STANDARD CHARTERED PVT EQUITY ADVISORY INDIA P. LTD, MUMBAI v. DCIT 1(3)(1), KHARGHAR

ITA 736/MUM/2016 | 2011-2012
Pronouncement Date: 28-05-2021 | Result: Allowed

Appeal Details

RSA Number 73619914 RSA 2016
Assessee PAN AADCM7746F
Bench Mumbai
Appeal Number ITA 736/MUM/2016
Duration Of Justice 5 year(s) 3 month(s) 16 day(s)
Appellant STANDARD CHARTERED PVT EQUITY ADVISORY INDIA P. LTD, MUMBAI
Respondent DCIT 1(3)(1), KHARGHAR
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted K
Tribunal Order Date 28-05-2021
Assessment Year 2011-2012
Appeal Filed On 11-02-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH MUMBAI BEFORE SHRI M.BALAGANESH AM & SHRI RAVISH SOOD JM ITA NO. 736 /MUM/ 2016 ( ASSESSMENT YEAR : 2011 - 12 ) M/S. STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD. CRESENZO 7 TH F LOOR PLOT NO.C - 38 & 39 G - BLOCK BKC BANDRA (E) MUMBAI 400 051 VS. ACIT - 1(2)(1) ROOM NO.535 M.K.ROAD AAYAKAR BHAVAN MUMBAI - 400 020 PAN/GIR NO. AADCM7746F (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI DHANESH BAFNA & CHANDNI SHAH REVENUE BY SHRI A MOHAN SHRI SHREENIVASA RAGHAVA IYENGAR & SHRI SREEKAR CIT DR DATE OF HEARING 18 / 12 / 2020 & 24/05/2021 DATE OF PRONOUNCEMENT 28 / 0 5 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 736/MUM/2016 FOR A.Y. 2011 - 12 PR EFERRED BY THE ORDER AGAINST THE FINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DATED 28/1 2 /201 5 U/S.143(3) R.W.S.144C(13) OF THE INCOME TAX ACT HEREINAFTER REFERRED TO AS ACT PURSUANT TO THE D IRECTIONS OF THE LD. ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 2 DISPUTE RESOLUTION PANEL - 2 MUMBAI (DRP IN SHORT) U/S.144C(5) OF THE ACT DATED 30/10 /2015 FOR THE A.Y.2011 - 12. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD DRP WAS JUSTIFIED IN FIXING THE ASSESSEES ARMS LENG TH MARGIN AT 42.40% FOR ITS INTERNATIONAL TRANSACTIONS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS ENGAGED IN PROVIDING NON - BINDING INVESTM ENT ADVISORY AND RESEARCH SERVICES IN CONNECTION WITH INVESTMENT OPPORTUNITIES IN INDIA TO ITS ASSOCIATED ENTERPRISES (AES) VIZ. STANDARD CHARTERED - REAL ESTATE FUND ; STANDARD CHARTERED BANK SINGAPORE BRANCH ; STANDARD CHARTERED IL & FS AND MERLION INDIA MANAGERS LIMITED. WE FIND THAT THE AES PROVIDE NONDISCRETIONARY INVESTMENT MANAGEMENT AND OTHER RELATED SERVICES TO INVESTMENT FUNDS ( HEREINAFTER REFERRED TO AS FUNDS) THAT ARE BASED IN THE OVERSEAS LOCATION IN RELATION TO THE INVESTMENTS MADE BY TH E FUNDS. THE AES REVIEW AND UNDERTAKE A DETAILED EVALUATION OF ALL INVESTMENT/ DIVESTMENT RECOMMENDATIONS PROVIDED BY ASSESSEE IN INDIA. THE AES THEN TAKE APPROPRIATE DECISIONS WITH RESPECT TO MAKING FINAL INVESTMENT / DIVESTMENT RECOMMENDATION TO THE FUN DS. THE ANALYSIS CARRIED OUT BY ASSESSEE IS NOT BINDING ON THE AES AND AES MAY TAKE A DECISION NOT TO RECOMMEND INVESTMENT / DIVESTMENT OPPORTUNITY IDENTIFIED BY ASSESSEE TO THE FUNDS. 