TMI Blog2023 (4) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... omparable. Inclusion of Office Care Services Ltd as comparable - It is not in dispute that the annual report of the said comparable company does not specify the nature of functions performed by that company. Hence, even at the time of benchmarking done by the assessee itself, the assessee had not bothered to obtain any other evidence to bring on record the nature of functions performed by the said comparable company to include the same in the list of comparables. It is very well settled that the information mentioned in the website of any company is only for their performance and cannot be relied upon by any statutory authority or by any Court. Hence, we are in agreement with the argument advanced by the DR on this issue. Accordingly, we hold that the ld. CIT(A) was justified in rejecting this company as a good comparable with the assessee for want of details of functions performed by the said comparable. Hence, the ground raised by the assessee in its cross objections is dismissed. Inclusion of Vatika Marketing Ltd has been rightly rejected in the final list of comparables as it is engaged in providing project maintenance services and segmental details are not available. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 28-3-2023 - Shri M.Balaganesh, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Assessee : Shri Porus Kaka a/w Shri Divesh Chawla For the Revenue : Dr. Samuel Pitta ORDER PER M. BALAGANESH (A.M): This appeal in ITA No.2988/Mum/2019 Cross Objection in CO No.05/Mum/2021 for A.Y.2012-13 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-58, Mumbai in appeal No. CIT(A)-58,Mumbai/10222/2017-18 dated 19/02/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s.144C(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31/03/2016 by the ld. Dy. Commissioner of Income Tax-15(3)(1), Mumbai (hereinafter referred to as ld. AO). 2. At the outset, we find that the cross objections preferred by the assessee is delayed by 279 days. We find that the cross objections has been preferred during the Covid period and in view of the relaxation granted by the Hon ble Supreme Court in light of Covid-19 pandemic, the delay in filing of cross objections is hereby condoned and the same is taken up for adjudication. 3. The ground Nos.1-6 raised by the assessee in cross objections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y.2012-13 was filed by the assessee company electronically on 30/11/2012 declaring total income of Rs.2,42,79,910/-. The case was selected for scrutiny vide issuance of notice u/s.143(2) of the Act on 16/08/2013 which was duly served on the assessee. The assessee company is engaged in business of coordination / liasoning services to the group companies. During the year under consideration, the assessee company has shown revenue from operations at Rs.6,54,08,130/- and other related income at Rs.29,78,840/-. The ld. AO found that assessee company had entered into Contractor Agreement with Oil and Natural Gas Corporation Ltd. ( ONGC in short) for hire of drilling rigs and had given sub-contract of the same activity to its group company. A reference u/s.92CA(1) of the Act was made by the ld. AO to the file of the ld. TPO for determining the Arm s Length Price (ALP) of international transactions carried out by the assessee. 4.2. The assessee is an Indian company liable to income tax in India as per the provisions of the Act. The AE of the assessee is engaged in offshore drilling activities by deploying rigs and skilled personnel. The AEs operate as project office in India and pay ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch skill sets nor does it own the assets or the personnel that will enable it to render such services. For the sake of commercial prudence, the assessee had entered into service contracts with ONGC. However, since the assessee did not have the relevant skill sets / assets/ personnel for the provision of services to ONGC, this contract was sub-contracted by the assessee to its AEs with the prior consent of ONGC. Infact, the tender document of ONGC itself clearly permit the rendering services by the AE to ONGC. In this regard, the tender document for chartered hire of preliminary unit J P ANGEL between ONGC and assessee dated 20/08/2010 clearly captures the Memorandum of Understanding dated 02/02/2010 entered into by the assessee company with its AEs; agreement dated 02/02/2010 between assessee company and its parent company i.e. Transocean Offshore International Ventures Ltd (AE). This goes to prove very clearly that the ONGC in the tender document itself had taken due cognizance of the back to back contract arrangement entered into by the assessee with its AEs for rendering of offshore drilling services considering the fact that assessee does not possess the requisite skill sets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks attached with the performance of the contract. The main crux and essence of the argument of the ld. DR is that since the entire risk is undertaken by the assessee in the capacity of contractor to perform the offshore drilling services to ONGC, it should be adequately compensated with the said rigs undertaken by the AE in addition to the cost plus mark up reimbursed by the AE. This has not been compensated to the assessee and hence, the ld. TPO had adopted the ALP rate of 1.56% from Royalty STAT software based on the comparable instances and data submitted by the assessee before the ld. TPO. The ld. CIT(A) duly appreciated the contentions of the assessee and the modus operandi adopted by the assessee with regard to execution of contracts for ONGC and deleted the ALP adjustment made by the ld. TPO on the impugned issue. 