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Case Number

ITA No. 496.Mum/2015 Assessment Year: 2010-11

Attorney(S)

Assessee by Shri Porus Kaka & Shri Divesh Chawla (AR)
Revenue by Shri N.K. Chand-CIT (DR)

Judges

Saktijit Dey, J.M.
Ashwani Taneja, A.M.

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Smart Summary

Structured Summary of the Opinion (Transfer Pricing — Motilal Oswal Comparable Issue)

Judge / Bench: Ashwani Taneja, A.M. — Order pronounced 22 January, 2016 — Assessment Year: 2010-11

Factual and Procedural Background

The assessee filed an appeal against the order of the Learned Commissioner of Income Tax (Appeals)-15, Mumbai dated 27.10.2014, which had decided against the assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act for assessment year 2010-11. The appeal was filed one day late; a petition for condonation of that delay was placed before the court and the delay was condoned after the assessee explained that the managing director was unavailable and supported the explanation with a sworn affidavit. No serious objection to condonation was raised by the Revenue and the appeal was admitted for adjudication.

On the merits, the central dispute concerned Ground No. 1: the confirmation by the CIT(A) of an upward Transfer Pricing adjustment by the AO due to inclusion of M/s. Motilal Oswal Investment Advisors Pvt. Ltd. (MOIAPL) as a comparable in benchmarking the assessee's international transactions. The assessee sought exclusion of MOIAPL from the comparable set; the AO had included it in the assessment order. The Tribunal considered submissions from both parties, examined relevant documentary material (including annual reports and transfer pricing studies), and reviewed precedents on the comparability issue.

Legal Issues Presented

Whether M/s. Motilal Oswal Investment Advisors Pvt. Ltd. (MOIAPL) is functionally comparable to the assessee (a captive/non-binding investment advisory sub-advisor) for the purposes of Transfer Pricing benchmarking and determination of Arm's Length Price (ALP).
Whether the AO (and TPO) erred in including MOIAPL in the comparable set — including procedural objections raised by the assessee that MOIAPL was included without fresh search or following prescribed procedure.

Arguments of the Parties

Assessee's Arguments (Appellant)

MOIAPL was included abruptly by the AO in the assessment order without conducting a fresh search and without following the procedure prescribed under law.
Functionally, the assessee is a captive/sub-advisor providing non-binding investment advisory services to associated enterprises, with limited decision-making authority and limited risk exposure (market, investment, credit, FX, manpower risks); consequently its returns reflect that limited functionality.
MOIAPL, by contrast, is an investment banking/merchant banking entity engaged in merchant banking, IPOs, mergers & acquisitions, private equity and structured debt, with decision-making and implementation roles and a different fee/quantification mechanism (often percentage-based), making it functionally dissimilar to the assessee.
Precedents from various benches and the Hon'ble Bombay High Court have held that MOIAPL is not a pure advisory company and should be excluded as a comparable for pure advisory firms; these were relied upon to show consistency with previous decisions.

Revenue's Arguments (Respondent)