3.1. FUNCTIONS PERFORMED BY ASSESSEE THE MAIN OBJECTIVE OF ASSE S SEE IS TO CONDUCT INDUSTRY AND MARKET RESEARCH AND FURNISH INDUSTRY / MARKET FEEDBACK OF INDIAN COMPANIES WITH A VIEW TO PROVIDE INFORMATION AND THEREBY ENABLING THE AES TO MAKE ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 3 INFORMED DECISION ON MAKING FINAL INVESTMENT / DIVESTMENT RECOMMENDATIONS TO THE F UNDS. THE INVESTMENT DECISIONS ARE SO LEL Y THE RESPONSIBILITY OF THE BOARD OF DIRECTORS OF THE FUNDS. ASSESSEE DOES NOT MAKE ANY DECISION ON INVESTMENT / DIVESTMENT ON BEHALF OF AES / THE FUNDS. ASSESSEE RENDERS VARIOUS SERVICES TO AES IN PURSUANCE OF ARRAN GEMENTS BETWEEN ASSESSEE AND THE AES. ACCORDINGLY ASSESSEE PROVIDES THE FOLLOWING SERVICES TO AES: IDENTIFY AND RECOMMEND INVESTMENT OPPORTUNITIES IN INDIA ; PROVISION AND PROCUREMENT OF RESEARCH AND STATISTICAL DATA IN RELATION TO INVESTING OPPORTUNITIE S IN INDIA ; CARRYING OUT SUCH PRELIMINARY DUE DILIGENCE AS IS REQUIRED TO ALLOW A REASONABLE ASSESSMENT TO BE MADE OF THE COMPETITIVE POSITION AND THE FINANCIAL PROSPECTS OF THE PROSPECTIVE INVESTEE COMPANIES AND OF QUALIFICATION AND EXPERTISE OF THEIR MA NAGEMENT; PREPARING WRITTEN INVESTMENT AND DI VESTMENT PROPOSALS FOR REVIEW AND DECISION BY THE AES; MONITORING PERFORMANCE OF INVESTEE COMPANIES AND PROVIDING PROGRESS REPORTS O N THE SAME FROM TIME TO TIME; PROVIDING SUCH INFORMATION / ASSISTANCE / PRES ENTATIONS AS MAY BE REQUIRED BY THE AES OR ITS AUDITORS FOR VALUATION OF THE INVESTMENTS; PROVISION AND PROCUREMENT OF STATISTICAL AND FACTUAL INFORMATION AND RESEARCH REGARDING ECONOMIC AND POLITICAL FACTORS AND TRENDS IN INDIA; AND PROVIDING INFORMATIO N AND ASSISTANCE TO THE AES WITH REGARD TO THE VALUATION AND DISPOSITION OF THE INVESTMENTS ON A PERIODIC BASIS. 3.1.1. THE VARIOUS FUNCTIONS PERFORMED BY ASSESSEE IN THE COURSE OF PROVIDING ITS INVESTMENT ADVISORY AND RESEARCH SERVICES ARE DISCUSSED BELO W: ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 4 A) INITIAL REVIEW RESEARCH PLANNING: THE ANALYSTS PLAN RESEARCH STUDIES AND IDENTIFY THE PURPOSE AND STRATEGY IN OBTAINING RELEVANT DATA TO BE USED IN THE RESEARCH STUDY. THEY DEVELOP THE PROCEDURES / METHODOLOGY WHICH DESCRIBE THE SERIES OF STEPS TO BE UNDERTAKEN IN CARRYING OUT RESEARCH FUNCTION . COMMUNICATION : THE ANALYST REMAIN IN FREQUENT CONTACT IN PERSON OR BY TELEPHONE WITH LOCAL BROKERS BUSINESS GROUPS LEGISLATIVE BODIES ASSOCIATIONS UNIONS AND NEWS MEDIA TO SEEK INFORMATION TO CARRY OUT T HEIR FUNCTIONS EFFECTIVELY. COLLATION OF DATA : THE RESEARCH IS INFLUENCED BY A WHOLE GAMUT OF EVENTS PUBLIC POLICY CHANGES MARKET CONDITIONS GOVERNMENT POLICIES AND PERFORMANCE OF COMPANIES. THUS PRIMARY DATA HAS TO BE GATHERED ON ECONOMIC AND MARKET E VENTS NATIONAL AND INTERNATIONAL EVENTS PUBLIC AND CORPORATE POLICIES AND PERFORMANCE FACTS OF COMPANIES. IN ORDER TO COLLECT SECONDARY DATA. IT USES VARIOUS SOURCES SUCH AS TRADE JOURNALS PERIODICALS OFFICIAL DOCUMENTS NEWS PAPER S AND MAGAZINES. TH E ANALYST ARRANGE MEETINGS WITH VARIOUS COMPANY OFFICIALS FOR THE PURPOSE OF UNDERSTANDING THE GROWTH PROSPECTS AND THE FUTURE OUTLOOK OF THE INDUSTRY. B) PRELIMINARY INVESTMENT ANALYSIS THE ANALYSTS REVIEW THE NARRATIVE AND STATISTICAL INFORMATION GATHER ED AND ON THE BASIS OF SUCH INFORMATION THEY WRITE RESEARCH REPORTS WHICH INCLUDE STATISTICAL FORECASTS SUMMARY TABLES GRAPHS AND CHARTS. THIS ANALYSIS INVOLVES A DUE DILIGENCE REVIEW OF THE PROPOSED INVESTEE COMPANY. IF REQUIRED INPUTS FROM EXTERNAL L AWYERS ARE ALSO TAKEN O N THE BASIS OF THE ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 5 ANALYSIS ABOVE THE ANALYSTS MAKE A PRESENTATION SUMMARIZING THE FINDINGS TO THE AES. SUCH PRELIMINARY DUE - DILIGENCE IS REQUIRED TO ALLOW A REASONABLE ASSESSMENT TO BE MADE