4.7. In our considered opinion, the various arguments advanced by the ld. DR as summarized hereinabove are contrary to the facts and materials available on record ignoring the cognizance taken by ONGC in the tender documentation itself as detailed supra. Hence, the various arguments advanced by the ld. DR drawing our attention to certain clauses in the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one by the assessee. Neither does it change the fact that the initial incidence of risk lies on the 4. The assessee claims that the amount to be charged should be adjusted against the income already disclosed in the books. This again is a fallacious argument. The receipt reflected in the books is for the specific support and coordination services that it performs for the AES. The procurement of the contract and passing on of the same to the AEs is a distinct activity, it is not coordination or support service in nature. It is an activity that involves the acceptance of the initial incidence of risk legally and being held liable for any criminal breach. 5. The assessee claims that all the responsibilities and obligations were passed on to the AES. This is again not a valid argument. The assessee has passed on the execution risks and the associated profits to the AES. The point that is being discussed here is the compensation for bearing the initial risk; for the procurement of the contract and taking the legal obligations associated with it being the initial/primary obligant. After the contract has been passed on, the risk sare that of the assessee; but that does not mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Forex International Drilling Inc. (SFID), Triton Holdings Ltd. (THL) and R B Falcon (A) Pty. Ltd. (R B) has the necessary skill sets and assets to provide off shore drilling as well as gas exploration and development services. The Group offers a complete package vis a vis constructing oil and natural gas wells in deep waters and harsh environment of various water depths and field development needs. The Group companies have the capabilities and experience of providing drilling services to Indian customers for more than two decades. ONGC, A Government of India Undertaking, is stated to be one of the biggest customers of the Group in India. Some time in the year 2008, Oil Natural Gas Corporation (ONGC) floated tender of charter hire of seven numbers 300 ft. independent LEG Cantilever Type Off shore Jack and Rigs (Drilling Rigs). One of the main conditions of the tender was multiple entities of the same group were not allowed to bid for the tender. Due to such pre condition, the Transocean Group incorporated a wholly owned subsidiary in the name of Transocean Drilling Services India Pvt. Ltd. (TDSIPL), a company in India, to enter into contract with ONGC, which is the assessee befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng foreign exchange loss. The Transfer Pricing Officer on examining the annual report for the relevant previous year, however, found that the assessee had entered into following transactions with its A.E. Sub contracting costs paid ₹ 369,40,07,189 Recovering of expenses received ₹ 4,80,58,593 Reimbursement of expenses paid ₹ 3,69,73,756 6. The Transfer Pricing Officer noticed that, though, as per Schedule VI of the annual report income from service was shown at ₹ 410,59,77,730. The assessee has reduced therefrom service tax of ₹ 34,82,10,146, and sub contractor cost of ₹ 369,40,07,189 and has shown net revenue of ₹ 6,37,60,397, as international transaction with its A.E. in Form no.3CEB. The Transfer Pricing Officer observed, as per the principle of Transfer Pricing Officer, netting of all the international transaction is not permissible. He, therefore, was of the view that the assessee had not correctly reported its international transactions for the assessment year under consideration. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. As a result, the PLI of the assessee was worked out to 0.37% as against 13.11% of the comparables and the arm s length profit was determined at ₹ 49,26,43,330 and arm s length cost at ₹ 32,65,12,425 resulting in upward transfer pricing adjustment of ₹ 47,88,71,298. In pursuance to the order passed by the Transfer Pricing Officer, Assessing Officer proposed the addition on account of transfer pricing adjustment in the draft assessment order. The assessee objected to the draft assessment order before the DRP. The DRP, however, upheld the order of the Transfer Pricing Officer on the issue, whether sub contracting cost paid to the A.E. should form part of assessee s operating cost as well as the issue of comparables selected by the Transfer Pricing Officer. Thus, in pursuance to the directions of the DRP, the Assessing Officer passed the impugned assessment order incorporating the transfer pricing adjustment proposed by TPO. 7. Learned Authorised Representative submitted, as per the pre condition of the tender floated by ONGC, multiple companies of the Transocean Group could not have participated in the bid for supply of rig and off shore drilling work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the assessee and the A.E. to fulfill the terms and conditions of assessee s contract with ONGC, the A.E. TOIVL provided a guarantee on behalf of the assessee for performance of work. He submitted, the aforesaid documents clearly establish that the assessee did not have the ability to perform any of the service as per the tender. It was clearly understood by the parties to the contract that all the services were due to be provided by the A.E. directly. The assessee only provided co ordination and liaisoning services between ONGC and the A.E. He submitted, the above documents are part of ONGC contract. The assessee on its part only provided co ordination and liaison services. It was due to the ability of the A.E. that the assessee has got the contract from ONGC. Therefore, assessee was merely providing liaisoning services and acted as an intermediary between ONGC and A.E. who are actually engaged in providing off shore drilling service. Learned Authorised Representative submitted, after evaluation and fulfillment of various bid criteria ONGC gave a firm order to the assessee on 14th April 2010 and the firm order was followed up with a detailed contract. On getting the firm order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause f1) In case Sub-contractor is unable to mobilize/ deploy the Drilling Unit and commence the Operation within specified period..., Contractor may request Operator for extension of time with unconditionally agreeing for payment of liquidated damages. Upon receipt of such a request, if the Operator extends the period of mobilization and recovers from the Contractor liquidated damages a sum equivalent to 0.5% of the annual contract value for each week of delay or part there of subject to maximum of 5%, then the contractor shall be entitled to recover the said amount of liquidated damages from sub-contractor 2. Duration Clause 1.3 Sub clause (c) on page 184 of the ITAT paper book Operator shall have the option to terminate the agreement at any time during the last 30 days if in the opinion of the operator another well cannot be drilled Clause 1.3, Sub clause (c) on page 315 of the ITAT paper book Contractor (subject to ONGC opting to terminate the contract) shall have the option to Terminate this agreement during the last 30 days if in the opinion of the opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing conformity to Operator's tender specification certified by third party inspection agency at least 30 days prior to stipulated mobilization period. Sub-clause 1.6.4: In case the Contractor fails to adhere to either of the above time schedules Operator reserves the right to invoke the performance bond, forfeit the same and terminate the Agreement without prejudice to any other right or remedy available as per the Agreement. Clause 1.6 of on page 315 of the ITAT paper book Sub-clause 1.6.1: Sub-contractor accepts that the Operator shall get the Drilling Unit and equipment inspected through any of the following internationally reputed third party inspection agency... the cost of third party inspection shall be borne by the Operator... Sub-clause 1.6.2: Sub-contractor acknowledges y and confirms that Operator will accept the Drilling Unit only after Operator nominated third party agency confirms that Drilling Unit is as per the tender specifications Sub-clause 1.6.3: Sub-contractor confirms completion of inspection and complete readiness of the Drilling Unit in all aspects, to the satisfacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds diesel, water and other services (Air Logistics, material transport and standby boat for safety) in case the inspections/ repairs are carried out at location other than as specified above. Clause 3.5 on page 318 of the ITAT paper book Sub-contractor shall be required to carry our repair of damages or structural defects in the hull structure and/ or to carry out required inspections, which prevents the hull structure from performing its normal intended functions. Sub-contractor shall bear all costs towards diesel, water and other services (Air Logistics, material transport and standby boat for safety) in case the inspections/repairs are carried out at location other than as specified above. 