The annual report of MOIAPL stated that the company had only one reportable segment (AS-17), and thus it should not be excluded on the ground of being multi-segment/diversified.
Even if functions are not identical, the skill sets required to perform the functions of MOIAPL and the assessee are similar; on that basis MOIAPL should be considered comparable.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Carlyle India Advisors (P.) Ltd. v. Assistant Commissioner of Income-tax 10(1), Mumbai (7901/Mum/2011) (Mumbai)	That Motilal Oswal Investment Advisors Pvt. Ltd. is not a pure advisory company and is functionally different; MOIAPL was excluded as a comparable in cases involving pure advisory firms.	The Tribunal relied on this and related decisions to support exclusion of MOIAPL from the list of comparables for the assessee.
Commissioner of Income-tax-10, Mumbai v. Carlyle India Advisors (P.) Ltd. (32 taxmann.com 23 (Bombay))	Affirmation (by the High Court) of the approach that MOIAPL is functionally dissimilar and not an appropriate comparable for pure advisory companies.	The Tribunal/bench noted that the Carlyle decision was upheld by the Hon'ble Bombay High Court and respectfully followed that outcome in excluding MOIAPL.
Carlyle India Advisors (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle-10 (1), Mumbai (43 taxmann.com 184 (Mumbai - Trib.))	MOIAPL treated as functionally dissimilar; supports excluding MOIAPL from comparable set for advisory firms.	Listed among the precedents relied upon to conclude MOIAPL is not comparable to the assessee.
Carlyle India Advisors (P.) Ltd. v. Deputy Commissioner of Income-tax, 10(1), Mumbai (49 taxmann.com 476 (Mumbai-Trib.))	Same principle: MOIAPL is engaged in diversified activities and cannot be a comparable for pure advisory firms.	Used to reinforce the conclusion that MOIAPL should be excluded.
General Atlantic (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle-3 (1), Mumbai (32 taxmann.com 178 (Mumbai-Trib.))	Support for excluding MOIAPL where facts are similar — MOIAPL regarded as functionally different from pure advisory firms.	Included in the list of authorities showing MOIAPL's exclusion as comparable.
General Atlantic (P.) Ltd. v. Assistant Commissioner of Income-tax (OSD), Circle-3(1), Mumbai (36 taxmann.com 44 (Mumbai-Trib.))	Reinforces that MOIAPL's diversified activities make it an unsuitable comparable for pure advisory companies.	Relied upon as part of consistent Tribunal jurisprudence to exclude MOIAPL.
Temasek Holdings Advisors (I) (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle-3(3), Mumbai (38 taxmann.com 80 (Mumbai - Trib.))	MOIAPL excluded as comparable where assessee is pure advisory in function and MOIAPL is diversified.	Listed among authorities that support excluding MOIAPL.
Deputy Commissioner of Income-tax, Cir. 3(3), Mumbai v. Temasek Holding Advisors (P.) Ltd. 47 taxmann.com 311 (Mumbai-Trib)	Similar principle — MOIAPL's diversified/merchant banking activities distinguish it from pure advisory firms.	Relied upon by the bench in reaching the exclusion conclusion.
Q India Investment Advisors Pvt Ltd v. Deputy Commissioner of Income-tax-3 (3), Mumbai (923/Mum/2015)	MOIAPL not a suitable comparable for investment advisory firms because it is engaged in diversified merchant-banking/other activities.	Cited and followed; the bench reproduced and relied on the Q-India findings in reaching the conclusion to exclude MOIAPL.
NVP Venture Capital India Pvt Ltd v. Deputy Commissioner of Income-tax-3 (2)(2), Mumbai (1564 Mum 2015)	Part of consistent Tribunal decisions indicating MOIAPL's functional dissimilarity to pure advisory companies.	Listed among precedents supporting exclusion.
Bain Capital Advisors (I) P. Ltd. v. Deputy Commissioner of Income-tax-3 (1), Mumbai (413/Mum/2015)	MOIAPL excluded as a comparable in similar factual contexts.	Included among the decisions relied upon by the bench.
Bain Capital Advisors (I) P. Ltd. v. Deputy Commissioner of Income-tax-3(1), Mumbai (1360 Mum 2014)	Same principle as above: exclusion of MOIAPL where it is functionally different from the assessee.	Relied upon for consistency with earlier Tribunal decisions.
Acumen Fund Advisory Services India (P.) Ltd. v. Deputy Commissioner of Income-tax - 2(1), Mumbai (50 taxmann.com 317 (Mumbai - Trib.))	MOIAPL engaged in acquisition, disinvestment, IPO and diversified activities; not comparable to pure investment advisory service providers.	Quoted by the bench to show consistent findings across cases excluding MOIAPL.
Deputy Commissioner of Income-tax-2(1), Mumbai v. Arisaig Partners India Pvt Ltd. (1083/Mum/2014)	Supports the view that MOIAPL is functionally dissimilar and should be excluded as a comparable for pure advisory firms.	Part of the body of decisions the bench followed in excluding MOIAPL.
Lehman Brothers Advisers Pvt. Ltd. v. ACIT-Circle 6(3) - ITA No. 7722	Detailed factual analysis of MOIAPL's activities (merchant banking, cross-border M&A, structured finance, private equity) demonstrating non-comparability with pure advisory entities.	The bench reproduced and relied on the Lehman Brothers analysis to conclude MOIAPL is functionally different and must be excluded from comparables.

Court's Reasoning and Analysis

The court proceeded in stages.

