Sarang v. Kotwal, Jj

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.117 OF 2017 Pr.Commissioner of Income Tax-5 … Appellant V/s. M/s General Atlantic Pvt. Ltd.… Respondent --- Mr.Ashok Kotangle with Mr.Prabhakar Ranshur for the Appellant.Mr.Porus Kaka, Senior Counsel with Mr.Divesh Chawla i/byMr.Atul Jasani for the Respondent. --- CORAM : AKIL KURESHI AND SARANG V. KOTWAL, JJ. DATE : MARCH 12, 2019. P.C.:- 1.Revenue has filed this appeal against the judgment of theIncome Tax Appellate Tribunal raising following question for ourconsideration:- “Whether on the facts and in the circumstances ofthe case and in law, the ITAT was right in directingthe AO to exclude Motilal Oswal InvestmentAdvisory Pvt. Ltd. from the list of comparables,when the DRP has in this year found that themajor source of revenue came from financialadvisory services and assessee company itself hasreported in its annual report income fromoperations under the head 'Advisory fees'- a factthat has not been controverted by the Assesseecompany?” 2.This issue is squarely covered in favour of the assessee byorder of this Court in its own cases arising earlier. We maytherefore pass brief order. 3.Respondent-assessee is undisputedly an Investment Advisor. While carrying out transfer pricing assessment in case of theassessee, revenue desired to compare the instance of one M/sMotilal Oswal Investment Advisory Private Limited. The Tribunaldiscarded such comparable on the ground that Motilal Oswal wasan Investment Banker and cannot be compared with the assesseewhich was an Investment Advisor. 4.In case of this very assessee in Income Tax Appeal No.251 of2014 passed on 15[th] July, 2016, the Court considered the following question at the instance of the revenue:- “Whether on the facts and in the circumstances ofthe case and in law the Tribunal was justified inlaw holding that the assessee's activity of providingservices is similar to the nature of services andactivity of Carlyle India Advisors Pvt. Ltd. Ignoringthe fact that activities of the assessee's arecomparable to merchant banking/investmentbanking activities?” Priya Soparkar The appeal was dismissed holding that the question is concluded. 5.In Income Tax Appeal No.406 of 2016 in case of Pr. Commissioner of Income Tax -3 Vs. M/s NVP VentureCapital India Pvt. Ltd. in an order dated 18[th] September, 2018the court considered, besides other the following question:- “Whether on the facts and in the circumstancesand in law, the ITAT was justified, in directingnot to consider the case of Motilal OswalInvestment Advisors Pvt. Ltd. as a comparable,when it's P & L showed operational income fromadvisory fees, the same as that of assessee andinstead to place reliance on Director's Reportwhich had categorized activities engaged by saidcompany as Equity Capital Markets Mergers andacquisitions, Private Equity syndication andstructured debt, would not make such relianceagainst the ambit of Rule 10B(2)?” 6.The Court in this context while dismissing the revenue’sappeal observed as under:- “12. We have heard the learned counsel for partiesat length and have gone through the papers andproceedings in this appeal including the impugnedorder passed by the ITAT. We are unable to agreewith Mr Suresh Kumar that the above questions oflaw as projected by him to be substantial, areindeed substantial questions of law requiring ourconsideration. On going through the order of the 6.The Court in this context while dismissing the revenue’sappeal observed as under:- “12. We have heard the learned counsel for partiesat length and have gone through the papers andproceedings in this appeal including the impugnedorder passed by the ITAT. We are unable to agreewith Mr Suresh Kumar that the above questions oflaw as projected by him to be substantial, areindeed substantial questions of law requiring ourconsideration. On going through the order of the ITAT it is quite clear that the findings given thereinare purely based of the facts placed before it. Thefacts, as placed before the ITAT, have not beencontroverted or denied by the revenue before us.The ITAT, after considering all these factual aspects,came to a categorical finding that Motilal OswalInvestment Advisors Pvt. Ltd. was engaged in aqualitatively different and diversified business thanthat of the assessee which was confined torendering only non-binding investment advisoryservices to its Associated Enterprise (NVP –Mauritius). In coming to its conclusion, the ITATalso relied upon another decision of the Tribunal inthe case of Carlyle India Pvt. Ltd. (ITA2200/MUM/2014) dated 22[nd] August, 2014. In thiscase also the Tribunal concluded that thoughMotilal Oswal Investments Advisory Pvt. Ltd. wasdeclaring a solitary stream of operating incomeunder the head “advisory fee”, but un-disputedly itwas engaged in diversified fields and the financialresults for each segment were not separatelyavailable. Considering that it engaged in manydiversified fields and not only in the field ofrendering non-binding advisory services, the ITATcame to a finding that Motilal Oswal InvestmentsAdvisory Pvt. Ltd. was not a concern which could beincluded in the list of comparable companies. Wedo not think that these findings of fact are in anyway perverse or vitiated by any error apparent onthe face of the record which, in turn, would giverise to any substantial question of law. We are infull agreement with the findings given by the ITAT.In fact, looking to the facts as narrated by the ITATin the impugned order, we would have nohesitation in holding that by comparing MotilalOswal Investments Advisory Pvt. Ltd. to theassessee company (for the purposes of determiningthe ALP) would be like comparing apples andoranges. This being the case, we do not find any infirmity in the order of the ITAT excluding MotilalOswal Investments Advisory Pvt. Ltd. from the finallist of comparables which would give rise to anysubstantial question of law. 13. In view of the foregoing discussion, we are ofthe opinion that the impugned order does not giverise to any substantial question of law which wouldrequire our consideration as the matter solelyrevolves around factual matters. Having found thatthe findings given thereon by the ITAT are certainlyplausible and possible, no interference is called forby us under section 260A of the I. T. Act, 1961. Inthese circumstances, the appeal stands dismissed.However, in the facts and circumstances of the case,there shall be no order as to costs.” 7.Learned counsel for the revenue however brought to ournotice an admission order dated 30[th] July, 2018 passed byDivision Bench of this Court in Income Tax Appeal No.79 of2016 in case of one M/s Q-India Investment Advisors Pvt. Ltd.. However when we have the instance of dismissal of appeal ofthis very assessee, we need not follow the admission order incase of another assessee that too without comparing two sets offacts within two cases. 8.In the result, this appeal is dismissed. (SARANG V.KOTWAL,J.) (AKIL KURESHI,J.)