7. Deficiencies Clause 3.6 on page 190 of the ITAT paper book Sub-clause (1) Contractor equipment shall be maintained by the contractor in sound and efficient operating condition at all times. Should the performance of Contractor's drilling equipment becomes unsatisfactory or the general standard of performance of work hereunder be materially reduced because of defective dril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all other requirement of its personnel... 9. Performance Clause 3.10 on page 191 of the ITAT paper book The Contractor undertakes to perform all services under this agreement with all reasonable skill/ diligence and care in accordance with sound industry practice to the satisfaction of the Operator and accepts full responsibility for satisfactory quality of such services. If the Operator is dissatisfied with the work of Contractor, then Operator shall give a written notice specifying the causes of dissatisfaction and Contractor shall correct the specified deficiencies within 15 days failing which Operator shall have the right to terminate this agreement by giving 30 days advance written notice to the Contractor unless the specified deficiencies is corrected within such 30 days period. Clause 3.10 of TDSIPL and TOIVL sub-contract on page 319 of the ITAT paper book The Sub-contractor undertakes to perform all services under this agreement with all reasonable skill/ diligence and care in accordance with sound industry practice to the satisfaction of the operator and accepts full re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsocean Inc. and claim the amount from Transocean Inc. and forfeit the same. Transocean Inc. shall be obliged to make the payment to the Contractor upon demand Notwithstanding the invocation of the Performance Guarantee by the Contractor, if the Agreement is not terminated simultaneously with the invocation of Performance Guarantee, Sub-contractor shall not be discharged from its obligations to diligently and efficiently execute the Agreement as per the terms and conditions herein. 11. Material, supplies, equipment and services Clause 4.1 on page 192 of the ITAT paper book Sub-clause (a) Contractor will furnish and maintain at its cost all items designated at Exhibit A hereto under the heading 'Furnished by the Contractor' Clause 4.1 on page 320 of the ITAT paper book Sub-clause (a) Sub-contractor will furnish and maintain at its cost all items designated at Annexure -1 hereto under the heading Furnished by the Sub- contractor' 12. Personnel Clause 4.2(a) submitted on page 192 of the ITAT paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout giving any future notice... Further, the sub- contractor shall obtain all necessary clearance from customs for storage and removal of materials from stores 14 Independent Contractor Relationship Clause 9.1 on B the ITAT paper book Sub-clause (a) Contractor, directly and through its employees, shall perform all work connected with the Drilling operations herein contemplated. In the performance of this work contractor is an independent Contractor and is completely responsible to control and execute the details of the work, Operator being interested in proper execution and results obtained. The work contemplated herein shall meet the approval of Operator and be subject to the general rights of directions and inspection. Neither Contractor's employees nor employees of its sub- contractors, shall be considered employees of Operator. Sub-clause (b): Contractor shall at all times, have full responsibility for control, direction and supervision of operations being carried out under this Agreement except when and to the extent that the Operator assumes control and supervision of operation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Petroleum and Natural Gas (India), at his cost. It is the responsibility ol the Contractor to obtain all necessary permissions and clearances from the statutory authorities, for operating the Drilling Unit in Indian waters, at his cost. Contract 01 shall ensure that the Drilling Unit i.s classed and confirm that they would obtain permission /clearance of DG Shipping, wherever required for operating the Drilling Unit in Indian waters, at his cost. However, for obtaining Naval Defence Clearance and other necessary permissions and clearances from [lie statutory authorities, Operator shall issue forwarding tatter upon request from Contractor supported by all relevant valid documents. Clause 13.2 on page 328 of the IT AT paper book Sub-contractor agrees that il shall secure permits nnd licenses for operations of the Drilling Unit in Indian Waters, if required and Sub-contractor shall pay any expenses in this regard. Contractor confirms that it would assist the Sub contractor in obtaining Naval Defence C'learance of Drilling Unit prior to commencement of contract from Ministry of Defence through Ministry of Petroleum and Natural Gas (Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut limit, which may arise