Procedural threshold: The appeal was one day late. The assessee provided a petition and sworn affidavit explaining the delay (managing director unavailable). The Revenue raised no serious objection. In the interest of justice the delay was condoned and the appeal admitted.
Merits — comparability analysis: The Tribunal examined submissions, documentary material (assessee's Transfer Pricing Study Report, MOIAPL's annual report) and the risk and functional profiles of both entities. The assessee's position was that it is a captive/sub-advisor providing non-binding advisory services, with limited risk and no decision-making/implementation role; MOIAPL is engaged in merchant banking, capital markets, M&A, private equity and structured debt and undertakes decision-making and implementation functions, with significantly different fee structures and income sources.
The Revenue's counter was that MOIAPL's annual report stated a single reportable segment and that skill sets overlap with the assessee, therefore comparability could be maintained.
The bench weighed the functional and risk differences and placed reliance on an array of prior Tribunal decisions and a High Court decision (Carlyle India Advisors decision upheld by the Bombay High Court) addressing the same issue. The Tribunal reproduced reasoning from Lehman Brothers Advisors decision which detailed MOIAPL's diversified activities and income mix (equity capital markets, M&A, private equity syndication, structured debt, cross-border M&A), and concluded that these activities and the resulting risk/functional profile made MOIAPL unsuitable as a comparable for an entity engaged solely in non-binding investment advisory services.
On these bases, and following the consistent precedent, the Tribunal concluded that MOIAPL is functionally dissimilar and directed the AO/TPO to exclude MOIAPL from the comparable set and to re-compute the Arm's Length Price and any Transfer Pricing adjustment without MOIAPL.
The Tribunal also noted that other grounds raised by the assessee were consequential on Ground No. 1; since Ground No. 1 was decided in favour of the assessee, the remaining grounds were rendered academic and were dismissed as infructuous.

Holding and Implications

Core Ruling: The appeal is PARTLY ALLOWED.

Direct consequences (as directed by the Tribunal):

The Assessing Officer / Transfer Pricing Officer is directed to exclude M/s. Motilal Oswal Investment Advisors Pvt. Ltd. from the list of comparables used for benchmarking the assessee's international transactions for AY 2010-11.
The AO/TPO is directed to re-compute the Arm's Length Price and to re-determine any Transfer Pricing adjustment, if applicable, after excluding MOIAPL.
Other grounds raised by the assessee were held to be consequential on the primary ground and were dismissed as infructuous.

Broader implications: The Tribunal explicitly relied on and followed a series of prior Tribunal decisions and a Bombay High Court decision; the opinion applies those authorities to the facts and does not purport to lay down a new principle of law. The decision therefore affirms earlier jurisprudence that MOIAPL is not a suitable comparable for entities engaged solely in non-binding investment advisory services under similar facts.

Order pronounced in open court on 22 January, 2016.

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Ta Associates Advisory P. Ltd. v. Cit

Ashwani Taneja, A.M.:— This appeal has been filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals)-15, Mumbai ((in short Ld. CIT(A)) dated 27.10.2014 for the assessment year 2010-11, decided against the assessment order passed by the Assessing Officer (in short ‘AO’) u/s 143(3) of the Act.

2. During the course of hearing, Shri Porus Kaka & Shri Divesh Chawla Authorised Representative (Ld. Counsel) on behalf of the assessee and Shri N.K. Chand, CIT, Departmental Representative (Ld DR) on behalf of the Revenue, argued the case.

3. At the very outset, it has been noted that appeal filed by the assessee is late by one day. In response to our query, Ld. Counsel of the assessee has drawn our attention to the petition filed by the assessee requesting for condonation of the delay. We have gone through the said petition explaining the delay on the ground that managing director of the company was not available and that is how delay occurred. The assessee has supported the reason along with duly sworn affidavit. No serious objection has been raised by the department for condonation of delay. In view of these facts and in the interest of justice, the delay is condoned and appeal is admitted for adjudication.

4. Ground No. 1: In this ground, the assessee has challenged the action of Ld. CIT(A) in confirming the action of AO in making addition as a result of upward Transfer Pricing Adjustment. The main grievance of the assessee is that the AO has wrongly included one comparable namely M/s. Motilal Oswal Investment Advisors Pvt. Ltd.