THE COMPETITIVE POSITION AND THE FINANC IAL PROSPECTS OF THE PROSPECTIVE INVESTEE COMPANIES AND OF QUALIFICATION AND EXPERTISE OF THEIR MANAGEMENT. C) FINAL INVESTMENT ANALYSIS BASED ON THE PRELIMINARY ANALYSIS THE LOCAL ADVISORS PREPARE A FORMAL REPORT WHICH INDICATES THE PROS AND CONS OF MAK ING THE INVESTMENT OR DIVESTMENT. THE ANALYSIS IS LARGELY BASED ON THE DUE DILIGENCE REVIEW CARRIED OUT EARLIER AND DEPICTS THE LEVEL OF RISK INVOLVED IN THE INVESTMENT. D ) PROGRESS REPORTS ASSESSEE ALSO PREPARES QUARTERLY REPORTS PERTAINING TO THE INVEST MENTS MADE BY AES. THESE REPORTS DETAIL THE PROGRESS OF THE INVESTMENT A LATEST UPDATE OF THE VALUE OF THE PORTFOLIO A BRIEF ON THE INDUSTRY DEVELOPMENTS RELEVANT TO THE INVESTMENT ETC. 3.1.2. FOR THE PURPOSE OF CARRYING OUT THE ABOVE FUNCTIONS ASSESSE E MAINTAINS / UPDATES DATABASE OF FINANCIAL AND OTHER INFORMATION RELATING TO THE EQUITIES AND CAPITAL MARKETS FOR PROVIDING INFORMATION / DATA RELEVANT FOR MAKING INVESTMENTS IN THE CAPITAL MARKETS IN INDIA. 3.1.3. THE ABOVE - MENTIONED SERVICES ARE RENDER ED THROUGH A TEAM OF LOCAL ADVISORS WHO FOLLOW THE STOCK MARKETS AND ECONOMIC TRENDS IN INDIA AND CARRY OUT IN DEPTH ANALYSIS OF SECONDARY MARKETS. FOR STUDYING POTENTIAL COMPANIES THE TEAM OF ASSESSEE COMMUNICATES AND HOLDS DISCUSSIONS WITH VARIOUS PARTI ES SUCH AS BANKS BROKERS FINANCIAL ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 6 INSTITUTIONS AND MANAGEMENT OF THE COMPANIES WHICH ARE BEING RESEARCHED ETC. 3.2. FUNCTIONS PERFORMED BY AES THE AES OF ASSESSEE ARE RESPONSIBLE FOR PROVIDING THE SERVICES RELATING TO THE ORIGINATION INVESTMENT MON ITORING AND DIVESTMENT OF PRIVATE EQUITY INVESTMENTS TO THE FUNDS. THE AES ARE RESPONSIBLE FOR MANAGING INVESTMENTS OF THE FUND ENTITLES IN DIFFERENT MARKETS ACROSS THE GLOBE BUT MOSTLY FOCUSING ON EMERGING MARKETS SUCH INCLUDING INDIA. THE AES ARE RESPO NSIBLE FOR ALL STAGES OF THE INVESTMENT CYCLE FROM ORIGINATION INVESTMENT MONITORING THE DIVESTMENT WITH SUPPORT FROM LOCAL ADVISORY COMPANIES INCLUDING ASSESSEE PRIMARILY FOR THE PURPOSE OF CARRYING OUT LOCAL INVESTMENT ADVISORY RESEARCH AND LOCAL LIA ISON SERVICES. THE AES CONSIDER AND DECIDE WHETHER TO TAKE UP THE RECOMMENDATION MADE BY ASSESSEE TO MAKE AN INFORMED RECOMMENDATION TO THE FUNDS. THE ANALYSIS BY ASSESSEE I S NOT BINDING ON THE AES AND AES RECOMMENDATION IS NOT BINDING ON THE FUNDS. THE AES MAY AT ITS DISCRETION DECIDED NOT TO PURSUE CERTAIN INVESTMENT / DIVESTMENT OPPORTUNITIES IN A MANNER RECOMMENDED BY ASSESSEE . 3.2.1. IN CARRYING OUT ITS OPERATIONS THE AES PERFORM VARIOUS FUNCTIONS RELATED TO THE PURCHASE MAINTENANCE MONITORING A ND SALE OF ASSETS SUCH AS TRANSMISSION AND PLACEMENT OF INVESTMENT ORDERS MAKING INVESTMENTS SECURE HOLDING OF INVESTMENTS MADE AND DISPOSAL OF INVESTMENTS. INVESTMENT COMMITTEE THE DECISION TO MAKE FINAL INVESTMENT / DIVESTMENT RECOMMENDATION TO THE FU ND IS MADE BY THE INVESTMENT COMMITTEE (IC) IN THE AES WHO ACTS AS THE FUND MANAGER. THE IC IS COMPRISED OF SENIOR EMPLOYEES OF THE AES ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 7 SUCH AS THE GLOBAL HEAD OF PRINCIPAL FINANCE THE GLOBAL CO - HEAD OF PRIVATE EQUITY THE CHIEF OPERATING OFFICER ALONG WITH OTHER SCB GROUP REPRESENTATIVES. WHEN ASSESSEE REPRESENTATIVE(S) ATTEND THE IC MEETING THEY ATTEND TO EXPLAIN THE RECOMMENDED INVESTMENT / DIVE S TMENT OPPORTUNITIES IN INDIA. THEY DO NOT PARTICIPATE NOR CONTROL THE INVESTMENT APPROVAL PROCESS. FUND S THE ULTIMATE DECISION OF INVESTMENT / DIVESTMENT IS MADE BY THE BOARD OF DIRECTORS OF THE FUNDS INCORPORATED OUTSIDE OF INDIA. 