in favour of Contractor, Contractor's employees, agents, sub-contractors or their employees, on account of bodily injury or death of Contractor's employees, agent, sub- contractor's employce or damage to said employee's property as a result of the operations, contemplated hereby, regardless of whether said claims, demands, or causes of action arise out of negligence or otherwise, in whole or in part, unseaworthiness or other fault, including pre-existing conditions of Operator, its contractors other than the Contractor, sub- contractors, partners, Joint Ventures, their employees or agents. B. Operator agrees to protect, defend, indemnify and hold Contractor and its sub- contractors, its agent and its affiliates, its other contractors and/or their employees harmless from and against all claims, suits, demands and causes of action, liabilities, expenses, costs, liens, rights in rem and judgements of every kind and character, without limit, which may arise in favour of Operator, Operator's employees, Agents, invitees, contractors (other than Contractor) and sub- contractors, or their employees, on account of bodily injury or death ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty of Contractor) as a result of the operations contemplated hereby, regardless of whether or not said claims, demands, or causes of action arise out of the negligence or otherwise in whole or in part, unseaworthiness or other faults, including pre existing conditions of Sub-contractor, its subcontractors, partners, Joint ventures, employees or agents. 20 Payment of Excise Duty, Vat/ Sales Tax, works Contract Tax and Service Tax Clause 15.5.1 Refer page 210 of the ITAT paper book 3 VAT/Sales Tax/ Works Contract Tax/ Excise Duty levied, if any, on materials/consumables will be to the account of Contractor. VAT/ Sales Tax/Works Contract Tax/ Excise Duty levied, if any, on charter hire payments received by the Sub- contractor, under this contract, will be to the account of Operator. Clause 15.1.1 Refer page 333 of the ITAT paper book VAT/Sales Tax/ Works Contract Tax/ Excise Duty levied, if any, on materials/consumables will be to the account of Sub- contractor. VAT/ Sales Tax/ Works Contract Tax/ Excise Duty levied, if any, on charter hire payments received by the Sub-contractor, under this cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets / equipments, mobilization of the rigs and personnel, inspection, guarantees, etc., were the responsibility of the A.E. and all the risk in regards to liquidity damages deficiency, performs, etc., shall lie with the A.E. He submitted, the entire responsibility, risk, liabilities under ONGC contract was transferred to its A.E. while the assessee only provided co ordination and liaison services between ONGC and A.E. He submitted, for the purpose of execution of off shore drilling operation, the contract with ONGC had specified minimum number of personnel to be employed per shift on each rig is 47 with at least two shifts running per day, whereas, the assessee had only seven employees on its pay roll carrying out various administrative and co ordination functions. In this context, the assessee referred to the relevant clauses of the contract as well as the salary paid by the assessee and its A.Es. for their respective activities which are as under: Salary paid by A.Es to its employees working on Rigs ₹ 69,31,83,118 Salary paid by assessee to its employees none of whom are posted on the Rigs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DRP in the case of A.E. had held that the A.E id engaged in actual drilling operation and the assessee is a mere intermediary, which decision of the DRP has been accepted by the Department, a contrary view cannot be taken in assessee s case in respect of the very same income. Learned Authorised Representative submitted, in assessment year 2012 13, the Transfer Pricing Officer himself has acknowledged that assessee is acting merely as an intermediary between ONGC and its A.Es and has accordingly considered the payments made by the assessee to A.Es as pass through cost, which cannot be considered as part of the cost base of the assessee to compute the arm's length price. Learned Authorised Representative submitted, as the assessee has been able to demonstrate that the responsibility agreed in the contract with ONGC were passed on completely to the A.Es in the back to back agreement effectively the various functions and underlying risk in relation to the same were also passed on to the A.Es. He submitted, the MoU / agreement between the assessee and the parent company and guarantee furnished by parent company are part of agreement with ONGC. Accordingly, the role of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icing Officer bench marked the transaction for all the functions put together treating the assessee as risk bearing entity. He did not bench mark the functions separately. In reply to the submissions of the assessee that in assessment year 2012 13, the Transfer Pricing Officer has accepted the