4.1. During the course of hearing, it has been submitted by the Ld. Counsel that the aforesaid comparable has been included by the AO abruptly in the assessment order without making any fresh search and without following due procedure as prescribed under the law. It has been also submitted that Motilal Oswal (i.e. M/s. Motilal Oswal Investment Advisors Pvt. Ltd.) is not, even, functionally comparable to the assessee company. It has been submitted that based on the Functional, Assets and Risk analysis of the assessee as documented in its Transfer Pricing Study Report, it can be concluded that the assessee company is a captive service provider with limited risk associated with carrying out such business and does not perform any decision making function and its activities are merely restricted to the provision of non-binding Investment Advisory Services under the institutions of its Associated Enterprises. The role of the company is limited to the provision of non-binding Investment Advisory Services, and thus, it assumes limited risk such as market risk, loss and investment risk, credit risk, foreign exchange risk and manpower risk. Thus, the assessee received returns having regard to its functionality and its profile.

4.2. It has been submitted that on the other hand, Motilal Oswal is not functionally comparable to the assessee company, since Motilal Oswal is an investment banking company engaged in providing investment banking solutions. It has a team of experienced bankers and is capable of providing services for various projects viz capital markets mergers and acquisition, private equity and structured debt. It has been submitted that Motilal Oswal is primarily into merchant banking and IPO services, and quantification of its fee and remuneration stand on a absolutely different platform, which is charged mostly on percentage basis. Motilal Oswal is involved in the decision making process as well as implementation. On the other hand, the assessee company is merely a sub-advisor. Its role is confined merely to advisory that too upto a pre-investment stage. The assessee company's role is confined mostly in providing opinion to its clients for various investments options available in the market. How and it what manner advice/opinion of the assessee company would be implemented or executed by the client, in none of the business of the assessee company. Our attention has been drawn on various pages of the paper book to show Transfer Pricing Reports and Annual Reports of Motilal Oswal as well as the assessee company to show the distinction between the working mechanisms of both the companies.

4.3. Lastly, it has been submitted by the Ld. Counsel that this issue is no more res-integra. It has been decided in various judgments coming from the Tribunal and Hon'ble Bombay High Court that Motilal Oswal is not pure advisory company and the same was rejected as comparable to pure advisory companies in following cases:

1. Carlyle India Advisors (P.) Ltd. v. Assistant Commissioner of Income-tax 10(1), Mumbai. (7901/Mum/2011) (Mumbai)

2. Commissioner of Income-tax-1 0, Mumbai v. Carlyle India Advisors (P.) Ltd. (32 taxmann.com 23 (Bombay)

3. Carlyle India Advisors (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle-10 (1), Mumbai (43 taxmann.com 184 (Mumbai - Tub.)

4. Carlyle India Advisors (P.) Ltd. v. Deputy Commissioner of Income-tax, 10(1), Mumbai (49 taxmann.com 476 (Mumbai-Trib.)

5. General Atlantic (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle-3 (1), Mumbai (32 taxmann.com 178 (Mumbai-Trib.)

6. General Atlantic (P.) Ltd. v. Assistant Commissioner of Income-tax (OSD), Circle-3(1), Mumbai (36 taxmann.com 44 (Mumbai-Trib.)

7. Temasek Holdings Advisors (I) (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle-3(3), Mumbai. (38 taxmann.com 80 (Mumbai - Trib.)

8. Deputy Commissioner of Income-tax, Cir. 3(3), Mumbai v. Temasek Holding Advisors (P.) Ltd. 47 taxmann.com 311 (Mumbai-Trib)

9. Q India Investment Advisors Pvt Ltd v. Deputy Commissioner of Income-tax-3 (3), Mumbai. (923/Mum/2015)

10. NVP Venture Capital India Pvt Ltd v. Deputy Commissioner of Income-tax-3 (2)(2), Mumbai (1 564 Mum 2015)

11. Bain Capital Advisors (I) P. Ltd. v. Deputy Commissioner of Income-tax-3 (1), Mumbai. (413/Mum/2015)

12. Bain Capital Advisors (I) P. Ltd. v. Deputy Commissioner of Income-tax-3(1), Mumbai (1360 Mum 2014)

13. Acumen Fund Advisory Services India (P.) Ltd. v. Deputy Commissioner of Income-tax - 2(1), Mumbai (50 taxmann.com 317 (Mumbai - Trib.)