3.3. THE ASSESSEE HAD ARRIVED AT THE ARMS LENGTH PRICE (ALP) MARGIN BY ADOPTING TRANSACTION NET MARGIN METHOD (TNMM) AS THE M OST APPROPRIATE METHOD (MAM). WE FIND THAT THE PROFIT LEVEL INDICATOR USED BY THE ASSESSEE WAS OPERATING PROFIT TO TOTAL COST (OP / TC) AND ITS MARGIN WAS 16.16% ON PROVISION OF THESE SERVICES TO FOUR AES. WE FIND THAT THE LD TPO BY DISTURBING THE COMPAR ABLES CHOSEN BY THE ASSESSEE DETERMINED THE ALP AT 55.67% AND MADE TRANSFER PRICING ADJUSTMENT OF RS. 25 54 67 000. THIS WAS REDUCED BY THE LD DRP TO 42.40% BY PROVIDING CERTAIN RELIEFS TO THE ASSESSEE IN RESPECT OF COMPARABLES. WE FIND THAT THE ASSESSE E HAD DISPUTED THE DETERMINATION OF MARGIN BY LD DRP AT 42.40% ON VARIOUS GROUNDS. WE FIND THAT THE LD AR BEFORE US ARGUED THAT IF GROUND NO. 1.3. RAISED BY THE ASSESSEE IS TAKEN UP FOR ADJUDICATION FIRST AND DECIDED IN FAVOUR OF THE ASSESSEE THE ASSESSE E WOULD BE WELL WITHIN THE +/ - 5% ACCEPTED TOLERANCE RANGE AND IN THAT SCENARIO NO ADJUSTMENT TO ALP WOULD BE REQUIRED. WE FIND THAT GROUND NO. 1.3. RAISED BY THE ASSESSEE IS FOR SEEKING A) EXCLUSION OF MOTILAL OSWAL PRIVATE EQUITY ADVISORY PRIVATE LIMI TED ON THE GROUND THAT IT IS NOT FUNCTIONALLY COMPARABLE WITH ASSESSEE ; ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 8 B) EXCLUSION OF LADDERUP CORPORATE ADVISORY PVT LTD ON THE GROUND THAT IT IS NOT FUNCTIONALLY COMPARABLE WITH ASSESSEE ; C) INCLUSION OF CYBER MEDIA RESEARCH LIMITED AS IT IS FUNCTIONAL LY COMPARABLE WITH ASSESSEE 3.4. WE FIND LOT OF FORCE IN THIS ARGUMENT OF THE LD AR AS ADJUDICATION OF THE EXCLUSION AND INCLUSION OF AFORESAID COMPARABLES WOULD RESOLVE THE ISSUE IN DISPUTE BEFORE US AND IN CASE IF THE SAME IS DECIDED IN FAVOUR OF THE AS SESSEE THE ADJUDICATION OF OTHER CONTESTED COMPARABLES WOULD BECOME ACADEMIC IN NATURE. HENCE WE NOW PROCEED TO ADJUDICATE THE EXCLUSION AND INCLUSION AS THE CASE MAY BE OF AFORESAID COMPARABLES. 3.5. EXCLUSION OF MOTILAL OSWAL PRIVATE EQUITY ADVISORY PRIVATE LIMITED AT THE OUTSET WE FIND THAT THE LD AR STATED THAT THIS COMPARABLE HAD BEEN HELD TO BE FUNCTIONALLY NOT COMPARABLE WITH ASSESSEE RENDERING NON - BINDING INVESTMENT ADVISORY SERVICES BY THE ORDER OF THIS TRIBUNAL DATED 11.6.2019 PASSED IN THE CASE OF BAIN CAPITAL ADVISORS(INDIA) LTD VS ACIT IN ITA NO. 1996/MUM/2016. WE FIND THAT THE LD DR VEHEMENTLY ARGUED THAT THE FUNCTIONS PERFORMED BY THIS COMPARABLE COMPANY IS SIMILAR TO THAT OF THE ASSESSEE COMPANY AND HENCE IT BECOMES A VALID COMPARABLE . THE RELEVANT PORTION OF THE TRIBUNAL ORDER DATED 11.6.2019 WHICH HAS ADDRESSED THIS ISSUE IS REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE: - 9. (I) WE HAVE CONSIDERED THE CONTENTIONS ADVANCED BY THE AUTHORIZED REPRESENTATIVES FOR BOTH TH E PARTIES AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THEM IN CONTEXT OF THE AFOREMENTIONED COMPARABLE. WE FIND THAT THE ISSUE AS TO WHETHER THE AFOREMENTIONED COMPARABLE VIZ. MOTILAL OSWAL EQUITY A DIVISORS PVT. LTD. COULD BE SELECTED AS A COMPANY FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF AN ASSESSEE WHICH WAS PROVIDING NON - BINDING