TMI Blog2020 (6) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... become functionally different from the trading segment of assessee. The functional difference itself is sufficient to exclude the company from the set of the comparables, and we are not examining other grounds like RPT filter etc for rejection of the company. Accordingly, we direct the learned TPO/AO to exclude the company from the set of the comparables and re-compute the average PLI of the comparables and if the PLI of the assessee is found to be more than the average PLI of the comparables, no adjustment would be required in the trading segment of the assessee. Exclusion of comparables selected in technical service segment as being functionally different. Transfer pricing addition made under the MAT provisions - HELD THAT:- Transfer pricing addition is not included in the above list and, therefore, the Assessing Officer is not justified in considering the transfer pricing addition for the purpose of computation of the book profit under the provisions of section 115JB of the Act. Accordingly, we allow the ground of the assessee in this regard. - ITA No.7802/Del./2017 - - - Dated:- 27-4-2020 - Shri Sudhanshu Srivastava, Judicial Member And Shri O.P. Kant, Accountan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Mahindra Automotive Distributors Private Limited without sharing the calculation of the same with the assessee, and consequently not excluding the same from final list of comparables although as per the assessee the RPT of this comparable was 29% and was liable to be rejected as per TPO s filter of 25% RPT. 8. Without prejudice to above ground, the learned AO/TPO and the learned DRP grossly erred in law in re-computing the PLI of assessee for trading segment under TNMM from 11.60% to 1.33% by not appreciating that Goodwill acquired and amortized via depreciation and prior period expenses is an exceptional and non-operating item which required to be treated as non operating as accepted by TPO himself in the order of on page 30 to treat Goodwill write off as non operating. 9. Hon ble DRP has erred in law in merely following last year DRP order for not accepting contention of the assessee for treating Goodwill written off and prior period expenses are as non-operating. 10. That the learned DRP has earned in law in not appreciating alternate adjustment claimed by the assessee to treat the depreciation cost of assessee as well as comparables as nonoperating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice Segment 23. That the Hon ble DRP and consequently TPO/AO has erred in law in confirming the adjustment of ₹ 29,00,665/- in technical service segment of the assessee. 24. The Ld. TPO and consequently the DRP as well as AO has erred in law and on the fact of the assessee s case by re-computing the PLI of the assessee for technical service under TNMM in not accepting the assessee s claim that amortization of goodwill and prior period expenses are non-operating/extraordinary expenses as stated by TPO himself in the order on page no. 30. 25. That the Hon ble DRP has earned in law in sustaining the rejection of assessee s comparable by the TPO without any cogent reasons and without appreciating FAR analysis done. 26. That the learned TPO has earned in law in conducting fresh search process for obtaining new comparables and not giving the assessee the details of fresh search process so that assessee may submit its objection, which is against the principle of natural justice. 27. That the Hon ble DRP has erred in law in not excluding comparables objected by the assessee which were different from the assessee both in nature of activities and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company is engaged in supply of spare parts and other equipment used by engine based power plants and oil and gas pumping system and also provide technical services in relation thereto. The assessee company also renders market support services and project management services to its overseas Associated Enterprises (AEs). 2.1 In its transfer pricing study filed, the assessee reported following international transaction for the year under consideration: Class of Transactions Total Value of Transaction (Rs.) Reimbursement expenses 20091 Purchase of traded goods 21004900 Provision of project management support service 10656118 Provision of market support services 43350872 Sale of goods 759600830 Receipt of services 7383455 Provision of Technical services 18395849 Deferred revenue s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted such goods to be sold to third parties from its AE during the year. In this regard, functions undertaken by the BEIPL have been articulated below: (a) Functions: Nature of Function BEIPL AE Procurement Yes BEIPL is responsible for purchasing the traded goods from its AE based on the confirmed requisition to be raised on it by the customers in India. On receipt of the purchase order, the associated enterprises dispatch the goods. No The AE is responsible to dispatch goods to BEIPL on receipt of the purchase the order from it. The AE does not take any functions in relation to the transaction of procurement of the traded goods. Research Development No BEIPL does not undertake R D and therefore, does no function in relation thereto Yes AEs carry out the function of R D for supplying goods to BEIPL Inventory Management Yes It is the responsibility of BEIPL to warehouse the goods once they arrive in