IN THE INCOME TAX APPELLATE TRIBUNAL “K”, BENCH MUMBAI

BEFORE SHRI SAKTIJIT DEY, JM

&
SHRI M.BALAGANESH, AM
ITA No.423/Mum/2016
(Assessment Year :2011-12)
IT(TP)A No. 1164/Mum/2017
(Assessment Year: 2012-13
M/s. Guggenheim Capital Vs. Asst. Commissioner of
Management (Asia) Private Income Tax, Circle 3(1)(2),
Limited Room No.607, 6 t h Floor,
C/o. Quest Offices, 1st Floor Aayakar Bhavan, M.K.
Parinee Crescenzo Building Road, Mumbai- 400 020
C 38 & 39, G Block,
Bandra Kurla Complex,
Mumbai – 400 051
PAN/GIR No.AADCG2796G
(Appellant) .. (Respondent)
ITA No.299/Mum/2016
(Assessment Year :2011-12)
Asst. Commissioner of Vs. M/s. Guggenheim Capital
Income Tax, Circle 3(1)(2), Management (Asia) Private
th
Room No.607, 6 Floor, Limited
Aayakar Bhavan, M.K. C/o. Quest Offices, 1st Floor
Road, Mumbai- 400 020 Parinee Crescenzo Building
C 38 & 39, G Block,
Bandra Kurla Complex,
Mumbai – 400 051
PAN/GIR No.AADCG2796G
(Appellant) .. (Respondent)

Assessee by Shri Anuj Kisnadvala / Shri

Rushabh Vora / Shri Maulik Doshi
Revenue by Shri Anand Mohan

Date of Hearing 18/02/2019

Date of Pronouncement 20/02/2019

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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

आदे श / O R D E R

PER M. BALAGANESH (A.M):

These cross appeals are filed by assessee and revenue directed against

the order of Commissioner of Income Tax (Appeals)-1, [hereinafter

referred to as the ld CITA], Mumbai dated 23rd September 2015 for

A.Y.2011-12 and 2012-13 in the matter of order passed u/s.143(3) r.w.s.

144C of the Income-Tax Act, 1961. Since identical issues are involved in

these appeals, they were heard together and are being disposed off by

this consolidate order, for the sake of convenience.

2. Let us take up assessee appeal for A.Y.2011-12 in ITA

No.423/Mum/2016. Though the assessee has raised various grounds

before us, we find that the only issue to be decided is as to whether the

Ld. DRP was justified in not including IDC (India) Ltd., Informed

Technologies India Ltd., Pipal Research Analytics & Information Services

India Pvt. Ltd., and ICRA Management Consulting Services Ltd., as

comparable companies for the purpose of benchmarking the international

transactions carried out by the assessee. The interconnected issue is

whether the Ld. DRP was justified in including the Ladderup Corporate

Advisory Pvt. Ltd. as comparable for the purpose of benchmarking

international transactions in the facts and circumstances of the case.

3. The brief facts of this issue are that the assessee is a part of

Gugganheim group which provides diversified financial services. It renders

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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

asset management, investment banking and capital market services,

insurance, institutional finance and investment advisory solutions. The

assessee is engaged in providing non-binding/recommendatory

investment advisory services to Gugganheim Partners India Management,

LLC [hereinafter referred as AE”]. Assessee collects information from

above companies, funds or portfolios recommended by the AE and

analyse the same to give its reports to its overseas AE. Assessee is

engaged in business of providing investment research and advisory

services to its AE’s on a non-exclusive and non-binding basis, in

connection with potential investment opportunities in India. The details of

international transactions entered into by the assessee during the year as

mentioned in the order of the Ld. TPO dated 13/01/2015 are as under:-

Sr. Nature of International transaction FY 2010-11 Method Used

No.
1 Rendering non-binding investment 6,63,82,418 TNMM
advisory services
2 Payment of support and global 64,84,986 TNMM
management charges

3 Reimbursement of expenses 33,47,700 Cost to cost

Total 7,62,15,104

3.1. The assessee benchmarked its international transactions by using

multiple year data of last three years average margin and by identifying

following five comparables and arrived at weighted average margin of

14.31% as under:-
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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

