TMI Blog2017 (11) TMI 1756X X X X Extracts X X X X X X X X Extracts X X X X ..... directions, the same has to be taken into proportionate adjustment. Appeal of the assessee is allowed. - I.T.A. No. 6856/DEL/2015 - - - Dated:- 6-11-2017 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For the Appellant : Sh. Himanshu Sinha Adv Ms. Vrinda Tulshan, Adv. For the Respondent : Sh. Amrender Kumar, CIT DR ORDER PER SUCHITRA KAMBLE, JM This appeal has been filed by the assessee against the Order passed under Section 143(3) of the Income Tax Act, 1961 read with directions issued by the DRP-1, New Delhi in Assessment Year 2011-12. 2. The Ld. AR submitted that the Hon ble Jurisdictional High Court vide order dated 8th May 2017 has given following directions:- 16 . Consequently, the following directions are issued: (i) the impugned order of the ITAT dated 24th August 2016 is modified by directing the following issues will not be remanded to the TPO but will be decided by the ITAT itself on merits after hearing both the parties. (a) issue concerning exclusion of WAPCOS and Mahindra and inclusion of Kirloskar as comparables for the TSS segment b) issue regarding exclusion of Sasken as comparable for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44,455,170 9. Reimbursement of Expenses (Paid) 9,782,132 10. Interest on Loan 5,379,000 During the relevant assessment year, the assessee had entered into the following international transactions with its AEs Particulars Most Profit Level Indicator (PLI) Margin earned by the Appellant No. of comparables considered Average margin CSD services Transactional Net Margin Method Operating Profit/Total Cost (OP/TC) 77.7.71%.71% 13 12.18% 7.68% 4 7.28% During the course of Transfer Pricing assessment proceedings, the Transfer Pricing Officer (TPO) while accepting all other international transactions to be at arm s length, rejected the economic analysis undertaken by the assessee for its CSD Services Segment and TSS Segment. The TPO proceeded to undertake a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AR that under this segment the assessee provided technical support service with respect to telecom equipment sold to customers in India. These services primarily include repairs and maintenance services, after sales support services, installation and commissioning services, trouble report handling services, etc. The Ld. AR submitted that the assessee primarily functioned as a support service provider and earned an OP/TC margin of 7.68%. However, the TPO arrived at an average of 19.49% (OP/TC) and made adjustment of ₹ 951,65,037/- to the TSS segment by using the following four comparables:- S.No. Company Name OP/TC 1 Consulting Engineers Limited 13.75 2 Telecommunication Consultants India Limited (Consultancy and service contract segment) 10.87 3 Wapcos Limited 30.55 4 Mahindra Consulting Engineers Limited 22.79 Average 19.49% 5. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the TPO held that under the application of TNMM as the most appropriate method, the difference in functional profile gets evened out and as such the company can be considered as a comparable. He further submitted that his company is engaged in the provision of technical consultancy in Multi Disciplinary Projects which includes designing, engineering, procurement, construction, monitoring and supervision, infrastructure consulting services and integrated project management services. He also submitted that this company has been rejected as a comparable by the DRP in assessee s own case for AY 2010-11 against which the department has not preferred any appeal. The Ld. AR also submitted that Mahindra Consulting has been rejected as a comparable in Rolls Royce India P. Ltd. in ITA No. 6636/Del/2015. The Ld. AR also relied on the decision of Rampgreen Solutions P. Ltd. in ITA No. 102/2015, wherein the Hon ble Delhi High Court held that functionally different company cannot be considered as comparable company. 8. The Ld. DR submitted that for Kirloskar the TPO has not verified the RPT margin whether 25% or not. For exclusion of WAPSCO, the Ld. DR submitted that technical and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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