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TMI Blog2018 (8) TMI 1624X X X X Extracts X X X X X X X X Extracts X X X X ..... warding and other port related activities. Jaldhi Overseas Pte Ltd ('Jaldhi Overseas') engages Bothra India for vessel handling at the port, to provide various vessel related services until the vessel embarks on its journey. The operations carried out by Bothra India are independent contractor while dealing with unrelated enterprises as well as Jaldhi Overseas. The Assessing officer passed the assessment order on 30/12/2016 for the assessment year 2012 u/s 143(3) r.w.s. 153A & Section 144C. Similarly, he passed an order for the ay 2010-11 on 27/12/2016 and for ay 2012-13 on 26/12/2016. Aggrieved the assessee filed this appeal on the following revised grounds:- 1. On the facts and circumstances of the case, and in the law, the Ld. A.O. /Ld. Panel erred in initiating proceedings under Section 153A of the Act even though it was time barred. The Appellant therefore prays that the assessment order be treated as void-ab-initio and bad in law. 2. On the facts and circumstances of the case, and in law, the Assessment Order passed by the Ld. Assessing Officer ('AO') under the directions of and Hon'ble Dispute Resolution Panel (,DRP' or 'Ld. Panel') und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding a company viz. Apollo Logi solutions Limited, as comparable which was functionally different and which did not find place in SCN issued by the Ld. TPO and thereby violating principle on natural justice. The Appellant therefore prays that the Ld. Aa / Ld. Panel / Ld. TPO be directed to treat the value of international transactions at arm's length. 8. Without prejudice to the generality of the foregoing ground, on the facts and circumstances of the case and in law, the Ld. Dispute Resolution Panel has erred in affirming the action of the Ld. Transfer Pricing Officer / Ld. Assessing Officer in including Aegis Logistics Ltd in the final set of comparables ignoring the fact the functions, assets and risk of the company are not comparable with the appellant company. 9. Without prejudice to the generality of the foregoing ground, on the facts and circumstances of the case and in law, the Ld. Dispute Resolution Panel has erred in affirming the action of the Ld. Transfer Pricing Officer / Ld. Assessing Officer in including Om Logistics Ltd in the final set of comparables ignoring the fact the functions, assets and risk of the company are not comparable with the appellant comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest under section 234B of the Act. The Appellant therefore prays that the Ld. AO be directed to delete the levy of interest u/ s. 234B of the Act. 17. On the facts and in circumstances of the case, the Ld. AO erred in initiating penalty proceedings under section 274 r.w.s. 271 of the Act. The Appellant therefore prays that the Ld. AO be directed to delete the initiation of penalty proceedings u/s. 274 r.w.s. 271 of the Act. The Appellant craves leave to add to and/or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal. 3. Though the assessee has raised a number of grounds before us, it had contested only the issue of determination of Arms length price under Transfer Pricing Provisions No other ground was argued or contested during the course of hearing of the case. 3.1. All the technical grounds have not been pressed. Hence these are dismissed as not pressed. 4. On the issue of determination of Arm's Length Price, the ld. Counsel for the assessee agitated the selection of M/s. Aegis Logistics Ltd. ('Aegis')And M/s. Malabar Coast Marine Services Pvt. Ltd. ('Malabar') as comparables for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vessel related requirements. These operations are undertaken to ensure quick berthing of vessel and efficient cargo handling which includes vessel operation handling, monitoring and reporting, receipt of owner funds, verification of PDAs and managing payments, cargo document verification, statement of facts etc. for correctness, issuance of letter of protests, assisting coordination with master for signing bill of lading etc. The functional profile of Aegis as brought out by the DRP at page 5 of its order is as follows:- "Aegis Logistics is engaged in the sale of liquefied petroleum gas (LPG), wholesale of solid, liquid and gaseous fuels and related products, and storage and warehousing of products, such as general merchandise warehouse and warehousing of furniture, automobiles, gas and oil, chemical and textiles. The company has two major divisions - Liquid Terminal and Gas Terminal. In the absence of the segmentation of the revenues and costs, the Company cannot be considered as a comparable. Aegis is engaged in the sale of products as against the assessee which renders services, and is thus functionally different evident form its annual report. During the FY 2009-10, Aegis h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% subsidiary of M/s. Aspinwall Ltd. M/s. Aspinwall was taken as a comparable both by the assessee as well as by the T.P.O. and this holding company reported a profit margin of 3.13% on a turnover of Rs. 80 Crores and whereas 'Malabar', the subsidy company reported margin of 42.33% on a low turnover of Rs. 1.96 Crores. This anomaly, will require investigation, as laid down by the Hon'ble Delhi High Court in the case of [2015] 60 taxmann.com 355 (Delhi) Rampgreen Solutions (P.) Ltd. v. Commissioner of Income-tax. It was submitted that profits are abnormal as 'Malabar' had utilized all the workforce and facilities of the holding company and as 'Malabar's' working is widely influenced by the holding company which resulted in huge profit margins. It was submitted that even small fluctuations can result in wide variations in profit margin. The ld. D/R, submits that this comparable i.e. 'Malabar' was picked up by the assessee himself and hence he cannot plead for exclusion of this comparable. In reply the ld. Counsel for the assesee relied on the decision of Hon'ble Chandigarh ITAT, Special Bench in the case of Quark Systems Private Limited v. DCIT: 2010 38 SOT 307, for the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation (P.) Ltd. v. ITO [2008] 23 SOT 385 (Pune) Deloittee Consulting India (P.) Ltd. v. Dy. CIT [2013] 144 ITD 451/36 taxmann.com 68 (Hyd.) Genisys Integrating System (India) (P.) Ltd. v. Dy. CIT [2012] 53 SOT 159/20 taxmann.com 715 (Bang.) 6. The said findings of the Tribunal in respect of the said three Companies are on the basis of appreciation of evidence on record. We find no infirmity in the said findings of the Tribunal on that count. In fact, the Tribunal has endorsed the views of the CIT Appeals whilst coming to such conclusions. The concurrent findings of facts arrived at by the Authorities below, cannot be re- appreciated by this Court in the present Appeal." 8.2. Applying the proposition of law laid down, we hold that 'Malabar' cannot be taken as a comparable in the final list of comparables for the reasons that the turnover in question is not comparable. The margins of this company is far in excess of the margins of its holding company M/s. Aspinwall Ltd. which is also taken as a comparable by both the assessee as well as the revenue. Hence we direct that this comparable should be excluded from the final list of comparables. The TPO could not have included this ..... 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