Sr. Name of the Company Three year average

No. Operating Profit /
Operating Cost
1 ICRA Management Consulting Services Ltd., 5.03
2 ICRA Online Ltd., 34.87
3 IDC (India) Ltd., 12.30
4 Informed Technologies India Ltd., 19.39
5 Pipal Research Analytics & Information Services -0.03
India Pvt Ltd.,
Average 14.31

3.2. The assessee adopted transactional net margin method [TNMM] as

most appropriate method (MAM) by adopting profit level indicator [PLI] as

operating profit divided by operating cost (OP/OC) by taking the assessee

company as the tested party. The profit margin of the assessee was

17.77% which was higher than the comparables weighted average

margin based on their three years data of 14.31% as above. Accordingly,

the assessee pleaded that its margin to be at arm’s length price. The Ld.

TPO rejected four out of five comparables identified by the assessee and

retained only ICRA Online Ltd., from the comparables chosen by the

assessee.

3.3. During the course of proceedings before the TPO, assessee gave a

single year data i.e., contemporaneous data for all the five list of

comparables selected by the Ld. TPO which admittedly included the list of

fresh comparables identified by the Ld. TPO for the purpose of

benchmarking. Accordingly, the final list of comparables and its respective

margins based on single year data are as under:-

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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

Sr. Name of the Company Single Year Comparable

No. OP/TC (%) Selected by
1 ICRA Online Ltd 21.63% Assessee
2 Motilal Oswal Investment Advisory Pvt. Ltd. 82.29% TPO
3 Ladderup Corporate Advisory Pvt Ltd 52.43% TPO
4 New Berry Advisors Ltd., 35.62% TPO
5 ICRA Technoloanalyst Ltd., 24.29% TPO
Average 43.26%

3.4. Accordingly, the Ld. TPO made an adjustment of Rs.1,39,97,428/-

as under:-

Particulars Amount (Rs.)

Operating Income (A) 6,46,96,564

Operating Cost (B) 5,49,34,724

Operating profit (C) 97,61,840

OP/OC 17.77%

Arm's Length OP/OC 43.25 %

Arm's Length Operating Income (E) 7,86,93,992

Adjustment -E- A 1,39,97,428/-

105% of Income (A) 6,79,31,392

95% of Income (A) 6,14,61,736

3.5. The assessee filed objections before the Hon’ble Dispute Resolution

Panel (Ld. DRP) and the Ld. DRP vide its directions u/s.144C(5) of the Act

dated 23/09/2015 directed the TPO to include Motilal Oswal Investment

Advisory Pvt. Ltd., and ICRA Technoanalyst Ltd., in the list of final

comparables chosen by the Ld. TPO and directed the Ld. TPO to arrive at

the revised benchmarking and make suitable adjustments thereon to ALP.

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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

4. Against the said directions of the Ld. DRP, both assessee as well as

the revenue are in appeal before us. Revenue is in appeal against the

directions of the Ld. DRP to include Motilal Oswal Investment Advisory

Pvt. Ltd., and ICRA Technoanalyst Ltd. in the list of comparables. The

assessee is in appeal before us for rejection of comparables chosen by it

i.e IDC India Ltd., Informed Technologies India Ltd., Pipal Research

Analyst & Information Services India Pvt Ltd., and ICRA Management

Consulting Services Ltd. Assessee is also in appeal before us against the

order of DRP in upholding the inclusion of Ladderup Corporate Advisory

Pvt. Ltd., and prayed for exclusion of the same from the list of

comparables.

5. The Ld. AR placed on record the copies of Co-ordinate Bench

decisions of this Tribunal in ITA Nos.928 & 1370/Mum/2016 dated

30/11/2018 for A.Y.2011-12 in the case of Blackstone Advisors India Pvt.