14. Deputy Commissioner of Income-tax-2(1), Mumbai v. Arisaig Partners India Pvt Ltd. (1083/Mum/2014)

15. Lehman Brothers Advisers Pvt. Ltd. v. ACIT-Circle 6(3) -ITA No. 7722

4.4. Ld. Counsel has read before us various judgments from the above list to show that Motilal Oswal was excluded from the list of comparables in these cases which are having similar facts with the assessee company.

4.5. On the other hand, Ld. DR vehemently opposed the submissions made by the Ld. Counsel of the assessee. Our attention was drawn on annual report of Motilal Oswal wherein statutory auditors of the said company have mentioned that the Motilal Oswal had only one segment and there were not separate reportable segments as defined in AS-17. It was further submitted that even if the functions of the said company and the assessee company are not similar, but skill sets required to perform the functions are similar. In view of these facts Motilal Oswal should be held as comparable to the assessee company.

4.6. We have gone through the submissions made by both the sides. In our considered opinion, functions and activities carried out by Motilal Oswal are different from the functions and activities of the assessee company. Accordingly, the risk profiles of the two are also different. It has been clearly mentioned in the annual report of Motilal Oswal that the said company is engaged in the business of merchant banking and investment, business advisory services. It is further noted by us that actually we need not labour much on this issue as various benches have already addressed this issue at great length and detail in the aforesaid precedents relied upon by the Ld. Counsel. In the case of Lehman Brothers Advisors Pvt. Ltd., in which one of us (i.e. Hon'ble J.M. was a party), it was held, with regard to Motilal Oswal as under:

“4. We have heard both the parties on the limited issue of if the MOIAPL is a good comparable and whether it passed the functional test. In this regard, we examined the directors” report placed on page 13 of the paper book and the following is reported by the directors under the heading “review of operations and future outlook”, which reads as under:

“The market for the services of the Company is buoyant and the Company made a quantum jump in business during the year 2007-08. On the whole, 23 assignments were completed successfully in the year as against 14 completed in the previous year. Income from cross border M&A activity and the related financing solutions has been the largest contributor to the revenue mix during the year. The team size has now increased to 30 and there is a good blend of relationship managers, products specialist and sector expert. Specifically, the knowledge and expertise in the industry areas of real estate, oil & gas, information technology, steel and power have been strengthened. The Capital Markets business gained momentum during the year deriving its synergy from distribution team at Motilal Oswal Securities Limited. The company’ was ranked as number one in Bloomberg ranking for QlP business during the quarter ended March, 2008. The Company has been able to originate and structure high quality deals in private equity business and, is hopeful that the same trend would continue in the coming year. Clients have appreciated the capability of the Structured Finance team and it remains a strong selling proposition for the Company to strengthen its position in the market place and to be able to cross sell its services across the clients and Industry sectors.

The financial markets have seen an unprecedented turmoil over the last three months with both equity and credit markets being unstable and in a state of uncertainty. The market situation would have impact on the capital markets business of the Company in the coming year. At the same time, the liquidity crunch and re-valuation of assets across the board globally has opened up opportunistic buying and selling possibilities for our clientele in the industry and financial markets. The team has a good combination of skill set and knowledge to address the change in the market conditions. The Company expects a larger flow of transactions in the product areas of business and financial restructuring, private equity have-offs shareholder value creation through buy-back/sell-outs and mergers.”

5. From the above it is evident that the said company MOIAPL has undertaken 23 assignments successfully in the year under consideration. Major portion of the income is earned by MOIAPL out of cross border activity services and related financial services. The capital market business is one of the source 3s of the advisory fees earned by the assessee. Assessee has also earned fees out of assessee's capability of the structured finance teams, financial markets, ie both equity and credit market, is another source of income for the assessee. These functions of the assessee were analyzed by the Tribunal during the proceedings in the case of Carlyle India Advisors (P) Ltd. (supra). The detailed findings of the Tribunal in this regard are mentioned in para 12 of the said Tribunal's order (supra) and the same is reproduced as under:

“12. . ……… The only dispute is whether Motilal Oswal Investment Advisors Pvt Ltd can be considered as a comparable for the determination of ALP. A perusal of three comparables considered by the TPO shows that M/s. Future Capital Investment Advisors Ltd has operative 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 statements 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 loss 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 the determination of ALP and re-determine the Arm's Length Price excluding Motilal Oswal Investment Advisors Pvt Ltd [as per the findings] and including M/s. IDC [as per the directions of the DRP] i the light of the provisions of section 92C(2) r.w.s 92C(2A) of the Act. Ground no. 4.1 and ground no. 9 are accordingly allowed.”