India till the time they are sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of collection of amount due from BEIPL. Foreign Currency Risk: The risk arises from any adverse fluctuations in foreign currency exchange rates, which could have a negative impact on the profitability of the company. Yes BEIPL deals with its AEs in foreign currency. So, BEIPL is exposed to foreign exchange risk on account of fluctuations in foreign currency in relation to INR. Therefore, BEIPL bears this risk. No AE is not exposed to any risk on account of foreign exchange fluctuation since the invoices raised by them are in their local currency; they do not have risk on this account. Inventory Risk: This covers the risk of theft, breakage arising out of stocking and warehousing of the products, and obsolescence arising out of technological upgradation and enhancement etc. Yes but limited After the goods are imported by BEIPL, any risk such as theft, obsolescence, market risk arising out of stocking and warehousing the imported products is borne by BEIPL. In most cases BEIPL imports the goods only after a confirmed order is placed by the customer and therefore, the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42/Del/2010, prayed that its gross margin of 38.71%, being higher than the profit level indicator of 15.50% of the comparable companies chosen by the assessee, the international transaction is at arm s length. 4.3 The learned TPO rejected the RPM as most appropriate method due to following reasons: (a) The comparables should be dealing in resale of properties/services which are similar in nature and value as far as possible. If the tested party deals in branded goods, the comparable entities should also be dealing in branded goods. If the value of the goods sold by the tested party and the comparables differs significantly, the comparability may suffer. (b) Where a comparable is enjoying a monopoly or exclusive rights to sell in the market or faces no competition in its market, the comparability suffers as the conditions/circumstances of sale should also be comparable. The resale price margin cannot be compared in those cases also where one of the parties is making resale using its intangible assets such as marketing network while the other party has no such intangible. (c) The functions performed which affect the resale price margin should also be similar or it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sl. No. Name of the company Remarks of the TPO 1. Batliboi Ltd. Does not pass filter applied by the TPO. Hence rejected. 2. Kirloskar Oil Engines Ltd. Does not pass filter applied by the TPO. Hence rejected. 3. Greaves Cotton Does not pass filter applied by the TPO. Hence, rejected. 4.5 The learned TPO, re-computed the profit level indicator of the assessee at 1.33% by treating goodwill amortized as an operating expense, which was treated by the assessee as nonoperating while computing the profit level indicator. The learned TPO rejected the comparables selected by the assessee and made afresh search and proposed following comparables: S.No. Comparable Companies OP/OI (%) 1. Jullundur Motor Agency (Delhi) Ltd. 3.68 2. Mahindra Automobile Distr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 OP/OC 11.91% 1.33% 4.7 Before us, the learned Counsel of the assessee submitted that goodwill amortization expenses need to be excluded for computing the profit level indicator due to following reasons: - In this regard it is submitted that pursuant to the resolution passed by board of directors in Feb., 2012, the Diesel Power Business of Rolls Royce Indi Pvt. Ltd. was purchased by the assessee through a Slump sale. - The Business Purchase consideration was ₹ 103.5 crores. The net assets acquired were of ₹ 43.72 crore. The excess of the Business Purchase consideration of ₹ 59.78 crore over the value of assets purchased was recognized as goodwill in the books of the assessee. This Goodwill on account of Business Purchased was to be amortized over a period of 5 years as per note 35 of audited financials. - Thus the creation of Goodwill in the books of the assessee is due to an extra-ordinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of intangibles cannot be computed. The purpose of TP analysis is to compare the like with like. Any exceptional item which effects the comparisons in an open market are required to be ignored/excluded, it is respectfully submitted. - In case of Federal Mogul Automotive Products India Pvt. Ltd. [TS-110-ITAT-2015-DEL-TP], Hon ble Delhi ITAT upheld the exclusion of extraordinary provisions and nonoperating items for computing the PLI. - It is submitted that mergers, acquisitions, demergers, a pin-off, business reorganizations etc. are extra ordinary events and effects the normal profitability of the company, thus need to be adjusted to reflect the true comparability. Reliance is placed on the case of American Express Indian Pvt. Ltd. [TS-517-ITAT-2015(DEL)-TP] in which it was held that- The factor of amalgamation of merger or acquisition etc. has its own implication on the financial results of the company as these are abnormal financial characteristics which distort the normal profitability. - When the AICPA published ARB 43, Restatement and Revision of Accounting Research Bulletins Nos. 1-42, in 1953, the following items, when material, were specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the TPO of 6.27%(page 39 of TPO s order), thus the transaction of Sale of Traded Goods of the assessee are at ALP. Although the assessee is separately challenging the comparable and other issues, however, without prejudice to such challenged the ALP adjustment made by the TPO in trading segment is prayed to be deleted on this ground only. - In the light of above facts and provisions, it is thus prayed that the goodwill amortization of ₹ 11,42,72,959/- may please be treated as nonoperating and PLI of the assessee be restored to 11.91%. 