Ltd., ITA Nos. 1717 & 2207/Mum/2016 dated 21/02/2018 for A.Y.2011-

12 in the case of General Atlantic Pvt. Ltd., and IT(TP)A Nos. 1148&

2092/Mum/2016 dated 30/11/2018 for A.Y.2011-12 in the case of New

Silk Route Advisors Pvt. Ltd., wherein IDC (India) Ltd., and ICRA

Management Consulting Services Ltd., were sought to be included as

comparable company for the purpose of benchmarking the international

transactions in view of functional similarities. The Ld. AR also placed

reliance on the aforesaid orders to drive home his point for exclusion of

one of the comparables Ladderup Corporate Advisory Pvt. Ltd. from the
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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

list of comparables. In response thereto, the Ld. DR drew our attention to

the fact that Ld. DRP in page 28 at para 3.9.2. had categorically stated

that the income of the assessee during the year was Rs.11.18 Crores

from financial and management consultancy fees. Company had acquired

merchant banking license only in July 2010. There is no evidence that

during the year 2010-11 any income has been received from merchant

banking. Based on these observations, the Ld. DR held that Ladderup

Corporate Advisory Pvt. Ltd. to be a valid comparable.

6. We have heard rival submissions. Let us now examine each of the

comparables under dispute before us.

a. Ladderup Corporate Advisory Pvt. Ltd:

We find the entire argument of the Ld. DR have already been considered

by the Co-ordinate Bench decision of this Tribunal in IT(TP)A Nos. 1148 &

2092/Mum/2016 for A.Y.2011-12 in the case of New Silk Route Advisors

Pvt. Ltd., wherein it was held as under:-

“11. This company was selected by the Transfer Pricing Officer and was
also retained by the DRP.

12. Objecting to the selection of the aforesaid company by the Transfer

Pricing Officer and the DRP, learned Authorised Representative
submitted, the company being a merchant / investment banking company,
is functionally different from the assessee, hence, cannot be treated as
comparable to an investment advisory service provider like the assessee.
In this context, he relied upon the following decisions:– i) DCIT v/s
General Atlantic Pvt. Ltd., 91 taxmann.com 406 (Mum.); ii) Temasek
Holdings Advisors India Pvt. Ltd. v/s DCIT, [2017] 87 taxmann.com 168;
iii) Well Fargo Real Estate Advisors Pvt. Ltd. v/s DCIT, [2018] 90
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M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

taxmann.com 18 iv) Avenue Asia Advisors Pvt. Ltd. v/s DCIT, [2017] 85
taxmann.com 311 (Del.)

13. The learned Departmental Representative relied upon the

observations of the Transfer Pricing Officer and the DRP.

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–1 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 Representative 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
appeal 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.”

Respectfully following the aforesaid decision, we hold that Ladderup

Corporate Advisory Pvt. Ltd., cannot be treated as a comparable to the

assessee.

b. Inclusion of IDC (India) Ltd.,:-

We find that the Co-ordinate Bench of this Tribunal in ITA Nos.1717 &

2207/Mum/2016 dated 21/02/2018 for A.Y.2011-12 in the case of General

Atlantic Pvt. Ltd., had observed as under:-

“15. Insofar as IDC (India) Ltd. is concerned, it is observed, in assessee’s

own case for assessment year 2006–07, the Tribunal accepted this
company as a comparable which was upheld by the Hon'ble Jurisdictional
High Court while dismissing the appeal filed by the assessee. While
upholding the decision of the Tribunal, the Hon'ble Jurisdictional High
Court observed that since the non–binding advisory service provided by
the assessee is similar to the service provided by Carlyle India Ltd.,
wherein, IDC (India) Ltd. is accepted as a comparable there is no reason
to defer with the decision of the Tribunal. It is necessary to observe, in
case of other assessees engaged in providing non–binding investment
advisory services akin to the assessee for the very same assessment year,
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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

the Tribunal has held that IDC (India) Ltd. is a good comparable. In this
context, we refer to the decisions of the Tribunal in case of AGM India
Advisory Pvt. Ltd. (supra) and Temasek Holdings Advisors India Pvt. Ltd.
v/s DCIT, 87 taxmann.com 168 (Mum.). Moreover, in assessee’s own case
in the earlier assessment years, this company having been found to be
functionally similar was accepted as a comparable. In view of the
aforesaid, we direct the Assessing Officer to include this company as a
comparable.”

Respectfully following the same, we direct the Ld. AO to include this

company to be a comparable for benchmarking the international

transaction of the assessee.

c. ICRA Management Consulting Services Ltd:

We find that the Co-ordinate Bench of this Tribunal in ITA Nos.

