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2016 (8) TMI 1471

..... on-site work in relation to specified licensing, coordination and other activities. During the year under consideration, assessee had 3 project offices in India being Rotem RS 1, Rotem RS 3 and BRCL. The role of the Rotem RS1 project office, is to overview the replacement/modification job being undertaken by outsourcing companies and lace with the MRC personnel in relation to maritime and troubleshooting in relation to rolling stock supplied under contract Rotem RS 3 undertakes the supply of components to BEML and is not involved in on-site activities need to be deselected from selected from final list. - I.T.(TP) No.1722/Del/2015 - 5-8-2016 - SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER For The Appellant by :Shri Salil Kapoor, Adv., Ms. Ananya Kapoor, Adv. For The Respondent by : Shri Amrendra Kumar, CIT DR ORDER PER BEENA A. PILLAI, JM: The present appeal has been preferred by the assessee against the order of Ld. ACIT Circle 2 (1) (1), International taxation, New Delhi dated 16/02/2015 for assessment year 2010-11 on the following grounds of appeal: 1. On the facts and circumstances of the case and in law, the assessment order/directions passed by t .....

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..... me of the documentation by the assessee. 8. On the facts and circumstances of the case and in law, the Ld. AO/Hon'ble DRP/Ld. TPO erred in considering companies functionally different from Rotem - POs as comparable. 9. Without prejudice, on the facts and circumstances of the case and in law, the Ld. AO/Hon'ble DRP/Ld. TPO erred in following an inconsistent approach in the selection of the comparable companies. 10. Without prejudice, on the facts and in the circumstances of the case and in law, the Ld. AO/Hon'ble DRP/Ld. TPO erred in law and in facts and circumstances of the cases, by using incorrect filters. 11. On the facts and in the circumstances of the case and in law, the Ld. AO/Hon'ble DRP/Ld. TPO erred in treating foreign exchange gain or loss as non- operating item for the computation of net operating margins of the comparable companies. 12. Without prejudice, on the facts and in the circumstances of the case and in law, the Ld. AO/Hon'ble DRP/Ld. TPO erred in using single year data as against the multiple year data used by the Appellant, to compute the arm's length price of the international transaction of the appellant using Transactional Net Margi .....

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..... o overview the replacement/modification job being undertaken by outsourcing companies and lace with the MRC personnel in relation to maritime and troubleshooting in relation to rolling stock supplied under contract Rotem RS 3 undertakes the supply of components to BEML and is not involved in on-site activities. The on-site activities of testing and commissioning in India are undertaken by BEML as an independent member to MR MB Consortium. RS3 PO only acts as a communication channel between Rotem and the MRC even though the meeting may pertain to on-site portion of the contract. The role of BMRCL PO is largely similar to those under DMRC s RS3 contract. 2.2 The international transactions undertaken by the assessee for the year under consideration are as under: RS 1 PO: Name of the transaction Method selected Value of International transaction Rendering of administrative support and coordination services TNMM(OP/TC) 3,50,73,914 RS 3 PO: Name of the transaction Method selected Value of International transaction Rendering of administrative support and coordination services TNMM(OP/TC) 17,03,58,098 Reimbursement of expenses to AE 93,51,586 Reimbursement of expenses by AE No Benchmarking .....

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..... e as under: S.No. Name of the comparable company OP/OC 1. Apitco Ltd. 40.09% 2. Global Procurement Consultants Ltd. 37.19% 3. HCCA Business Services Ltd. 20.05% 4. TSR Darshaw Ltd. 41.15% 4.1 Apart from that assessee is insisting on inclusion of 7 comparables which are as under: S.No. Name of the comparable company OP/OC 1. Educational Consultants(I) Ltd. 7.37% 2. ICRA Management Consulting Services Ltd. 1.37% 3. In House Production Ltd. 4.09% 4. India Tourism Development Corp.Ltd. 1.13% 5. HT Music Entertainment Ltd. 3.98% 6. Ma Foi Global Services -43.45% 7. Overseas Manpower Corpn. Ltd. -21.03% 5. At the outset the Ld. AR pointed out that the issue of inclusion/exclusion of certain comparables stands covered by the order of ld.TPO for assessment year 2009- 10 and 2011-12 which are as under: Comparables excluded by the Ld. TPO for assessment year 2009-10 and 2011-12: 1. Global Procurement Consultants Ltd. 2. HCCA Business Services Ltd. 3. TSR Darashaw Ltd. Comparables accepted by the Ld. TPO for assessment year 2009-10 and 2011-12: 1. Educational Consultants(I) Ltd. 2. ICRA Management Consultants Ltd. 5.1 He submitted that in the event these five comparables are excluded / includ .....

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..... iew from assessment year 2009-10 and 2011-12. Without any proper reason or change in the functionality and financial data, it cannot be held that these companies are to be excluded/included (as prayed for herein above), in the intermediary period of the assessment year under consideration. The Ld. TPO has to bring some material on record to show as to why these comparables which were excluded/included (as prayed for herein above) in the earlier year and also in succeeding year, cannot be excluded/included in the year under consideration. Global Procurement Consultants Ltd. 8. This company has been chosen by the TPO as a comparables. This company is mainly engaged in rendering services to government bodies and international organization. It is engaged in providing varied services inconsistency segment like bit support services, performance review, valuation assignments, financial advisory services etc. whereas Rotem RS 1 PO is performing functions like licensing, coordination maintenance and troubleshooting and marketing and contracting activities, contract execution, testing and commissioning, lies inning/interfacing with the DMRC carried on by Rotem RS 3 PO, without any risk being .....

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..... he Ld. TPO in for assessment year 2009-10 and 2011-12 on the segmental basis. It is further submitted that the assessee has taken the segmental information relating to income earned from technical assistance and human resource development for the purposes of compatibility of this company with that of the assessee. The ld. DR does not dispute regarding the rejection of this company by the Ld. TPO in the earlier as well as succeeding assessment year. Thus following the rule of consistency we direct the ld. TPO to include this company in the list of comparables. ICRA Management Consultants Ltd. 12. This company has been chosen by the assessee as a comparable. The Ld. AR submitted that this company is functionally similar as it offers consultancy services in the areas of strategy risk management operations improvement regulatory economics and transaction advisory. It has been pointed out by the ld.AR that, this comparable was accepted by the TPO in assessee s own case for assessment year 2009-10 and 2011-12. The ld. DR does not dispute regarding the rejection of this company by the Ld. TPO in the earlier as well as succeeding assessment year. Thus following the rule of consistency we d .....

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