6. The contents of above extracted para highlights the fact that the MOIAPL is into merchant banking, and therefore, is functionally different to that of the assessee which is engaged in the business of non-binding advisory services. Therefore, in our opinion, the assessee is engaged in the function of non-binding advisory services whereas MOIAPL is into the merchant banking, capital markets, finance markets etc. Therefore, we find the MOIAPL is functionally dissimilar and therefore, the same should be excluded for benchmarking the international transactions. Accordingly, AO/TPO is directed to exclude the same. Thus, Ground no. 1 raised by the assessee is allowed in favour of the assessee.

4.7. Similarly, in case of Q-India Investment Advisors Private Limited (supra), similar view has been taken. Detailed finding of the Hon'ble Bench are reproduced herein:

“7. We have considered rival contentions, carefully gone through the orders of the authorities below and found that assessee is engaged in rendering investment advisory services to its AE. As per finding recorded in various judicial pronouncements in above referred cases, M/s. Motilal Oswal Investment Advisory Pvt. Ltd. has been excluded from the list of comparables on the plea that it is engaged in diversified activities. In the case of Acumen fund Advisory Services (I) Pvt. Ltd. (supra), the Tribunal observed that M/s. Motilal Oswal Investment Advisory Pvt. Ltd. is engaged in acquisition, disinvestment, IPO, etc, whereas the assessee is engaged in investment advisory services. In case of Carlyle India Advisors Pvt. Ltd. (supra), the Tribunal observed that M/s. Motilal Oswal Investment Advisory Pvt. Ltd. is registered with SEBI as merchant banker and is engaged in diversified activities, acquisition, disinvestment, IPO etc.

8. As per the annual report of M/s. Motilal Oswal Investment Advisory Pvt. Ltd. for the year ending on 31-3-2010 relevant assessment year 2010-2011, the company derives its business income from four different business verticals viz. Equity Capital Markets, Mergers & Acquisitions, Private Equity Syndications and Structured Debt. The income source across the four products was more or less evenly balanced. The company continues to perform well on advising Indian corporate on cross border acquisitions. The Private Equity business over the last three years has also resulted in a good pipeline of IPOs in the coming year.

9. In view of the above observations regarding nature of business carried on by Motilal Oswal and the judicial pronouncements, it is crystal clear that in addition to investment advisory services in which assessee was involved, M/s. Motilal Oswal Investment Advisory Pvt. Ltd. was engaged in diversified activities and registered with SEBI as a merchant banker. Thus, M/s. Motilal Oswal Investment Advisory Pvt. Ltd. is functionally different from the assessee. Accordingly, we direct the AO to exclude M/s. Motilal Oswal Investment Advisory Pvt. Ltd. form the list of comparables.”

4.8. It is noted that the assessment year in the above said case is A.Y. 2010-11 which is same as that of assessee in the case before us. It is further noted by us that decision of Hon'ble Bombay Bench in the case of Carlyle India Advisors (P) Ltd. (supra) has been upheld by the Hon'ble Bombay High Court in the case of Commissioner Of Income-Tax v. Carlyle India Advisors (P.) Ltd. 32 taxmann.com 23 (Bombay). Thus, respectfully following the aforesaid judgments and in view of the facts brought before us. We find that Motilal Oswal is not comparable to the assessee company and the AO is directed to exclude the same from the list of comparables and re-compute the Arm's Length Price and also the Transfer Pricing Adjustment to be made, if any after the excluding the aforesaid company.

4.9. It is submitted by the Ld. Counsel of the assessee that other grounds raised by the assessee are consequential to ground no. 1 and if ground no. 1 is decided in favour of the assessee the other grounds become academic in nature and infructuous. Since, we have decided ground no. 1 in favour of the assessee, therefore other grounds are dismissed as infructuous.

5. In the result, the appeal of the assessee is partly allowed.

6. Order pronounced in the open court on 22 January, 2016.

Ta Associates Advisory P. Ltd. v. Cit

Structured Summary of the Opinion (Transfer Pricing — Motilal Oswal Comparable Issue)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Assessee's Arguments (Appellant)

Revenue's Arguments (Respondent)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Ta Associates Advisory P. Ltd. v. Cit

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