928&1370/Mum/2018 dated 30/11/2018 for A.Y.2011-12 in the case of

Blackstone Advisors India Pvt. Ltd., had observed as under:-

“8. This is one of the companies selected by the assessee. The Transfer
Pricing Officer rejected this comparable on the reasoning that the
company is not functionally similar to the assessee on the basis functions
provided, asset employed and risk undertaken. The Transfer Pricing
Officer observed, while the assessee is providing investment advisory
services, as per the information obtained under section 133(6) of the Act,
this company provides management consultancy and advisory services to
corporate banks, government, multilateral agencies, institutional agencies,
etc. Whereas, the assessee is providing investment advisory services for
private equity investment as well as real estate investment to the A.Es.
Thus, he held that the company is not a comparable. This view of the
Transfer Pricing Officer was also endorsed by the DRP.

9. The learned Sr. Counsel for the assessee submitted, functions performed
by this company is more or less similar to the investment advisory services
provided by the assessee to the A.Es. He submitted, in a number of cases
relating to the very same assessment year the Tribunal held this company
to be a comparable to an investment advisory service provider. In this
context, he drew our attention to the following decisions:– i) DCIT v/s
General Atlantic Pvt. Ltd., ITA no.1717/Mum./ 2016, dated 21.02.2018; ii)
Temasek Holdings Advisors India Pvt. Ltd. v/s DCIT, [2017] 87
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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

taxmann.com 168; and iii) Sun Ares India Real Estate Pvt. Ltd. v/s DCIT,
ITA no.621/ Mum./2016, dated 09.02.2018.

10. The learned Sr. Counsel submitted, in assessee’s own case for the
assessment year 2008–09, the Tribunal has accepted this company as
comparable to the assessee. Thus, he submitted, this company has to be
accepted as a comparable.

11. The learned Departmental Representative relied upon the observations

of the DRP and the Transfer Pricing Officer.

12. We have considered rival submissions and perused materials on

record in the light of decisions relied upon. As could be seen from the facts
on record, this company is providing advisory services, hence, is
functionally similar to the assessee. The only reason the Transfer Pricing
Officer has rejected this company as comparable is because it is providing
management consultancy services to Banks, Corporates and Government,
etc. However, no substantive material has been brought on record by the
Department to demonstrate that the functions performed by this company
are drastically different from the assessee. In fact, in a number of
decisions, the Co–ordinate Bench has held this company as a comparable
to a investment advisory service provider. In this context, it is relevant to
take note of the following observations of the Co–ordinate Bench in case
of General Atlantic Pvt. Ltd. (supra) which is for the very same assessment
year.
“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 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
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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

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.”

13. It is also relevant to observe, in assessee’s own case for assessment

year 2008–09, the Tribunal having found the company to be functionally
similar to the assessee has accepted it as comparable. In view of the
aforesaid, we direct the Assessing Officer to include this company as a
comparable. “

Respectfully following the same, we direct the Ld. AO to include this

company as comparable for benchmarking the international transaction of

the assessee.

6.1. The Ld. AR stated before us that if ICRA Management Consulting

Services and IDC (India) Ltd., are included in the list of comparables and

Ladderup Corporate Advisory Pvt. Ltd is excluded from the list of

comparables, assessee would be well within the +/- 5% range and hence,

it would be through with regard to its ALP. In view of the same, we

refrain to give our opinion on the other comparables for which grounds

have been raised by the assessee before us and those issues are left

open. The Ld. TPO is directed to recompute the margins of the

comparables subject to the aforesaid directions.

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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

6.2. With regard to the revenue appeal, the disputed issue before us as

stated in the grounds of appeal by the revenue is only Rs.36,75,133/-. It

would be squarely hit by the recent Circular of the CBDT vide Circular No.

3/2018 dated 11.07.2018 wherein tax effect on the disputed issue would

be less than Rs.20,00,000/-. Hence, the revenue appeal is dismissed by

placing reliance on the said circular.

7. Accordingly, the appeal of the assessee for A.Y.2011-12 is allowed and

appeal of the revenue for A.Y.2011-12 is dismissed.

8. Let us come to appeal of the assessee for A.Y.2012-13 in IT(TP)A

No.1146/Mum/2017.

9. We find that assessee sought for inclusion of the following

comparables viz., 1. ICRA Management Consulting Services Ltd., 2. IDC

(India) Ltd., and 3. Informed Technologies India Ltd., and sought for

exclusion of Ladderup Corporate Advisory Pvt. Ltd. for the A.Y.2012-13

for the purpose of benchmarking international transactions carried out by

him.

