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2015 (11) TMI 1562 - AT - Income TaxTransfer pricing adjustment - selction of comparable - Held that:- Holtec Consulting Private Limited engaged in providing engineering support services for bulk material handling and structural steel detailing etc. having plant and machinery as part of its fixed assets and inventory in its books, it has also large portion of cost as sub-contracting and profile of Holtec is diametrically opposed to the assessee company which is engaged in engineering design and drawing for various overseas AEs to support overseas offices turnkey project execution. The assessee company has neither any plant and machinery as part of its fixed assets and inventory in its books nor has large portion of its cost as sub-contracting cost. So, it cannot be taken as a comparable in any case. RITES Ltd is functionally distinctive having been engaged in the area of engineering consultancy, traffic studies, export of locomotives and maintenance of the locomotives, construction and project management for railway track, electrification together with traffic and software consultancy assignments as against, the appellant company which is engaged in engineering design and drawing for various overseas AEs to support overseas offices on turnkey project execution basis. Webcam Consultancy Service Indi Ltd - perusal of the P & L account statement for the year ended 31.03.2005, which has otherwise not been reproduced above, which has otherwise not been disputed by the TPO, which shows that income to the sales income is more than 75% i.e. 99.38%. So, apparently TPO ha arbitrarily rejected this comparable in transfer pricing. So, we are of the considered view that the matter is required to be restored to the TPO regarding this issue. Engineers India Ltd. is company is ordered to be excluded from the list of comparables as the Government companies cannot be taken as comparables for TP by following the law laid down by Hon'ble Jurisdictional High Court in M/s. Avaya India Pvt. Ltd. [2011 (2) TMI 1294 - ITAT DELHI] and M/s. Thyussen Krupp Industries India Pvt. Ltd. [2013 (11) TMI 930 - ITAT MUMBAI] M/s. Steewards Lloyed India Ltd. - TPO has rejected the companies on the sole ground that these companies fall in service filter and has service income to sales income ratio of less than 75% whereas a bare perusal of the audited financial statement of the company for the year ending 31.03.2004 lying at page 48 of appeal set goes to prove that this company has service income to sale is more than 75% i.e. 93.82%; hence arbitrarily rejected by the TPO/ DRP. So, M/s. Steewards Lloyed India Ltd. qualifies for adoption as comparable for transfer pricing.
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