact, this principle/mandate was applied by the TPO while considering M/s. Power Soft Global Services Ltd. as a 10 Orbimed Advisors India Private Limited comparable because it has a financial year ending in September, 2006 and not 31st March, 2007 as in the case of respondent assessee. The same yardstick ought to have been applied by the TPO while considering whether Transwork Ltd. was comparable. The submissions on behalf of the mandate of Rule 10B of the Rules can be ignored as the difference is only of three months is without any basis. No such liberty is granted in terms of Rule 10B(4) of the Rules. (c) The findings of the Tribunal being on the basis of the unambiguous mandate of Rule 10B(4) of the Rules, question (iii) as proposed does not give rise to any substantial question of law. Thus, not entertained.” We have observed that Hon’ble Bombay High Court has not entertained the said question of law as the finding of the fact was recorded by the tribunal which was affirmed by Hon’ble Bombay High Court in the said decision keeping in view mandate of Rule 10B(4) of the Income-tax Rules, 1962. In the instant case, we have observed that no prejudice shall be caused to Revenue by inclusion of these comparables having financial year ending on 31st December vis-a-vis assessee closing its financial year on 31st March, which falls within the same financial year as that of the assessee. The data for nine months is common for both the comparable and the assessee , and if the same can be extra-polated with credible accuracy on the basis of data available on record then there is no reason why the said comparable should be rejected. The assessee has also placed reliance on case laws which are detailed above which we have duly taken note of. The tribunal has also accepted R System International Limited as comparable for AY 2009-10 in vide orders dated 16-01-2015 and also accepted said comparable R System International Limited as comparable for AY 2010- 11 and rejected contention that merely because financial year is ending on 31st December vis-a-vis assessee’s financial year ending on 31st March, the comparable cannot be accepted. Thus, we direct for inclusion of R System International Ltd. and Caliber Point Solutions Ltd. as comparable for computing ALP of international transactions entered into by the assessee with its AE. Revenue also fails on this ground. We order accordingly.
Since the facts of the present case before us is the same as decided in the case of Maersk Global Services Centre (I) Pvt. Ltd., respectfully following the said decision, we uphold the order of the CIT(A) and dismiss the ground nos. 1 & 2 raised by the Revenue.
11 Orbimed Advisors India Private Limited
The issue in Ground no.3 is against the order of the CIT(A) holding that ICRA Management Consulting Services Ltd. as functionally comparable to the assessee as against the order of the TPO holding the said company as functionally dissimilar on the ground that it is engaged in management consultancy and advisory services and no segmental opinion was available.
The learned CIT(A) allowed the appeal of the assessee by observing and holding as under:
“Further, with respect to I C R A Management Consulting Services Ltd, the appellant submitted that the company is engaged in consulting services, project advisory/services, market analysis, etc. In the decision of the Delhi Tribunal in the case of Xander Advisors India Private Limited vs. ACIT, the Tribunal held that ICRA is comparable to investment advisory companies similar to that of the appellant. Further, I have also perused the Mumbai Tribunal decision submitted by the appellant in the case of Temasek Holding Advisors (I) P. Ltd. which supports the view that ICRA should be considered as a comparable.”
We have heard the parties and perused the material available on record. We observe that the learned CITA() has accepted the company as comparable by placing reliance on plethora of judgments accepting the company as comparable investment advisory serves. We further find that in the case of DCIT vs. General Atlanatic Pvt. Ltd. in for A.Y. 2011-12, the Tribunal vide order dated 21.02.2018, under similar facts has held to be an acceptable comparable. The operative part of the said order is reproduced below:
12 Orbimed Advisors India Private Limited
“14. We have heard rival submissions and perused material available on record. Insofar as ICRA Management Consulting Services Ltd. is concerned, the Transfer Pricing Officer has rejected it as a comparable basically on the reasoning that unlike the assessee this company is providing management consulting service. One more reason by the Transfer Pricing Officer to exclude this company is difference in skill set of employees. However, we find nothing new in the argument of the Department as upon consideration of the very same argument, this company has been found to be a comparable to a non–binding investment advisory service provider. It is relevant to observe, in case 11 General Atlantic Pvt. Ltd. of AGM India Advisors Pvt. Ltd. v/s DCIT, [2017] 79 taxmann.com 86 which is for the very same assessment year, the Tribunal after considering argument advanced by the Department regarding difference in skill set held that ICRA Management Consultancy Services is a valid comparable to a company providing non–binding investment advisory services. It is also relevant to note, in assessee’s own case for assessment year 2009–10, this company has been accepted as a comparable by the DRP. Even otherwise also, the observations of the Transfer Pricing Officer on difference in skill set between the assessee and the comparable company appears to be not on the basis of proper analysis of fact and more on assumption and presumption. As regards other functional differences of this comparable pointed by the learned Departmental Representative, it needs to be mentioned, neither Transfer Pricing Officer nor DRP have deliberated on those aspects. Since these issues raised by the learned Departmental Representative are completely new issues and never raised at any stage earlier, we do not consider it appropriate to deal with them as it requires verification of fresh facts. Therefore, respectfully following the decisions of the Tribunal cited before us by the learned Authorised Representative, we direct the Assessing Officer to accept this company as a comparable. Respectfully following the decision of the co-ordinate Bench in the case of General Atlantic Pvt. Ltd. (supra), we uphold the order of the CIT(A) and dismiss the ground taken by the Revenue.