5. With reference to Ground No. 10 of the appeal seeking depreciation adjustment due to different asset base, the learned Counsel in its written submission submitted as under: - Alternately, it is requested that the whole amount of depreciation of the assessee as well as comparables may please be adjusted as nonoperating so as to enable fair comparison of adjusted PLI of the assessee and the comparables on account of difference in the asset base of the assessee and the comparables. By neutralizing the effect of depreciation from the PLI of the assessee as well as the comparables, the PLIs will be at part and comparable . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used by them. Your Honour would appreciate that the comparability analysis is required to pass the test of FAR analysis i.e. functions performed, assets employed and risk assumed. There is a clear and demonstrative difference in asset base of the assessee and these comparable, which need a definite adjustment as per rules. - Reliance in this regard is placed on following judicial precedents: Sabic Research and Technology Pvt. Ltd. (1065/Ahd/2012) Siemens Healthcare Diagnostics Ltd. Vs. ACIT (152 ITD 155) SchefenackerMotherson Limited (123 TTJ 509) The taxpayer in both the assessment year showed before the revenue authorities that profit shown by the taxpayer satisfies arm s length requirement on ratio of cash profit to sales if uniformly applied. As the deduction of depreciation is leading to wide differences, the same should be excluded. M/s. Qual Core Logic Limited Vs. Deputy CIT (ITA 893/Hyd./2011)- The object and purpose of transfer pricing is to compare like with the like, and to eliminate differences, if any, by suitable adjustment is to be seen. Therefore, there was justification on the part of the assessee in pleading that pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for obtaining the above said comparables so as to enable the assessee to submit detailed objections. The assessee specifically objected to this before TPO through written submission. C. Objections to the New Set of Comparables of the Ld. TPO (i) Not excluding Mahindra Automobile from final list of comparable. - Among 4 comparables chosen by TPO for trading segment of the assessee, the PLI of Mahindra Automobile Distributor Pvt. Ltd. is an outlier from other 3 companies. Your honour would notice that the PLI of Mahindra Automobile is 26.99% while of other 3 companies. Your honour would notice that the PLI of Mahindra Automobile is 26.99% while of other 3 companies is ranging from (0.39)% to (3.56)%. This clearly shows that the company is earning more than ordinary net profits than the other trading companies. While analyzing the annual report of Mahindra Automobile for the year under consideration, your honour would notice from the face of the P/L that during the year the company paid excise duty on sale of products 12% to 13% (approx). This shows that the Mahindra Automobile is not purely trading company and its revenue comprise of an activity which amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mahindra Automobile is excluded from final list of comparable, the revised PLI of the TPO s comparables shall be (0.63)% as: Particulars (TPO s comparables) PLI % as determined by TPO (OP/OI) Jullundur Motor Agency (Delhi) 3.68 PAE Ltd. -2.02 Stanes Motors (South India) Ltd. -3.56 Average -0.63 - If this company is excluded, the assessee will be at ALP even if no other objection is entertained on comparable or other issues. - If the comparable of the assessee namely, Mcnally Sayaji is retained in the final list along with the other 3 comparables chosen by the Ld. TPO, the PLI would be as follows : Particulars (TPO s comparables) PLI % as determined by TPO(OP/OI) Jullundur Motor Agency (Delhi) 3.68 PAE Ltd. -2.02 STanes Motors (South India) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esults declared by assessee in its TP analysis may be upheld. 5.3 The learned DR, on the other hand, relied on the order of the lower authorities and on the issue of exclusion of the comparable M/s Mahindra Auto Mobile distributor submitted that the comparable qualified related party transaction (RPT) filter being 21% of the total transactions, and thus following the direction of learned DRP, the comparable has been retained. 6. We have heard rival submission of the parties on the issue in dispute and perused the relevant metal on record. Before us, the assessee has submitted that if the comparable M/s Mahindra Auto Mobile distributor is excluded from the set of the comparables, the assessee will be at Arm s length Price ( ALP) and other objection of the assessee might not required to be entertained. 6.1 One of the main objections of the assessee for including M/s Mahindra Auto Mobile distributer is that during the year the company paid excise duty on sale of the products of 12% to 13% approximately and in view of the same the company is not purely trading and its revenue comprise of an activity which amount to manufacture such that excise duty is payable on it. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermination of ALP of the support service segment. 10.1 The assessee in its transfer pricing study applied CPM as most appropriate method to benchmark the international transaction of provision of support services i.e PMS and MSS. the assessee determined its gross profit at 26.18% and the gross profit margin of the comparables was determined at 7.48% on three years average. According to the assessee , the learned TPO applied TNMM as most appropriate method without giving any reason for disregarding the choice of the CPM as MAM adopted by the assessee for the support service segment . 10.2 Before us, the assessee in its written submission, submitted as under: - It is submitted that it is not open to the TPO to choose a different MAM for determining the ALP without assigning any cogent reasons. Reliance is placed on Alumeco India Extrusion Ltd. [TS-491-HC-2014-(TEL AP)-TP] wherein it was held that where assessee had chosen most appropriate method, TPO must record reason for rejection of such method. The Tribunal did not find any substance in any of the Transfer Pricing Officer s multiple arguments for arguments for rejection of assessee s internal Cost Plus Meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as the MAM for benchmarking the transaction of Support services segment. - Without prejudice, it is accepted that the CPM is more suited to the transaction of rendering of services than the TNMM. Reliance is placed on the OECD Guidelines (Para 2.45) and Guidance Note on Transfer Pricing issued by ICAI in 2017(Para 6.20), wherein the CPM is said to be ordinarily appropriate in the following situations: (i) where semi- finished goods are transferred between associates; or (ii) where there is long term buying and selling arrangements; or (iii) in the case of the provision of services; or (iv) joint facility arrangements; (v) contract manufacturing particularly where these are of subsidiary or peripheral nature. - Further, reliance is placed on the decision of L oreal India Pvt. Ltd. (supra)- The CIT(A) observed that even according to the OECD guidelines the preferred method is that the method requires computation of ALP directly based on gross margin, over other methods which require computation of ALP n an indirect method because, comparing gross margins extinguishes the need for making adjustments in relation to difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PO under the segment, is considered, the profit level indicator of the assessee of support service segment would be more than the average PLI of the comparables and no adjustment would be required and other grounds in relation to support service segment may not be required to adjudicate. 10.6 Accordingly, we take up arguments of the parties in relation to each comparable for adjudication. The function, asset and risk (FAR) analysis of the assessee in relation to provision of project management and marketing support services as available on page 49 to 51 of the paper-book, is reproduced as under: iii. Provision of Project Management and Marketing Support Services Background: BEIPL provides certain specific services to its AE as per an agreement entered into by the two parties namely Project Management Services and marketing Support Services. These services provided by BEIPL are in the nature of support services. The AE is the receiver of these services and performs no function in this regard. The functions performed by BEIPL are explained as under: (a) Functions Nature of function BEIPL AE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risk on account of shortfall in service quality. Foreign Exchange Risk The risk arises from any adverse fluctuations in foreign currency exchange rates, which could have a negative impact on the profitability of the company. Yes For the bills raised in foreign currency BEIPL is exposed to the risk of foreign currency fluctuations. However there is no risk for bills raised in INR Yes For the bills raised in INR the AEs are exposed to the foreign currency fluctuation risk. Credit Risk This is the risk arising when a firm supplies its products or services to a customer in advance of its payment. No. BEIPL is rendering service to its associated enterprises which have high creditworthiness therefore it bears no or negligible risk. No. The AEs make paymet to BEIPL in relation to the services availed by them and thus, are not exposed to any credit risk. Characterization The abovementioned contractual terms of the agreement which divides the risk and benefit between assessee and the AE clearly shows that the assessee bears virt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assessee. The learned DR also referred to revenue from operations of the company and submitted that company is engaged in diverse activities including project related services, infrastructure and planning development, which are broadly similar to the assessee. 