TMI Blog2015 (9) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... all activities carried on by assessee, therefore, it cannot be held that merely because segmental details are provided, therefore, the financial consultancy to foreign bank assumes significance. We, accordingly, confirm the assessment order of AO on the issue in question. - Decided against assessee - ITA no. 5927/Del/2010 - - - Dated:- 21-8-2015 - SHRI S.V. MEHROTRA AND SHRI A.T. VARKEY, JJ. For The Appellant : Shri Deepak Chopra Adv., Harpreet Singh Adv. and Shri Manasvani Bajpai Adv. For The Respondent : Shri Sanjay Prasad CIT(DR) ORDER PER S.V. MEHROTRA, A.M : This appeal has been preferred by the assessee against the assessment order dated 20-10-2010 passed by the Income-tax Officer, Ward 17(2), New Delhi, pursuant to DRP s directions dated 8-09-2010 u/s 144C of the Income-tax Act, 1961 ( the Act in short), relating to asstt. Year 2006-07, raising following grounds of appeal: On the facts and circumstances of the case and in law, the Learned Assessing Officer ( the Ld. AO ) has erred in passing the assessment order dated 20 October 2010 u/s 143(3) read with section 144C of the Income Tax Act, 1961 ('the Act') in conformity with the dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are full risk bearing entrepreneur(s), thereby erred in not allowing a risk adjustment to the Appellant. 7. the Hon'ble DRP and TPO/AO have grossly erred by denying the benefit of the arm's length range as provided under proviso to Section 92C of Act for purposes of computing the arm's length price under Section 92F of the Act. 8. That the Ld. AO has further erred in law and on facts in levying interest under section 2348 of the Act. 9. The Ld. AO has erred in initiating penalty proceedings under section 271(1)(c) of the Act. 2. Ground no. 3 was not pressed at the hearing. Accordingly, ground no. 3 stands dismissed being not pressed. Ground no. 9 is premature and stands dismissed accordingly. 3. Ground nos. 1,2 and 4 to 7: Brief facts of the case are that the assessee company, in the relevant assessment year, was engaged in the business of repair services, computer hardware and software related services, erection, commissioning and installation services. 3.1. The assessee had filed return of income declaring loss of ₹ 53,91,090/-. A reference u/s 92CA(1) was made for determining the arm s length price ( ALP in short) u/s 92CA(3) in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gmental results of company showed that in foreign consultancy segment, consultancy was being offered to foreign banks not having any branches or representative offices in India. Consultancy services rendered to foreign banks was very different from the business of the assessee, because assessee was engaged in the provision of pre sales and post sales technical and marketing support services to its AEs, which included market research, collection supply of information concerning products and services for communication interception, digital video security, surveillance and enterprise business intelligence, whereas Capital Trust, on the other hand, provided services to foreign banks, which included developing corresponding relationship of the foreign banks with Indian banks, promoting the services offered by the foreign banks, referring trade finance proposals, assisting foreign banks in country review etc. 3.5. Ld. DRP confirmed the ld. TPO s action, inter alia, observing that besides the issue of persistent losses, the nature of services rendered in the telecom field were very different from the banking industry. 4. Ld. counsel for the assessee submitted that though persisten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of ITAT Pune Bench A dated 9-10-2014 in the case of M/s Bobst India Pvt. Ltd. (rendered in ITA no. 1380/Del/2010 for AY 2006-07) in support of its contention that the company cannot be rejected merely on the basis of incurring losses, wherein in para 5.2 of the order it has been observed as under: 5.2. In this regard, the assessee has placed reliance on various Judicial pronouncements to support the fact that a company can be rejected as persistent loss maker if it has incurred losses for more than 3 years. In the case of Quark Systems (P) Limited vs. DCIT (2010) 38 SOT 307 (Chd.) (SB) observed that merely because a comparable is making loss, it cannot be excluded from the list of comparable for the purpose of computation of arm's length price. ITAT, Mumbai 'K' Bench in the case of Advance Power Display Systems Limited vs. ACIT held that persistent loss making company cannot be considered as good comparable for the purpose of determining ALP. ITAT, Hyderabad 'A' Bench in the case of Brigade Global Services Private Limited vs. ITO held that in case there is continuous loss year by year, in such a situation, that company's data cannot be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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