INVESTMENT ADVISORY SERVICES HAD BEEN LOOKED INTO BY THE TRIBUNAL IN THE CASE OF NEW SILK ROUTE ADVISORS PVT. LTD. VS. ACIT CIRCLE - 7(2)(2) MUMBAI [IT (TP) APPEAL NO. 1148/MUM/ 2016 DATED 30.11.2018) FOR A.Y. 2011 - 12. IN ITS AFORESAID ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 9 ORDER THE TRIBUNAL RELYING ON THE EARLIER ORDERS OF ITS COORDINATE BENCHES VIZ. (I) DCIT VS. GENERAL ATLANTIC PVT. LTD. 91 TAXM ANN.COM 406 (MUM); (II) TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. DCIT (2017) 87 TAXMANN.COM 168; (III) WELL FARGO REAL ESTATE ADVISORS PVT. LTD. VS. DCIT (2018) 90 TAXMANN.COM 18; AND (IV) AVENUE ASIA ADVISORS PVT. LTD. VS. DCIT (2017) 85 TAXMANN.C OM 311 (DEL) HAD CONCLUDED THAT THE AFOREMENTIONED COMPANY COULD NOT BE CONSIDERED AS A COMPARABLE TO AN INVESTMENT ADVISORY SERVICE PROVIDER DUE TO DIFFERENCE IN FUNCTIONAL PROFILE. THE TRIBUNAL WHILE CONCLUDING AS HEREINABOVE HAD OBSERVED AS UNDER: 1 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS RECORD IN THE LIGHT OF THE DECISIONS RELIED UPON. AS COULD BE SEEN FROM THE FACTS ON RECORD THOUGH THE AFORESAID COMPANY HAS FOUR BUSINESS VERTICALS HOWEVER THE SEGMENTAL DETAILS ARE NOT AVA ILABLE IN THE ANNUAL REPORT. FURTHER IN CASE OF TEMASEK HOLDING ADVISORS INDIA PVT. (LTD. (SUPRA) THE TRIBUNAL WHILE CONSIDERING THE COMPARABILITY OF THE AFORESAID COMPANY TO AN INVESTMENT ADVISORY SERVICES PROVIDER HELD THAT THIS COMPANY CANNOT BE A CO MPARABLE DUE TO DIFFERENCES IN FUNCTIONAL PROFILE. THE SAME VIEW WAS REITERATED BY THE CO - ORDINATE BENCH WHILE DECIDING THIS PARTICULAR ISSUE IN CASE OF WELL FARGO REAL ESTATE ADVISORS PVT. LTD. (SUPRA). SINCE THE AFORESAID DECISIONS OF THE CO - ORDINATE B ENCH ARE FOR THE VERY SAME ASSESSMENT YEAR AND NO DISTINGUISHING FACTS HAVE BEEN BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN OUR CONSIDERED OPINION THE RATIO LAID DOWN IN THE ABOVE REFERRED DECISIONS CLEARLY APPLY TO THE FACTS OF THE PRESENT CASE. THERE BEING NO DISSIMILARITY IN FACTS BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE RESPECTIVELY FOLLOWING THE AFORESAID DECISIONS OF THE CO - ORDINATE BENCH WE HOLD THAT THIS COMPANY CANNOT BE A COMPARABLE TO THE ASSES SEE. FURTHER WE FIND THAT A SIMILAR VIEW HAD ALSO BEEN TAKEN BY THE TRIBUNAL IN THE CASE OF TATA ASSET MANAGEMENT LTD. VS. DCIT CIRCLE - 2(3)(1) MUMBAI (ITA NO. 933/MUM/2016 FOR A.Y. 2011 - 12) AND IN THE CASE OF BLACK STONE ADVISORS INDIA PVT. LTD. VS. ACIT CIRCLE 3(1) MUMBAI (ITA NO. 1370/MUM/2016 DATED 30.11.2018) FOR A.Y. 2011 - 12. WE THUS RESPECTFULLY FOLLOWING THE AFORESAID ORDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL THEREIN CONCLUDE THAT MOTILAL OSWAL EQUITY ADVISORS PVT. LTD. CANNOT BE TR EATED AS A COMPARABLE TO THE ASSESSEE. 3.5.1. WE FIND THAT THE ASSESSEE COMPANY BEFORE US PROVIDES NON - BINDING AND NON DISCRETIONARY INVESTMENT ADVISORY AND OTHER RELATED SERVICES TO ITS AES AND THE FUNDS IN RELATION TO INVESTMENTS MADE BY THE FUNDS SITU ATED IN OVERSEAS LOCATION. FROM THE PERUSAL OF VARIOUS FUNCTIONS PERFORMED BY THE ASSESSEE COMPANY WHICH ARE DETAILED ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 10 HEREINABOVE WE FIND THAT THE FUNCTIONS PERFORMED BY THE AFORESAID COMPARABLE COMPANY IS FUNCTIONALLY DISSIMILAR WITH THAT OF THE ASSES SEE COMPANY. HENCE IN VIEW OF THE SAME AND ALSO BY RESPECTFULLY FOLLOWING THE SAID DECISION OF THIS TRIBUNAL IN THE CASE OF BAIN CAPITAL ADVISORS(INDIA) LTD VIDE ITS ORDER DATED 11.6.2019 WE DIRECT THE LD. TPO / LD AO TO EXCLUDE MOTILAL OSWAL PRIVATE EQU ITY ADVISORY PRIVATE LIMITED IN THE FINAL LIST OF COMPARABLES FOR WORKING OUT THE ARITHMETIC MEAN MARGIN OF THE COMPARABLES. 