TMI Blog2016 (2) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... n rent and selling event fees etc. has also not been rebutted. This fact further makes the said comparable as functionally not comparable to Business Support Services. Accordingly in the absence of any rebuttal on these crucial factual aspects, we find that the limited prayer of the assessee has to be allowed. Thus, for the detailed reasons brought and herein above Saket Projects Ltd. is directed to excluded as a comparable in the year under consideration - I.T.A .No.-6059/Del/2012 - - - Dated:- 6-1-2016 - SMT DIVA SINGH, JUDICIAL MEMBER AND SH.O.P.KANT, ACCOUNTANT MEMBER For The Appellant : Sh.Ravi Bhardwaj, CA and Sh. Naveen Agarwal, CA For The Respondent : Sh.Sanjay Kumar, Sr. DR ORDER PER DIVA SINGH, JM The present appeal has been filed by the assessee assailing the correctness of the order dated 30.10.2012 passed by DCIT, Circle- 14(1), New Delhi pursuant to the directions dated 21.09.2012 of the Dispute Resolution Panel s (hereinafter referred to as DRP ). 2. The Ld. AR referring to the grounds raised by the assessee submitted that although various grounds have been raised in the present appeal however, on the basis of Ground Nos.2.1, 2.3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayer for its exclusion. 3.3. In support of the said request it was further submitted that from 2009-10 assessment year onwards neither the assessee nor the Income Tax Department as per record have considered Saket Projects Ltd. as a comparable company. 4. The Ld. Sr.DR relied upon the orders of the authorities below. 5. We have heard the rival submissions and perused the material available on record. A perusal of the record shows that the assessee declared an income of ₹ 4,62,96,826/- under the normal provisions and an income of ₹ 51,17,87,682/- under the MAT provisions. The return was processed u/s 143(1) and subsequently after issuance of notice u/s 143(2) was selected for scrutiny assessment. The case following the procedures was marked to the TPO in view of the fact that the assessee engaged in the business of software development and providing marketing services had entered into the following international transactions in the year under consideration:- Nature of International transaction Method selected Value of international transaction (INR) Provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t conditions and customers views and requirements on the AE's products and services. (iv) General promotional activities for the AE's technology, products and services. (v) Establishment and maintenance of business relationships with the AE's customers. (vi) Providing technical guidance, support and training of the AE's customers. (vii) General administrative and technical assistance as requested by the AE. (viii) Other services that may be requested by the AE. The functional matrix of the functions earned by you vis-a-vis the AE is as below. Sl.No. Type of function QIPL AE 1. Corporate services functions Yes No 2. Market research and business development Yes No 3. Marketing support No Yes 4. Training of employees Yes Limited 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot available or 'not comparable'. The average margin of these 7 comparables is 15.71%. Among the companies that you have rejected Is Saket Projects Ltd. You have rejected it on the ground that Segmental financials are not available. That Is found to be incorrect. As per annexure 8 of your submission dated 21.02.2011, segmental data is very much available. In this case, normally, the Event management segment is considered comparable. This segment still very much exists and the segment revenue is clearly identified. The segment expenses are identified at Schedule 14 of the annual report. Therefore, the event management segment of this company shall be treated as comparable. As for the other companies, the reasons that you have advanced are acceptable, with the exception of the reason of Besant Raj international. You have advanced the reason that the company does not have any foreign exchange earnings. This fitter is not required to be used in this segment. However, the company shall remain rejected because in FY 2007-08, revenue from comparable activities (Provision of consultancy services) is less than 75 percent (Consultancy Income was 63.22 percent) of total revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y an otherwise comparable third party. An extreme result may be excluded on the basis that a previously overlooked significant comparability defect has been brought to light, not on the sole basis that the results arising from the proposed comparable merely appear to be very different from the results observed in other proposed comparables . This point is being made here because the only reason that the assessee has raised objection against its own comparable is because of the high margin. The Issue of the inappropriateness of objecting to comparables merely on the issue of margin has been discussed earlier in this order. In addition to what has been stated, it must he stated that margin is at best a measure of efficiency in the normal course of business. It cannot be used to reject a company as a comparable unless some actual functional dissimilarity has been pointed out. The assessee has failed to do so. In fact the assessee has chosen this as a comparable based on data for previous years. There is no change in the functions of this company in this year. The assessee has claimed that the segmental results of this company are not dependable. This is not borne out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g upon the facts as found considered by the Co-ordinate Benches in Nortel Networks India Pvt. Ltd. and Premier Exploration Services Private Ltd (cited supra). 6.6. A perusal of the record shows that the Co-ordinate Bench in the case of Nortel Networks India Pvt. Ltd. while considering the facts of Saket Projects Ltd. in 2008-09 assessment year directed exclusion of the said comparable holding as under:- 11.2. On issue of exclusion of Saket Projects Ltd, we are of the view that specific characteristics of services provided, assets employed, risk assumed i.e. the FAR of the comparable is decisive and inclusion or exclusion of comparables. The higher or lower rate of profit is nowhere prescribed as the determinative factor in this behalf. Only if the higher or lower profit rate results on account of effect of factors given in Rule 10B(2)read with sub-rule (3), that such case shall merit omission then only it can be considered. Higher profits achieved due to factors not mentioned in the rule then such case shall be continued to find place in the list of comparables. Similar view has been approved by various coordinate ITAT benches in the cases like Exxon Mobil Company India (P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these facts, we hold that Saket Projects Ltd. was not comparable to the extent wherein the various variations could be ruled out or iron out by provision of law and rules. (Emphasis provided) 7. It is seen that the order dated 22.11.2013 in the case of Premier Exploration Services Private Ltd pertains to 2008-09 assessment year which order has been followed by the Co-ordinate Bench in the case of Nortel Networks India Pvt. Ltd. order dated 25.02.2015. 8. In the afore-mentioned peculiar facts and circumstances following the judicial precedent, we concur with the conclusion of the TPO that a comparable cannot be excluded on the grounds of high profitability alone as high profit can be a measure of efficiency in management. While so holding taking into consideration the consistent finding on record qua the said comparable for the specific assessment year in consideration namely 2008-09 assessment year, we find that the judicial precedent concluding that segmental details in the public domain for the said year were not reliable has not been rebutted by the Revenue. On facts where segmental details qua the segment are not reliable then on this fact alone even dehors the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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