TMI Blog2020 (5) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... both dated 30.01.2015 passed by the AO in consonance with the orders passed by the ld. DRP/TPO under section 254/143 (3) r/w section 144C of the Income-tax Act, 1961 (for short the Act ) qua the assessment years 2004-05 2005-06 on the grounds inter alia that :- AY 2004-05 The Ld. DRP has erred in law and on facts in directing the TPO to include M/s. U.B. Engineering Ltd., Tata Projects Ltd. and L T Sargent Lundy Ltd. as comparable ignoring the fact that the functional profiles of these companies are different from the profile of the assessee. AY 2005-06 1. The Ld. DRP has erred in law and on facts in directing the TPO to exclude M/s. NTPC Electricity Supply Company Ltd. as comparable ignoring the fact that Organisation of Economic Cooperation and Development (OECD) Guidelines advocate use of TNMM Method as it allows comparability of the functions rather than strictly focusing on product/service comparability as in the case of Cost Plus Method, Resale Price Method and Comparable Uncontrolled Price Method. 2. The Ld. DRP has erred in law and on facts in directing the TPO to include M/s. U.B. Engineering Ltd., Tata Projects Ltd. and L T Sar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 0.16 crores (iii) Reimbursement of expenses (received) ₹ 5.53 crores AY : 2005-06 Sr.No. Nature of transaction Arm s length price as per taxpayer (i) Provision of engineering services and relating services ₹ 45.77 crores (ii) Reimbursement of expenses (paid) ₹ 0.16 crores (iii) Reimbursement of expenses (received) ₹ 4.67 crores 5. The taxpayer in order to benchmark its international transactions qua provision of Engineering Design Services (EDS) chosen 9 comparables in its Transfer Pricing (TP) study out of which 8 comparables have been rejected by the TPO by applying various filters and during the remand proceedings, TPO conducted fresh TP study and chosen 7 new comparables having margin of 32.47% as against taxpayer s margin of (-) 6.77% and thereby made an addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd 51.29% 51.32% 50.86% 4 Rites Ltd 30.7% 30.70% 31.88% 5 Stup Consultants Ltd. 19.36% 19.38% 18.77% 6 T C E. Consulting Engineers Ltd 11.79% 11.78% 12.28% 7 Wapcos Ltd. 18.95% 18.95% 17.95% 8 U B Engineering Ltd. - 4.27% 1.07% 9 L T Sargent Lundy Limited - -14.20% -11.75% 10 Tata Projects Limited - -1.67% 4.40% Average 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , hence rejected 2 Tata Projects Ltd. Service income less than 75%, hence rejected 3 U B Engineering Ltd. Service income less than 75%, hence rejected AY 2005-06 Company Name Comments of the TPO 1 L T -Sargent Lundy Ltd. Service income less than 75%, hence rejected 2 Tata Projects Ltd. Service income less than 75%, hence rejected 3 U B Engineering Ltd. Service income less than 75%, hence rejected 12. When we examine para 4.4.4 of TP order the ld. TPO has categorically applied service income threshold income of 75% to ensure selection of companies having functional profile similar to that of the taxpayer. So, ld. TPO applied filter that companies should have at least 75% of its revenue from technical consultancy services to be eligible as a comparab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r benchmarking the international transactions when undisputedly there is no change in the business model of the taxpayer since 2007-08. 16. So far as contention raised by the ld. DR for the Revenue that ld. DRP has erred in including aforesaid 3 comparables by ignoring the fact that functional profiles of these companies are different from the profile of the taxpayer is concerned when undisputedly no such findings have been returned by the TPO nor he has questioned functional dissimilarity of taxpayer vis- -vis UB Engineering Ltd., Tata Project Ltd. and L T Sargent Lundy Ltd., this issue has been raked up before the Tribunal first time. 17. Moreover, when we examine the orders passed by the Tribunal in taxpayer s own case for AYs 2007-08, 2008-09 2010-11, UB Engineering Ltd. has been included by the TPO himself as a comparable and there is no change in the functional profile of the taxpayer ever. So, this contention of the ld. DR for the Revenue is not tenable. However, we direct ld. TPO to verify the data supplied by the taxpayer from annual report if the UB Engineering Ltd., Tata Project Ltd. and L T Sargent Lundy Ltd. are having service income of more than75% to reta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk. As per the agreement with REC, your company will be executing the work in Kharagpur Block - 1 and 2 of West Midanapore Distt, of West Bengal. The NTPCESL is yet to undertake commercial activities in the area of distribution of power. It is exploring various options in this field. NTPCESL is in discussions with the Government of Karnataka for acquisition of Manglore circle of Manglore Electric Supply Company ltd. (MESCOM) in Karnataka. Based on the detailed discussions with Government of Karnataka, Karnataka Power Transmission Corporation ltd. and MESCOM a draft Agreement for acquisition of electricity distribution business in Mangalore Circle has been sent to Government of Karnataka. 22. An Expression of interest was submitted to Gujarat Electricity Board for appointment as City distribution franchisee In the Cities of Baroda and Rajkot. Discussions are in progress for identification of a Suitable distribution area in Gujarat, which is to be handed over to the Joint Venture Company to ensure bankability of the proposed 1000 MW power project at Pipavav as per the provisions of the MOU signed between NTPC, Gujarat Power Corporation ltd. and Gujarat Electricity Board. NTPCESL h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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