3.6. EXCLUSION OF LADDERUP CORPORATE ADVISORY PVT LTD AT THE OUTSET WE FIND THAT THE LD AR STATED THAT THIS COMPARABLE HAD BEEN HELD TO BE FUNCTIONALLY NOT COMPARABLE WITH ASSESSEE RENDERING NON - BINDING INVESTMENT ADVISORY SERVICES BY THE ORDER OF THIS TRIBUNAL DATED 11.6.2019 PASSED IN THE CASE OF BAIN CAPITAL ADVISORS(INDIA) LTD VS ACIT IN ITA NO. 1996/MUM/2016. WE FIND THAT THI S COMPARABLE COMPANY IS IN THE BUSINESS OF PROVIDING FINANCIAL AND CORPORATE ADVISORY SERVICES TO CORPORATE CLIENTS. THESE ADVISORY SERVICES COVER THE MAJOR SPECTRUM OF CAPITAL STRUCTURE ADVISING CLIENTS TO RAISE TRADITIONAL DEBT FACILITIES AS WELL AS ST RUCTURES DEBT RESTRUCTURING ADVISORY SERVICES RAISING PRIVATE EQUITY AND SOURCING & EXECUTING MERGER & AMALGAMATION OPPORTUNITIES DOMESTIC AS WELL AS CROSS BORDER. WE FIND THAT THE LD DR VEHEMENTLY ARGUED THAT THE FUNCTIONS PERFORMED BY THIS COMPARABLE COMPANY IS SIMILAR TO THAT OF THE ASSESSEE COMPANY AND HENCE IT BECOMES A VALID COMPARABLE. WE FIND THAT THE ASSESSEE COMPANY BEFORE US PROVIDES NON - BINDING AND NON DISCRETIONARY INVESTMENT ADVISORY AND OTHER RELATED SERVICES TO ITS AES AND THE FUNDS IN RELATION TO INVESTMENTS MADE BY THE FUNDS SITUATED IN OVERSEAS LOCATION. THE RELEVANT PORTION OF THE TRIBUNAL ORDER DATED ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 11 11.6.2019 WHICH HAS ADDRESSED THIS ISSUE IS REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE: - 9. . (B) LADDER UP CORPOR ATE ADVISORS PVT. LTD: WE FIND THAT THE ASSESSEE HAD OBJECTED TO THE INCLUSION OF THE AFORESAID COMPANY IN THE LIST OF COMPARABLES ON THE GROUND THAT THE LATTER WAS REGISTERED AS A CATEGORY 1 MERCHANT BANKER WITH SEBI INDIA AND WAS THUS ENGAGED IN RENDE RING MERCHANT BANKING SERVICES SINCE JULY 2010. APART THERE F R O M I T WAS S U B M I TT E D B Y T H E A S S E SS E E THAT A S P E R T H E A N N U A L R E P O R T OF THE AFORESAID COMPANY THERE WAS ONLY ONE SEGMENT. ON THE BASIS OF THE AFORESAID FACTS IT WAS THE CLAIM OF THE ASSESSEE THAT AS THE AFORESAID COMPANY WAS ENGAGED IN MERCHANT BANKING/INVESTMENT BANKING AND OTHER SIMILAR ACTIVITIES WHICH WERE NOT FUNC TIONALLY COMPARABLE TO THE ASSESSEE THAT WAS ENGAGED IN RENDERING INVESTMENT ADVISORY SERVICES HENCE IT COULD NOT HAVE BEEN SELECTED AS A COMPARABLE FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE. HOWEVER THE A.O/DRP DID NOT FIND FAVOUR WITH THE AFORESAID CONTENTIONS OF THE ASSESSEE. RATHER IT WAS OBSERVED BY THE LOWER AUTHORITIES THAT THE AFORESAID COMPANY WAS A BOUTIQUE INVESTMENT BANKING FIRM THAT OFFERED FINANCIAL ADVISORY SERVICES. FURTHER IT WAS OBSERVED BY THEM THAT AS PER ITS ANNUAL REPORT IT WAS REGISTERED AS A MERCHANT BANKER IN JULY 2010 FROM SEBI AND HAD NO ACTUAL INCOME FROM THE SAID ACTIVITY DURING THE YEAR UNDER CONSIDERATION. IN SUM AND SUBSTANCE IT WAS OBSERVED BY THE LOWER AUTHORITIES THAT THOUGH THE AFOREMENTIO NED COMPANY HAD STATED ITSELF TO BE AN INVESTMENT BANKING FIRM HOWEVER NO DIRECT INCOME WAS EARNED BY IT OUT OF SUCH ACTIVITY. ACCORDINGLY THE LOWER AUTHORITIES BEING OF THE VIEW THAT THE AFOREMENTIONED COMPANY WAS FUNCTIONALLY COMPARABLE TO THE ASSESSE E WHICH WAS PROVIDING INVESTMENT ADVISORY SERVICES THUS INCLUDED THE SAME IN THE LIST OF THE COMPARABLES. 