9.1. The brief facts of this issue are that the business profile of assessee

remain the same in A.Y.2012-13 also and the details of various

international transactions carried out by the assessee during the year are

as under:-

Sr. Nature of International transaction FY 2011-12 Method Used

No.
1 Provision of non-binding investment 59,546,585 TNMM
advisory services
2 Availing of support and global 7,295,607 TNMM
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M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

management charges
3 Reimbursement of expenses 3,351,875 Cost to cost
Total 70,194,067

9.2. The assessee claimed its profit margin at 15.07%. The assessee

benchmarked its transactions by using both multiple year data and single

year data of the following comparables as under:-

Sr. Name of the Company Three year Single Year updated

No. average margins (FY 2011-
Operating 12)
Profit /
Operating
Cost
1 Cyber Media Research Ltd., 4.34 (-30.51)
2 ICRA Management Consulting 7.73 6.95
Services Ltd.,
3 ICRA Online Ltd., 30.61 14.93
4 Informed Technologies India Ltd., 14.35 8.26
Average 14.26 -0.09

9.3. The Ld. TPO rejected the comparables chosen by the assessee

except ICRA Online Ltd., and included Ladderup Corporate Advisory Pvt.

Ltd in his list of comparables and arrived at the average comparables

margined at 26.45% as against the assessee’s margin at 15.07%. The Ld.

TPO accordingly made an adjustment of Rs.63,14,561/- to ALP as under:-

Particulars Amount (Rs.)

Operating Income (A) 6,38,71, 566/-

Operating Cost (B) 5,55,05,043/- .

Operating profit (C) 83,66,523/-

OP/OC 15.07%

Arm's Length OP/OC 26.45%

Arm's Length Operating Income (E) 7,01,86,127/-

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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

Adjustment -E- A 63,14,561

105% of Income (A) 6,79,31,392/-

95% of Income (A) 6,14,61,736/-

10. The Ld. DRP upheld the action of the Ld. TPO by placing reliance of

their own order for A.Y.2011-12 in assessee’s own case.

11. Aggrieved, the assessee is in appeal before us.

12. We have heard the rival submissions. We find that the assessee

had filed grounds of appeal for exclusion of Ladderup Corporate Advisory

Pvt. Ltd. and inclusion of ICRA Management Consulting Services Ltd., IDC

(India) Ltd., and Informed Technologies India Ltd. We find that the Co-

ordinate Bench of this Tribunal in the case of Goldman Sachs Asset

Management (India) Pvt. Ltd., in ITA No.1427/Mum/2017 dated

31/08/2018 for A.Y. 2012-13 with regard to the aforesaid comparables

had observed as under:-

“The learned representative for the assessee pointed out that there was no
dispute so far as the nature of services being rendered by the assessee is
concerned, being non-binding investment advisory services. It is pointed
out that the action of the TPO in considering Ladderup Corporate
Advisory Pvt. Ltd. as a comparable is incorrect inasmuch as the said
concern is functionally dissimilar. It has been pointed out that the said
concern is registered with the SEBI as a Category-I merchant banker and
is, inter-alia, engaged in rendering services in investment banking, capital
markets, wealth management, project finance and growth stage investing,
etc. Reference has also been made to para 9.1 of the order of TPO to point
out that assessee had brought out, on the basis of the website extract of the
said concern, that it was engaged in rendering investment banking and
debt capital services and not investment advisory services. Before the
TPO, assessee has also pointed out that even if there was any element of
investment advisory services being rendered by the said concern, the
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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

Annual Report of the said concern showed that there was no separate
reportable segment and, therefore, the said concern could not be
compared with the tested transactions. At the time of hearing, the learned
representative for the assessee pointed out that for the instant assessment
year, under identical circumstances, in the case of Temasek Holdings
Advisors (India) Pvt. Ltd. (ITA No. 1429/Mum/2017 dated 03.01.2018), the
said concern stood held to be functionally dissimilar to the activities
similar to that of the assessee. Reliance has also been placed on the case
of Temasek Holdings Advisors (India) Pvt. Ltd. (ITA No. 477/Mum/2016
dated 11.08.2017) and Wells Fargo Real Estate Advisors Pvt. Ltd., (ITA
No.1520/Mum/2016 dated 17.01.2018.