The issue raised in ground no.4 is against the order of the CIT(A) directing the AO to exclude Motilal Investment Advisors Pvt. Ltd and M/s LadderUp Corporate Advisory Pvt. Ltd as the comparables for benchmarking the transaction of Provision of Investment Advisory Services.
13 Orbimed Advisors India Private Limited
The TPO held that the company - Motilal Investment Advisors Pvt. Ltd is functionally dissimilar to that of the assessee. Though the said company is engaged in the business of merchant banking, which is completely different from the non-binding investment services provided by the assessee, it actually carried out only advisory services during the year. So far as LadderUp Corporate Advisory Pvt. Ltd is concerned, the TPO held that the company is engaged in management consultancy services and not into merchant banking.
The learned CIT(A) allowed the appeal of the assessee by observing and holding as under:
“Decision:- I have considered the facts of the case and submissions made by the assessee. With respect to Motilal Oswal Investment Advisors Pvt. Ltd.. the appellant has submitted that the company is engaged in investment banking, merchant banking, deal making activities such as private placement of equity, debt and convertible instruments, etc which are very different from the appellant's non-binding investment advisory service. Based on the submissions and arguments made by the appellant, it can be observed that MOIAPL is engaged into investment banking, deal making activities, solutions and transaction expertise covering private placement of equity, debt and convertible instruments covering international & domestic capital markets, mergers & acquisitions advisory and restructuring advisory & implementations which are completely different as compared to the business of appellant who provides non- binding investment advisory services. I have perused the Mumbai Tribunal decision in the case of Carlyle India Advisors Private Limited vs. DCIT, submitted by the appellant, wherein MOIAPL was rejected as a comparable to investment advisory services, as the said company is a merchant banker. Further, MOIAPL has also been rejected as a comparable in the " judgements of M/s Arisaig Partners India Pvt. Ltd. and TA Associates Advisory P. Ltd. The above principle has also been supported by judgements in the case of Sandstone Capital
Orbimed Advisors India Private Limited
Advisors Pvt Ltd. vs. ACIT, Goldman Sachs (India) Securities Private Limited vs. ACIT (OSD), Acumen Fund Advisory and General Atlantic Pvt. Ltd. vs. DCIT.
Further, it is also observed that MOIAPL is earning exceptionally high margins and comparing MOIAPL with the business of appellant is not justified. Further, there are huge fluctuations in the profits earned by MOIAPL and hence can't be compared with the appellant.1 agree with the view of the appellant which is also decided in a number of judgements (submitted by the appellant during the proceedings).
Based on the above decisions and the arguments of the appellant, I am of the view that MOIAPL being a company engaged in merchant banking activities is not similar to the appellant's investment advisory functions and accordingly should be excluded from the final set of companies.
Further, the appellant submitted that Ladderup Corporate Advisory Pvt Ltd is engaged in the business of merchant banking activities and acts as Syndicate Member i.e. carrying on the activity as an underwriter for its clients. Further, it is also observed that LCAPL is also engaged in activities relating to mergers &acquisition deals and restructuring activities whereby it performs the role of manager to the offer in the respective deals/ business activities. Thus, the functions performed by LCAPL cannot be compared to the appellant's business of non-binding investment advisory business.
It is also observed that there is significant fluctuation in the revenue and profits earned by LCAPL. Also, the revenue of LCAPL is diminishing significantly. Further, it is observed that though LCAPL is engaged in diversified business operations, it does not report any business segments.