12.2 We have heard submission of the both the parties on the issue in dispute. As far as functions of the company is concerned, from Note -15 of the Annual Report( available on page 28 of Annual Report of the Company), which is having detailed of revenue from operations, we find that main revenue has been earned from micro-enterprise development and skill development and EDPs. The relevant detailed of revenue from various operations is reproduced as under: Revenue and Operations As at 31st March, 2013 Amount (Rs.) As at 31st March, 2012 Amount (Rs.) Revenue from Business Services: 1. Micro Enterprises Development 1,21,07,772 61,65,005 2. Skill Development EDPs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rolls-Royce India private limited (in ITA No. 1310/Del/2015 for assessment year 2010-11). The assessee has acquired the very same undertaking of the Rolls-Royce India private limited in a slump-sale. The finding of the Tribunal(supra) is reproduced as under: 36. The second comparable, inclusion of which is disputed by the assessee, is Aptico Ltd. In the synopsis filed by the assessee it is mentioned that the services provided include but not limited to the domains of project report preparation, techno economic studies, feasibility studies, micro enterprise development, skill development, project management consulting, industrial cluster development, environmental management consulting, energy management consulting, market social research and asset reconstruction management services. This company was promoted jointly by All India Financial Institutions (IDBI, IFCI, ICICI), State Industry Development Corporations (APIDC, APSFC) and commercial banks (Andhra Bank, Indian Bank, State Bank of India, Syndicate Bank). 37. From a bare perusal of the services rendered by Apitco Ltd., it is clear that it is imparting consultancy in entirely different field and is not comparab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ics etc. The company being functionally dissimilar to the support service segment of the assessee, we direct the Learned AO/TPO to exclude the company from the set of the final comparables. BVG India Ltd. 14. The Counsel referred to disclosure in Board of Directors report explanatory ( page 4 of the Annual Report) wherein clause 3 , the operations of the company have been mentioned. He submitted that company was awarded contract of running and maintaining 937 ambulances across the Maharashtra and provide timely help in emergency medical situation. He submitted that the company also extended its operation in solid waste management. The services provided by the company not only include routine services of facility management, mechanized housekeeping and shop floor cleaning but specialized services of land filling, solid waste management, series treatment plant, emergency medical services, factory construction, outdoor advertisement etc. Therefore, the company cannot be compared with the support service segment of the assessee. 14.1 On the contrary, the Learned DR relied on the finding of the lower authorities. 14.2 We have heard rival submission of the parties o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the support service segment of the assessee. This company being functionally dissimilar at entity level , we direct the Learned AO/TPO to exclude from final set of the comparables. Marketing Consultant and Agencies. 16. The learned Counsel submitted that the company is engaged in providing advertisement services through various sources like periodicals, newspaper, radio and television. According to the Learned Counsel, the assessee is a marketing support service company and not a marketing company. He submitted that company being similar to Just Dial Ltd which has been excluded by the learned DRP and thus it might also be rejected on the same criteria as just dial Ltd. He also referred to Annual Report of the company and submitted that this a government of India undertaking as well as engaged in sale of products and failed to pass the filter of products to service ratio. 16.1 The learned DR on the other and submitted that government organization also plays a level playing field with private sector and cannot be excluded just on the ground that it is a government organization. On the filter of the product to service ratio, the learned DR submitted that learned T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the final set of the comparables. Goldmine Advertising Ltd: 18. The learned Counsel referred to Annual Report of the company and submitted that service sales of the company include space media, radio advertising, holding, designing, TV advertising sales, print sales etc. and this company being in media advertisement, cannot be compared with support services segment including marketing support of the assessee. 18.1 On the contrary, the learned DR relied on the finding of the learned TPO/DRP. 18.2 We have heard rival submission of the parties. In the profit and loss account, revenue has been shown from sale of services at ₹ 127,48,55,307/-. Further below the profit and loss account in footnotes, further breakup of the revenue has been shown as under: (A) Space Media : 997334654 Radio Advertising : 17942280 Hoarding: 53707532 Designing: 62387426 T.V. Advertising Sales:124955162 Print Sales: 13086017Other: 5442136 18.3 In view of the stream of the revenue shown by the company, it is evident that it is a full-fledged media advertisement company and it cannot be compared with the support service including marketing support segment of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haul. Service Quality Yes Since BEIPL is the provider of services it needs to keep a check ion the quality of services being proved. No AE does not have any functions to perform since it is on the receiving end of the services being provided by BEIPL (b) Assets All the assets employed by BEIPL after depreciation (as per books of account ) are integral part of business of BEIPL which helps it in carrying out the trading and service activities and are not exclusively used for the international transaction or provision of technical services. Refer para 5.3 for the details of tangible and intangible assets employed by the company on 31st March, 2013. (c) Risks Risk profiling of BEIPL vis-a0vis its AE s provided in the table below: Risk Category and Description Exposure to BEIPL Exposure to AEs Market Risk: Market risk arises for a business due to the uncertainty in the structure of the market, demand patterns and needs of customer s costs, pricing etc. Market risk represents standard ris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the risk arising when a firm supplies its products or services to a customer in advance of its payment No BEIPL is rendering service to its associated enterprises which have high Creditworthiness therefore it bears no or negligible risk. No. The AEs make payment to BEIPL in relation to the services availed by them and thus, are not exposed to any credit risk. Foreign Currency Risk: The risk arises from any adverse fluctuations in foreign currency exchange rates, which could have a negative impact on the profitability of the company Yes BEIPL raise invoices in foreign currency. So, they are exposed to foreign exchange risk on account of fluctuations in foreign currency in relation to INR. Therefore, BEIPL bears this risk. No No risk on account of foreign exchange fluctuations arises for the AE. 24. The assessee under the segment has claimed to have provided ancillary services of operation and maintenance to its AEs. The assessee has characterized itself as a technical service provider that assumes standard risk with carrying of such business activity . 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of the Annual Report ( page -5) , we find that various divisions of the company include power division, energy and carbon service division, environment management and engineering division, banking and finance division, Infra-consulting group, securitization division, entrepreneurship and vocational training division, E-school division, BT and Pharma division etc. Thus company is engaged in providing diverse services and no separate segment information is available in Annual Report. Clearly, the company cannot be compared functionally with the technical support service segment of the assessee at entity level. The company being functionally dissimilar, we direct the Learned AO/TPO to exclude the company from the final set of the comparables under technical service segment. HSCC(India) Ltd. : 27. The Counsel submitted that the company deals in providing consultancy services in healthcare sector and also provide range of services in the field of construction of hospitals, laboratories etc. The learned Counsel also submitted that the company fails filter of the service income more than 75% of total income. The Counsel submitted that company is a Government of India u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 30/09/2016has reproduced the table of segmental result of the company, however on being asked to provide the Annual Report, the Learned DR could not produce the same despite sufficient time provided to him for making the Annual Report available before the bench . In absence of annual report of the company, neither it can be compared functionally with the assessee nor the operating result of the company can be considered as a reliable. Accordingly, we restore issue of comparability of the Company back to the AO/TPO to provide the Annual Report of the Company to the assessee and then decide the issue in accordance with law after providing adequate opportunity to the assessee. Certification Engineering and International Ltd (CEIL): 29. The learned Counsel submitted that the company is engaged in providing certification services and quality check services, which are in contrast to the services rendered by the assessee provision the nature of the repair and overall of engines used in oil and gas generating plants. He also submitted that CEIL the government of India undertaking having different risk and rewards in rendering services of managing quality and safety. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . [TS-643-HC-2017-MAD]. 31.2 The learned DR, on the other hand, relied on the order of the lower authorities. 31.3 We have heard the rival submission and perused the relevant material on record. According to the provision of section 115JB of the Act, the book profit for the purpose of the provision means the net profit shown in the profit and loss account for the relevant year as increased by items listed in explanation-1. The list of the items in explanation-1 is reproduced as under: Explanation 1.-For the purposes of this section, book profit means the profit as shown in the statement of profit and loss for the relevant previous year prepared under sub-section (2), as increased by- (a) the amount of income-tax paid or payable, and the provision therefor; or (b) the amounts carried to any reserves, by whatever name called, other than a reserve specified under section 33AC; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (d) the amount by way of provision for losses of subsidiary companies; or (e) the amount or amounts of dividends paid or proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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