10 . WE FIND THAT THE ISSUE THAT THE AFOREMENTIONED COMPANY VIZ. LADDER UP CORPORATE ADVISORY PVT. LTD. COULD NOT BE TREATED AS A COMPARABLE TO AN INVEST MENT SERVICE PROVIDER HAD BEEN LOOKED INTO BY THE TRIBUNAL IN THE CASE OF NEW SILK ROUTE ADVISORS PVT. LTD. VS. ACIT CIRCLE - 7(2)(2) MUMBAI [IT (TP) APPEAL NO. 1148/MUM/2016 DATED 30.11.2018) FOR A.Y. 2011 - 12. THE TRIBUNAL IN THE AFOREMENTIONED CASE TAK ING COGNIZANCE OF THE FUNCTIONAL PROFILE OF THE AFOREMENTIONED COMPANY WHICH WAS REGISTERED AS A CATEGORY - 1 MERCHANT BANKING COMPANY WITH SEBI AND WAS ENGAGED IN MERCHANT BANKING SERVICES WITH EFFECT FROM JULY 2010 HAD THEREIN HELD THAT THE SAME COULD N OT BE TREATED AS A COMPARABLE TO A COMPANY ENGAGED IN THE ACTIVITY OF RENDERING INVESTMENT ADVISORY SERVICES. THE TRIBUNAL WHILE CONCLUDING AS HEREINABOVE HAD RELIED ON THE EARLIER DECISIONS OF THE COORDINATE BENCHES OF THE TRIBUNAL VIZ. (I) DCIT VS. GENE RAL ATLANTIC PVT. LTD. 91 TAXMANN.COM 406 (MUM); (II) TEMASEK HOLDINGS ADVISORS INDIA PVT. LTD. VS. DCIT (2017) 87 ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 12 TAXMANN.COM 168; (III) WELL FARGO REAL ESTATE ADVISORS PVT. LTD. VS. DCIT (2018) 90 TAXMANN.COM 18; AND (IV) AVENUE ASIA ADVISORS PVT. LTD . VS. DCIT (2017) 85 TAXMANN.COM 311 (DEL). THE TRIBUNAL WHILE CONCLUDING AS HEREINABOVE HAD OBSERVED AS UNDER: 14 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. FROM THE FUNCTIONAL PROFILE OF THE AFORESAID COMPANY IT APPEARS THAT IT IS REGISTERED AS CATEGORY - I MERCHANT BANKING COMPANY WITH SEBI AND IS ENGAGED IN MERCHANT BANKING SERVICES W.E.F. JULY 2010. CONSIDERING THE AFORESAID FACTUAL ASPECT THE CO - ORDINATE BENCH IN THE DECISIONS CITED BY THE LEARNED AUTHORISED REPRESEN TATIVE FOR THE ASSESSEE HAS HELD THAT THIS COMPANY CANNOT BE A COMPARABLE TO A COMPANY ENGAGED IN THE ACTIVITY OF INVESTMENT ADVISORY SERVICES. SINCE THE AFORESAID DECISIONS ARE FOR THE VERY SAME ASSESSMENT YEAR AND NO DISTINGUISHING FACT IN THE PRESENT A PPEAL WAS BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL WE HOLD THAT THIS COMPANY CANNOT BE TREATED AS COMPARABLE TO THE ASSESSEE. APART THERE FROM WE FIND THAT A SIMILAR VI EW HAD ALSO BEEN TAKEN BY THE COORDINATE BENCHES OF THE TRIBUNAL VIZ. (I) M/S GUGGENHEIM CAPITAL MANAGEMENT (ASIA) PVT. LTD. VS. ACIT CIRCLE 3(1)(2) MUMBAI (ITA NO. 423/MUM/2016 DATED 18.02.2019) FOR A.Y. 2011 - 12; (II) TATA ASSET MANAGEMENT LTD VS. DY. CIT CIRCLE 2(3)(1) MUMBAI [IT (TP) A. NO. 933/MUM/2016 DATED 15.03.201] FOR A.Y. 2011 - 12; AND (III) BLACK STONE ADVISORS INDIA PVT. LTD. VS. ACIT (ITA NO. 1370/MUM/2016 DATED 30.11.2018 FOR A.Y. 2011 - 12). WE THUS RESPECTFULLY FOLLOWING THE AFORESAID O RDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL THEREIN CONCLUDE THAT THE AFOREMENTIONED COMPANY VIZ. LADDER UP CORPORATE ADVISORS PVT. LTD. CANNOT BE TREATED AS A COMPARABLE TO THE ASSESSEE. 