6. Apart therefrom, it is pointed out that in the following decisions, it has

been held that a concern engaged in merchant banking activities could not
be compared with a concern which was rendering investment advisory
services:- i) CIT vs Temasek Holdings Advisors (India) Pvt. Ltd., ITA No.
1051 of 2014 (Bombay High Court); ii) Goldman Sachs (India) Securities
Pvt. Ltd. vs DCIT, ITA Nos. 927/Mum/2016 and 902/Mum/2016; iii)
Goldman Sachs (India) Securities Pvt. Ltd. vs ACIT, ITA No.
7724/Mum/2011; and, iv) Goldman Sachs (India) Securities Pvt. Ltd. vs
DCIT, ITA No. 222/Mum/2014

7. On the other hand, the ld. CIT-DR appearing for the Revenue
referred to the discussion made by the TPO whereby it is canvassed that
the said concern offers various types of services including financial
advisory services. It has also been pointed out that the TPO perused the
relevant Notes to the Accounts accompanying the Annual financial
statements, which showed that the said concern was receiving income by
way of corporate advisory services and that the said concern is to be
understood as a finance, consultancy and advisory service. It was,
therefore, contended that the income-tax authorities made no mistake in
treating the said concern as a comparable in order to benchmark the
tested transaction.

8. We have carefully considered the rival submissions. Insofar as the

nature of activities undertaken by the assessee is concerned, there is no
dispute inasmuch as the assessee is rendering investment advisory services
to its associated enterprise, which is sought to be benchmarked. By its very
nature, providing of investment advisory services stands on an altogether
different footing than merchant banking activities. This distinction has
been kept in mind by our co-ordinate Bench in the case of Temasek
Holdings Advisors (India) Pvt. Ltd. (supra) wherein also the tested
transaction was of providing of investment advisory services. In the said
case too, the TPO had considered Ladderup Corporate Advisory Pvt. Ltd.
as a good comparable, which was not found acceptable by the Tribunal. A
perusal of the said decision dated 03.01.2018 (supra) shows that for an
earlier Assessment Year of 2011-12, the said concern was found
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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

incomparable primarily on the ground that it was engaged in merchant

banking activities, which was quite distinct from its activity of rendering
investment advisory services.

9. In view of the said precedent, which has been rendered based on the
fact-situation of the financial year relevant to the assessment year before
us, we find no justification to uphold the action of the TPO in considering
that Ladderup Corporate Advisory Pvt. Ltd. is a good comparable. Thus,
on this aspect, the plea of the assessee is upheld and Ladderup Corporate
Advisory Pvt. Ltd. is directed to be excluded from the final list of
comparables.”

12.1. Respectfully following the aforesaid decision, we direct the Ld. TPO

to exclude Ladderup Corporate Advisory Pvt. Ltd. and include Informed

Technologies India Ltd. in the list of comparables for benchmarking

international transactions of the assessee. Since, it was stated before us

by the Ld. AR for the assessee would be through by taking the benefit of

+/-5% range if these two comparables are alone adjudicated, we refrain

to give our opinion on the inclusion / exclusion of ICRA Management

Consulting Services Ltd., and IDC (India) Ltd., for the Asst Year 2012-

13. The Ld. TPO is hereby directed to recompute the margins of the

assessee in accordance with the above mentioned directions. Accordingly,

the grounds raised by the assessee are allowed subject to aforesaid

directions.
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ITA No.423/Mum/2016 and other appeals
M/s. Gugganheim Capital Management (Asia) Pvt. Ltd.,

13. In the result, appeals of the assessee for A.Y.2011-12 and

2012-13 are allowed and appeal of the revenue for the A.Y.2011-

12 is dismissed.

Order pronounced in the open court on this 20/02/2019

Sd/- Sd/-
(SAKTIJIT DEY) (M. BALAGANESH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated 20/02/2019
Karuna Sr.PS
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT
DR, ITAT, Mumbai
5.
BY ORDER,
6. Guard file.
सत्यापित प्रतत //True Copy//
(Asstt. Registrar)
ITAT, Mumbai