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11-06-2019, Bain Capital Advisors, Section 92CA, Tribunal Mumbai

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5 days 21 hours ago #9735 by amit
Section - 92CA
Order Date - 11-06-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - Bain Capital Advisors (India) Private Limited
Respondent - ACIT
Justice - M.Balaganesh AM & Ravish Sood JM
Citation - 619Taxpundit151
Appeal No. - ITA No.1996/Mum/2016
Asstt. Year - 2011-12

Order

PER : RAVISH SOOD, JM

The present cross appeals filed by the assessee and the revenue are directed against the order passed by the A.O under Sec. 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 (for short „I-T Act‟), dated 28.01.2016. The assessee has raised before us the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Dispute Resolution Panel ('DRP') erred in upholding the action of the Assistant Commissioner of Income Tax, Circle 3(1)(1) ('AO') / the Additional Commissioner of Income-Tax, Transfer Pricing 1(1) ('TPO'), Mumbai of making an adjustment of Rs.12,14,10 530/- to the Appellant international transaction of provision of Investment Advisory Services. The Appellant prays that the aforesaid adjustment be deleted.

2. On the facts and in the circumstances of the case and in law, the DRP erred in upholding the action of the AO/TPO of rejecting the Transfer Pricing Study maintained by the Appellant and the fresh search subsequently submitted by the Appellant.

3. On the facts and in the circumstances of the case and in law, the DRP erred in upholding the action of the AO/TPO of excluding the comparables i.e. Cyber Media Research Ltd., Frontline Venture Services Private Limited and Primary Real Estate Advisors Private Limited, without appreciating the functional comparability of the said comparables.

4. On the facts and in the circumstances of the case and in law, the DRP erred in upholding the action of the AO/TPO of including functionally incomparable companies namely Motilal Oswal Private Equity Advisors Private Limited and Ladderup Corporate Advisory Private Limited in the final set of companies for determining the arm's length price of provision of investment advisory services.

5. On the facts and in the circumstances of the case and in law, the DRP erred in confirming the action of the AO/TPO in not applying multiple year data for comparable companies and using data for the financial year 2010-11 alone.

6. On the facts and in the circumstances of the case and in law, the A.O has erred in not allowing credit of Tax Deducted at Source („TDS‟) of Rs.73,78,312/- to the appellant.

All of the above grounds are without prejudice to each other.

The appellant craves to add to, alter, amend or withdraw all or any of the above grounds of appeal.”

2. Briefly stated, the assessee company is engaged in the business of rendering investment research/investment advisory services to its Associate Enterprise (for short „AE‟) i.e Bain Capital, Mauritius, in respect of potential investment opportunity in India. The assessee had filed its return of income for A.Y. 2011-12 on 23.11.2011, declaring total income of Rs.9,59,53,320/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2).

3. During the course of the assessment proceedings the A.O made a reference to the Transfer Pricing Officer (for short „TPO‟) for computation of the „Arm‟s Length Price‟ (for short „ALP‟) of the international transactions of the assessee for the year under consideration.

4. The TPO in the course of the proceedings observed, that the assessee had entered into the following international transactions during the year under consideration:

It was observed by him that the assessee had benchmarked the international transactions of providing investment advisory related support services to its AE by applying the Transactional Net Margin Method (for short „TNMM‟). Further, the „Profit Level Indicator‟ selected by the assessee was Operating Profit/Total Cost (OP/TC). It was observed by the TPO that the assessee had initially proposed a set of 5 comparables, which were thereafter voluntarily rejected by it. Further, on undertaking of a fresh search the assessee had selected three comparables on the basis of a single year updated margin, as under : It was claimed by the assessee that as its own margin of 20% was higher than the arithmetic mean of 5.42% of the aforementioned three comparables, therefore, the value of the international transactions entered into by it were at arm‟s length. The TPO rejected the aforesaid three comparables of the assessee and proposed a set of three comparables viz. (i). Motilal Oswal Investments Pvt. ltd (OP/TC: 82.29%); (ii).Ladder up Corporate Advisory Pvt. Ltd. (OP/TC : 52.43%); and (iii). Motilal Oswal Pvt. Ltd. Equity advisors Pvt. Ltd. (OP/TC : 32.38%), as good comparables to the assessee. Accordingly, the TPO determined the ALP of the international transactions of the assessee with its AE and worked out a transfer pricing adjustment of Rs.19,34,11,688/-, as under:

5. Aggrieved, the assessee filed objections with the Dispute Resolution Panel 1, Mumbai (for short „DRP‟). The assessee assailed the exclusion of its comparables viz. (i) Cyber Media Research Ltd (formerly IDC India Ltd.); (ii) Frontline Venture Services Private Ltd; and (iii) Primary Real Estate Advisors Pvt. Ltd. Further, the inclusion of the three new comparables by the DRP viz. (i) Motilal Oswal Investments Advisors Pvt. Ltd.; (ii) Ladder up Corporate Advisory Pvt. Ltd.; and (iii) Motilal Oswal Equity Advisors Pvt. Ltd. was also assailed before the DRP. The DRP was not persuaded to accept the claim of the assessee that the TPO had erred in rejecting the comparables which were selected by the assessee, and therein upheld the order of the TPO

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