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TMI Blog2015 (12) TMI 1548X X X X Extracts X X X X X X X X Extracts X X X X ..... enter to International SOS Singapore location. The assessee provides emergency assistance and support services to its members/clients of the AE. SOS India allows AEs members/clients to access its services through the SOS Singapore Alarm Centre. This enables clients of AE to access strong medical network of doctors, hospitals, clinics, and service providers across India. The assessee provides emergency assistance and support services to clients who are registered with the AE outside India and who are eligible to avail the services of the Group worldwide including India. During the year under consideration, the assessee, interalia, has entered into the international transaction to provide emergency assistance support services amounting to Rs. 23,77,46,801/- with its AE. 2.3. In TP documentation, for the purpose of benchmarking the international transaction, the appellant applied TNM method as the most appropriate method, considering itself to be the tested party and the Operating Profit/Operating Cost(OP/OC%) as the Profit Level Indicator(PIL). 2.4. The assessee selected the following 12 comparables whose average margin was 7.10% as against that of assessee's at 7.66%. S.No. COMP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the AO erred on facts and in law in making an adjustment of Rs. 1,35,95,532/- in the 'international transactions' of business support services, on the basis of the order passed u/s 92CA(3) of the Act by the Transfer Pricing Officer ("TPO"); 2.1 That the TPO/DRP erred on facts and in law in rejecting the following companies from the set of comparable companies allegedly on the ground that the said companies were functionally not comparable to the appellant: i) Educational Consultants India Limited ii) India Tourism Development Corporation Limited 2.2 That the TPO/DRP erred on facts and in law in considering following companies in the final set of comparable companies allegedly holding them to be functionally comparable to the appellant: i) Apitco Limited ii) Global Procurement Consultant Limited iii) HCCA Business Services Pvt. Ltd. 2.3 That the TPO/DRP erred on facts and in law in not allowing economic adjustment with respect to the operating profit margin of the comparables/appellant on account of the difference in the risk profile of the appellant and such comparable companies, allegedly holding that in absence of robust and reliable data, risk adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve difference of opinion, we observe that both the assessee as well as the ld.DR have stated that, comparable companies, performing the same specified support services as that of the assessee company cannot be found, and hence only companies which have broad comparative functional profile of undertaking support services in other fields, have to be taken as comparables. This is for the reason that the assessee is specialized in providing emergency assistance and support services to the members/clients of AE. The functional profile of the assessee is given from para 1.1 page 1 of the TP report which is extracted for the ready reference: "International SOS P. Limited, Singapore SOS Singapore is one of the world's largest medical and security assistance organization as well as the leading provider of remote site medical services headquartered in Singapore. With over 6000 professionals in 70 countries and 26 'Alarm Centers', the Group is engaged in provision of medical assistance, health care, security and risk management services to corporations, governments, and individuals. Founded in 1985 as AEA International, the Group focuses specifically on providing medical care and cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) Management consultancy; iii) Regulatory Strategy and iv) Contend Development. This company was taken as the comparable company, by the assessee and was accepted by the revenue though the nature of services rendered are totally different from the nature of services rendered by the assessee company. This is because both the parties accept that the companies providing specialized support services should be adopted as a comparable company. Similarly in the case of M/s.IDC (I)Limited is a company providing marketing intelligence, advisory services for the information technology, telecommunication and consumer technology markets. This company has been accepted by both parties as comparable. Hence, companies rendering specialized services, though in functionally different areas, are accepted by both parties as comparable companies. 12. With this background, we now examine each of the comparable companies in dispute. 1. Educational Consultant India Limited This company is a 100% Government of India owned company. In the case of M/s. ThyssenKrupp Industries India Pvt. Ltd., vs. Addl CIT Range(3), in ITA no. 6460/Mum/2012, the Coordinate Bench of the Mumbai Tribunal, has held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed party transaction actually does not exceed 14%, and hence the DRP is factually wrong. In any event ld. Counsel could not controvert the findings of the DRP, on the fact of ICRA not being in possession of intangible assets. When one company own intangible assets and when the other company does not own intangible assets, both cannot be compared. Thus, we have to uphold the order of the DRP and reject the claim of the assessee qua selection of ICRA, Management Consultancy Service Limited. 3. Indian Tourism Development Corporation Ltd. This company is a 100% Government of India owned company. In the case of M/s. ThyssenKrupp Industries India Pvt.Ltd., vs. Addl CIT Range(3), in ITA no. 6460/Mum/2012, the Coordinate Bench of the Mumbai Tribunal, has held that a company being 100% government of India owned should not be included in the list of comparables for the reasons that, profit motive is not the only relevant consideration in case of Government undertakings. Many Government undertaking operate on losses in furtherance of social obligations of the government. Educational Consultants India was directed to be excluded for the same reason. Respectfully following the proposition la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uality of service, the skills are comparable with the quality and skill of support services provided by the assessee, though in functionally different areas. As the ld. Counsel for the assessee has accepted before us that comparable companies rendering services in the same field as that of the assessee company cannot be found, companies rendering support services in other fields have to be taken as comparables. c) We have also perused the decision of the Hon'ble Jurisdictional High Court in the case of Rampgreen Solutions Pvt. Ltd.(supra). The claim of the ld. Counsel for the assessee is based on the propositions laid down in this case law. If on such an argument, the comparable Global Procurement Consulting Limited is excluded, then all the other comparables cited by the assessee as well as the ld.TPO have to be excluded on the same principle. This will leave us with no other comparable. The assessee cannot advance contradictory arguments. As it has been accepted by both the parties before us that, companies having a broad functional profile of rendering skilled professional support services, should be taken as comparable companies, the proposition laid down in Rampgreen Solutio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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