TMI Blog2017 (5) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitrary in nature. Accordingly we direct the AO/TPO to adopt turnover filter at 1/10th to 10 times of turnover of the assessee and accordingly re-examine the comparables. Company with Related Party Transactions was more than 25% need to be excluded - I.T.A. No. 7194/Mum/2012 - - - Dated:- 17-5-2017 - Shri B.R. Baskaran (AM), And Shri C.N. Prasad For The Assessee : Shri Sunil Lala For The Department : Shri Shahi Saanjay Kumar ORDER Per B.R. Baskaran(AM) The assessee has challenged the order dated 19-10-2012 passed by the assessing officer in pursuance of directions given by the Dispute Resolution Panel (DRP) u/s 144C(5) of the Act and it relates to the assessment year 2008- 09. The assessee is aggrieved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the difference is within the tolerance limit of +/- 5%. 5. Accordingly it was submitted before the TPO that the transactions have been carried out with AEs at arms length price. The assessee had identified ten comparables by searching using key words like Products/Rawmaterials , Technical consultancy and engineering services, Services and consultancy, Civil engineering works, Technical services, Other consultancy, Business activity. The ten comparable companies identified by the company are:- (1) Agrima Consultants International Ltd (2) Artefact Project Ltd (earlier known as Artefact Software and Finance Ltd) (3) Engineers India Ltd (4) L T Sargent Lundry Limited (5) L T Ramboll Consulting Engineers Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e identified that the following companies would fail in turnover test:- (1) Agrima Consultants International Ltd (2) Artefact Project Ltd (earlier known as Artefact Software and Finance Ltd) (3) L T Sargent Lundry Limited (4) L T Ramboll Consulting Engineers Limited (5) Mahindra Consulting Engineers Ltd (6) Telecommunications Consultants India Ltd The TPO also noticed that the Related Party Transactions was more than 25% in the case of L T Sargent Lundy Limited . In respect of Telecommunications Consultants India Limited, the TPO noticed that it is not functionally comparable. 8. It is pertinent to note that the TPO rejected the following comparable companies without assigning any reason:- (1) Mah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not have been taken as comparable as per the following decisions:- (a) CIT Vs. Thyssen Krupp Industries India P Ltd (2016)(68 taxmann.com 248)(Bom) (b) ACIT Vs. Chemtex Global Engineers P Ltd (2013)(35 taxmann.com 351)(Mum ITAT) (c) International SOS Services India P Ltd Vs. DCIT (2016)(67 Taxmann.com 73)(Delhi ITAT) (d) Bechtel India Pvt ltd Vs. DCIT (ITA No.1478/Del/2015) In the case of Thuseen Krupp Industries India P Ltd, the TPO had included M/s Engineers India Ltd, a Government company. The Tribunal excluded the same with the observation that the Engineers India Ltd could not be considered to be comparable for the reason that the contracts between Public Sector undertakings are not driven by profit motive along b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... era Software India P Ltd (TS-139-ITAT-2017 (Bang) (e) DCIT Vs. Nvidia Graphics P Ltd (TS-1089-ITAT-2016)(Bang) (f) Evry India P Ltd V DCIT (TS-76-ITAT-2017)(Bang). We notice that the co-ordinate bench is consistently accepting the turnover filter at 1/10th to 10 times of turnover. Hence there is merit in the contentions of the Ld A.R that the turnover filter of 1/4th to 4 times adopted by TPO was arbitrary in nature. Accordingly we direct the AO/TPO to adopt turnover filter at 1/10th to 10 times of turnover of the assessee and accordingly re-examine the comparables. 15. The TPO had rejected the L T Sargent Lundy Limited on more ground that the Related Party Transactions was more than 25%. The contention of the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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