3.6.1. WE FIND THAT THE ASSESSEE COMPANY BEFORE US PROVIDES N ON - BINDING AND NON DISCRETIONARY INVESTMENT ADVISORY AND OTHER RELATED SERVICES TO ITS AES AND THE FUNDS IN RELATION TO INVESTMENTS MADE BY THE FUNDS SITUATED IN OVERSEAS LOCATION. FROM THE PERUSAL OF VARIOUS FUNCTIONS PERFORMED BY THE ASSESSEE COMPANY W HICH ARE DETAILED HEREINABOVE WE FIND THAT THE FUNCTIONS PERFORMED BY THE AFORESAID COMPARABLE COMPANY IS FUNCTIONALLY DISSIMILAR WITH THAT OF THE ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 13 ASSESSEE COMPANY. HENCE IN VIEW OF THE SAME AND ALSO BY RESPECTFULLY FOLLOWING THE SAID DECISION OF THIS T RIBUNAL IN THE CASE OF BAIN CAPITAL ADVISORS LTD VIDE ITS ORDER DATED 11.6.2019 WE DIRECT THE LD TPO / LD AO TO EXCLUDE LADDERUP CORPORATE ADVISORY PVT LTD IN THE FINAL LIST OF COMPARABLES FOR WORKING OUT THE ARITHMETIC MEAN MARGIN OF THE COMPARABLES. 3 .7. INCLUSION OF CYBER MEDIA RESEARCH LIMITED WE FIND THAT THIS COMPARABLE HAS BEEN INCLUDED IN THE FINAL LIST OF COMPARABLES BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST YEAR 2010 - 11 VIDE ITS ORDER DATED 8.2.2019 AS FUNCTIONALLY COMPARABLE. THER E IS ABSOLUTELY NO CHANGE IN THE FUNCTIONS PERFORMED IN ASST YEAR 2010 - 11 AND 2011 - 12. HENCE THERE IS NO REASON TO TAKE A DIVERGENT STAND FOR US. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WE DIRECT THE LD TPO / LD AO TO INCLUDE CYBER MEDIA RESEARCH LIMITED IN THE FINAL LIST OF COMPARABLES FOR WORKING OUT THE ARITHMETIC MEAN MARGIN OF THE COMPARABLES. 4. APART FROM THIS WE FIND THAT THE LD AR STATED THAT A RESOLUTION UNDER ADVANCE PRICING AGREEMENT (APA) HAS BEEN REACHED WITH RESPECT TO TRANSACTIONS BETWEEN THE ASSESSEE AND ITS 2 AES VIZ STANDARD CHARTERED BANK SINGAPORE BRANCH AND STANDARD CHARTERED - REAL ESTATE FUND WHICH INCLUDES THE ASSESSMENT YEAR UNDER CONSIDERATION BEFORE US. WE FIND THAT THE APA ENTERED WITH CBDT HAD ARRIVED AT THE ALP OF COST PLUS 20%. THE LD AR BEFORE US SUBMITTED THAT THE SAME RATE MAY BE APPLIED FOR OTHER TWO AES ALSO. WE FIND THAT THE LD DR VEHEMENTLY RAISED OBJECTION TO THIS ARGUMENT ADVANCED BY THE LD AR BY STATING THAT APA RAT E COULD BE ADOPTED ONLY WHEN MECHANISM PROVIDED IN RULE 10B OF THE RULES FAILS. WE FIND THAT THIS ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 14 ASPECT OF THE ISSUE NEED NOT BE GONE INTO BY US AT THIS STAGE IN VIEW OF OUR AFORESAID DECISION TAKEN ON THE EXCLUSION OF 2 COMPARABLES AND INCLUSION OF 1 C OMPARABLE SUPRA. ACCORDINGLY THE ISSUE RAISED BY THE ASSESSEE WITH REGARD TO APA RATES AND OBJECTION RAISED BY THE LD DR ARE LEFT OPEN AND WE REFRAIN TO GIVE ANY OPINION IN THAT REGARD. 5. ACCORDINGLY WE DIRECT THE LD TPO / LD AO TO RECOMPUTE THE AR ITHMETIC MEAN MARGIN OF THE COMPARABLE COMPANIES AFTER EXCLUDING MOTILAL OSWAL PRIVATE EQUITY ADVISORY PRIVATE LIMITED AND LADDERUP CORPORATE ADVISORY PVT LTD AND AFTER INCLUDING CYBER MEDIA RESEARCH LIMITED FROM THE FINAL LIST OF COMPARABLES RETAINED AFTE R DIRECTIONS OF LD DRP. ACCORDINGLY THE GROUND NO. 1.3. WITH REGARD TO THESE COMPARABLES ALONE RAISED BY THE ASSESSEE IS ALLOWED. 6. THE GROUND NO. 2 RAISED BY THE ASSESSEE IS WITH REGARD TO CHARGEABILITY OF INTEREST U/S 234B AND 234C OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 28 / 05 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( RAVISH SOOD ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 28 / 05 / 202 1 KARUNA SR.PS ITA NO . 736 /MUM/ 2016 M/S STANDARD CHARTERED PVT. EQUITY ADVISORY INDIA P. LTD . 15 COPY OF THE ORDER FORWARDED TO : BY ORDER ( ASSTT. REGISTRAR) ITAT MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//