I have perused the decision of Hon'ble ITAT Mumbai in the case of McKinsey Knowledge Centre Pvt. Ltd. Vs DCIT, submitted by the appellant, wherein LCAPL was rejected as a comparable to investment advisory services, as the said company is engaged in merchant banking activities. Further, I agree with the view followed by the below listed judgments that there is a difference between merchant banking activity and non-binding / recommendatory investment advisory services:
• Q-India Investment Advisors Private Limited vs. DCIT (ITA No. 923/Mum/2015) -Jurisdictional ITAT
15 Orbimed Advisors India Private Limited
• Capital Advisors Pvt. Ltd. vs. ACIT (ITA No.6315/MUM/2012)
• Goldman Sachs (India) Securities Private Limited vs. ACIT (OSDJ (ITA No 7724/Mum/2011)
• General Atlantic Pvt. Ltd. vs. DCIT (ITA No. 8914/ Mum/ 2010) and (ITA No. 1019/ Mum/2014)
• Fund Advisory Services India Private Limited vs. DCIT (ITA No. 143/Mum/2014)
• DCIT vs. M/sArisaig Partners India Pvt. Ltd. (ITA No. 1083/Mum/2014) • NVP Venture Capital India Private Limited vs. DCIT (ITA No. 1564/Mum/2015) • Lehman Brothers Advisers Private Limited vs. ACIT (ITA No. 7722/M/2012)
• Wells Fargo Real Estate Advisors Private Limited vs. DCIT (ITA No. 1093/Mum/2014)
Based on the above decisions and the arguments of the appellant, I am of the view that LCAPL being a company engaged in merchant banking activities is not similar to the appellant's investment advisory functions and accordingly should be excluded from the final set of companies. 13. After hearing both the parties and perusing the material on record as also the decision relied upon by the rival parties, we observe that the issue is covered in favour of the assessee by the decision of the co-ordinate Bench of this Tribunal in the case of DCIT vs. General Atlantic Pvt. Ltd. (supra), wherein it has been held that Motilal Investment Advisors Pvt. Ltd is not comparable to investment advisory service. Similarly, it was held that LadderUp Corporate Advisory Pvt. Ltd cannot be treated as comparable to 16 Orbimed Advisors India Private Limited non-binding investment advisory services. The operative part of the order is as under:
“16. Insofar as Ladderup Corporate Advisory Pvt. Ltd. is concerned, it is seen that the comparability of this company to an investment advisory service provider came up for consideration before the Tribunal, Mumbai Bench, in Temasek Holding Advisors India Pvt. Ltd. (supra). The Bench after considering the submissions of the parties having found that the company is registered as a Category–1 Merchant Banking Company with SEBI and is engaged in Merchant Banking service w.e.f. July 2010 held that the company cannot be treated as comparable to non–binding investments advisory provider. Respectfully following the aforesaid decision of the Co–ordinate Bench, we exclude this company from the list of comparables.
As far as Motilal Oswal Investment Advisors Ltd. is concerned, different Benches of the Tribunal including Mumbai Benches have decided against including this company as a comparable to an investment advisory service provider. In fact in the case of AGM India Advisory Pvt. Ltd. (supra), which is for the very same assessment year, the Tribunal has excluded this company as a comparable finding that it is engaged in four different business verticals such as equity capital markets, merger and acquisition, profit equity syndications and structure debts. The Tribunal found that company’s core competence is in the field of merchant banking. Considering the aforesaid aspects, the Tribunal held that this company cannot be treated as comparable to an investment advisory service provider. Respectfully following the consistent view of the different Benches of the Tribunal, we uphold the decision of the DRP on this issue. 14. We, therefore, respectfully following the decision of the co-ordinate Bench, held that the learned CIT(A) has rightly directed the AO to exclude Motilal Investment Advisors Pvt. Ltd and LadderUp Corporate Advisory Pvt Ltd for bench marking the investment advisory services. Thus, the order of the CIT(A) is upheld and the grounds raised by the Revenue are dismissed.
17 Orbimed Advisors India Private Limited
The assessee has raised the following grounds in its cross-objection No. 346/Mum/2018
On the facts and in the circumstances of the case, the learned Transfer Pricing Officer ('TPO') and the learned Assessing Officer ('AO') have erred in rejecting certain comparable companies selected in the Transfer pricing documentation namely, A R Venture Funds Management Private Limited and IDFC Investment Advisors Limited by erroneously considering reimbursement of expenses in the calculation of Related Party Transaction ratio and the learned Commissioner of Income-tax (Appeals) ['CIT(A)'] has erred in confirming the approach of the learned TPO/ learned Assessing Officer
2. On the facts and in the circumstances of the case, the learned TPO and the learned AO have erred in erroneously computing the margin of Motilal Oswal Private Equity Advisors Private Limited as 32.38% instead of 27.46% by erroneously including referral fees as operation income while computing the margin and the learned CIT(A) has erred in confirming the approach of the learned TPO/ learned AO. Since we have dismissed the appeal of the Revenue, the cross-objections filed by the assessee becomes infructuous.
In the result, the Revenue’s appeal and the cross objections by the assessee are dismissed.
Order pronounced in the open court on this day of 10th June, 2019