TMI Blog2017 (10) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... ces from concept to commissioning for green field, modernization/expansion of cement as well as captive power plant, that the assessee unlike HPCL is not providing engineering support services for bulk material handling and structural steel detailing. Besides segmental data of HPCL are not available that could be compared. It is also a fact the HPCL is having plant and machinery as part of its fixed assets and inventory in its books of accounts. Sub-contracting is a large portion of cost of HPCL. In our opinion, there is no similarity between the functions of the assessee and HPCL. In short, all the three comparables, selected by the TPO and approved by the DRP, have to be rejected for arriving at the ALP of the IT.s of the assessee .If these comparables are not considered for benchmarking the margin of profit for the year under appeal, as compared to other comparables, is within the prescribed limits i.e.(+/- 5%). Therefore, we decide the second effective ground of appeal in favour of the assessee. - I.T.A./689/Mum/2017, - - - Dated:- 18-10-2017 - S/Shri Rajendra and Ram Lal Negi, JJ. Revenue by: Shri Saurabh Deshpande-DR Assessee by: Ms. Karishma R. Phatarphekar/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the documents submitted in form of additional evidences would prove beyond doubt that the assessee had received services from AE s, that the evidences should be taken on record in the interest of Justice. 2.2.During the course of hearing before us, the Authorised Representative (AR) and reiterated the arguments that are part of the application filed by the assessee. The Departmental Representative (DR) opposed the admission of evidences. 2.3.We have perused the additional evidences submitted by the assessee and the application made by it. After going through the same, we are of the opinion that they would be useful to decide the issue regarding TP adjustment made under the head corporate fees and the assessee was prevented from submitting them before the departmental authorities by a reasonable cause. Therefore, in the interest of justice, we admit the additional evidences under Rule 29 of the Rules. 3.First effective ground of appeal (GOA-2) is about mistake in considering the returned income of the assessee at ₹ 5,60,97,490/-instead of ₹ 5,56,17,488/-. We direct the AO to verify the fact and pass necessary orders if the claim made by the assessee is found fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in computation of ALP was not reliable or correct, that there was no violation of the TP provisions by the TPO it referred to certain case laws. It was further observed that in the transfer pricing study report the assessee had categorised itself as a provider of administrative and other services, that it was providing highly technical engineering services and design solution, that categorisation of the assessee company is a mere administrative service provider was incorrect, that the comparables introduced by the TPO were performing broadly similar function as were rendered by the assessee to its AE s, that broadly similar comparables could be used for benchmarking the ALP under TNMM. With regard to ATL, the DRP observed that the assessee had raised objection about inclusion of the said comparable stating that there were extraordinary events,that it could not justify as to how those events had impacted the margin of the engineering design segment, that CCEL was providing consultancy services for power, oil and gas sectors, that HCPL was also into provision of engineering consulting services, that all the functions performed by the comparable companies were similar to that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material before us. We find that the assessee had selected 4 comparables to prove that IT.s entered into with AE.s were at arm s length, that it had adopted TNMM as MAM, that as per the TPS the profit margin of the assessee was within the permissible limits, that the TPO added three more comparables and proposed upward adjustments of ₹ 78.71 lakhs under the head AES, that the DRP rejected the objection raised by the assessee about three comparables-namely ATL,HPCL and CCEL, that DRP had held that companies selected by the TPO were performing functions similar to the functions of the assessee, it was argued that there was no functional comparability between the assessee and the comparables selected by the TPO. So, it would be useful to take up the justification of inclusions of above referred three comparables in the final list of companies selected for benchmarking the ALP. In the case of CCEL it is found that it is involved in providing comprehensive consultancy services in the fields of Power, Oil and Gas sectors in India and overseas. As per the report of the Director, during the year under consideration, it had received orders for project management services for a thermal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steel detailing. Its portfolio of services include all discipline of engineering, business consulting, geology and mining, project and construction-management, environment-management and performance-management. Clearly, HPCL is engaged in providing comprehensive services from concept to commissioning for green field, modernization/expansion of cement as well as captive power plant, that the assessee unlike HPCL is not providing engineering support services for bulk material handling and structural steel detailing. Besides segmental data of HPCL are not available that could be compared. It is also a fact the HPCL is having plant and machinery as part of its fixed assets and inventory in its books of accounts. Sub-contracting is a large portion of cost of HPCL. In our opinion, there is no similarity between the functions of the assessee and HPCL. In short, all the three comparables, selected by the TPO and approved by the DRP, have to be rejected for arriving at the ALP of the IT.s of the assessee .If these comparables are not considered for benchmarking the margin of profit for the year under appeal, as compared to other comparables, is within the prescribed limits i.e.(+/- 5%). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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