payment made to sub contractor as pass through cost, the learned Departmental Representative submitted, in assessment year 2012 13, the Transfer Pricing Officer has undertaken a detailed factual analysis and a separate bench marking of the functions have been undertaken. He submitted, while following separate bench marking approach of contracting / bidding function and that of liaisoning and support service, the Transfer Pricing Officer excluded sub contracting cost. He submitted, in case sub contract cost is to be excluded, the function of sub contracting need to be remunerated at arm's length price. Extensively referring to the observations of the Transfer Pricing Officer in the said order, the learned Departmental Representative brought out certain importent points as under: a) FAR analysis revealed assessee was taking contracts and passing on the same to the AEs. This was done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company in execution of turnkey projects arise out of executing projects of public sector undertakings, it cannot be considered to be comparable to assessee company providing turnkey services to its AE as contracts between public sector undertakings were not driven by profit motive alone and other consideration also weigh in such as discharge of social obligations etc. To buttress this argument, the ld. AR drew our attention to the order of the ld. TPO at page 10 thereon wherein, the ld. TPO himself had included Apitco Ltd as one of the comparables, which is also a Government company. The ld. AR, though, in principle, agreed that Government company cannot be a good comparable in view of the decision of the Hon ble Jurisdictional High Court referred supra, submitted that the said principle cannot be made applicable to the facts of the instant case in view of the fact that the ld. TPO himself had considered a Government company as a good comparable. It is a fact on record that Apitco Ltd is a Government company which has been included as a good comparable by the ld. TPO. It is also pertinent to note that inclusion of a Government company as a good comparable i.e. Apitco Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he annual report of the said comparable company does not specify the nature of functions performed by that company. Hence, even at the time of benchmarking done by the assessee itself, the assessee had not bothered to obtain any other evidence to bring on record the nature of functions performed by the said comparable company to include the same in the list of comparables. It is very well settled that the information mentioned in the website of any company is only for their performance and cannot be relied upon by any statutory authority or by any Court. Hence, we are in agreement with the argument advanced by the ld. DR on this issue. Accordingly, we hold that the ld. CIT(A) was justified in rejecting this company as a good comparable with the assessee for want of details of functions performed by the said comparable. Hence, the ground No.7 raised by the assessee in its cross objections is dismissed. (C) Inclusion of Vatika Marketing Ltd: - The assessee has raised ground No.8 in its cross objections seeking for inclusion of the aforesaid comparable company. The ld. AR before us stated that the said comparable company is engaged in providing project maintenance services an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the figures had been done only to comply with the Accounting Standard-11 issued by ICAI and this figure has got absolutely no relevance with the assessee as such, for the purpose of taxation and the transfer pricing regulations, in view of the fact that the entire exchange fluctuation risk is to be borne only by the AE and not by the assessee. The assessee is merely a pass through entity of collecting the US$ from ONGC and passing on the same to AE pursuant to back to back arrangement. Since this exchange loss is purely notional, the assessee has chosen not to get it reimbursed from its AE during the year under consideration. The ld. AR also stated that any exchange loss incurred actually by the assessee at the time of actual settlement of bills has been duly reimbursed by the AE to the assessee. Hence, we hold that assessee was duly justified in not adding mark-up of 10% on this exchange loss considering the fact that it is purely notional in nature in the peculiar facts and circumstances of the instant case. Accordingly, the ground No.9 raised by the assessee in its cross objections is allowed. 10. The ground No.10 raised by the assessee in its cross objection is challengin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total 19.94 lakhs, the major expenditure of Rs.16,00,000/- is towards employees cost and ESOP expenses given by the parent to the employees. The ld. AR also drew the attention of this Bench to page No.3 of its ld. TPO order wherein the role of the assessee has been mentioned by stating that the assessee performed the following functions:- (a) Contracting / Bid (b) Liasoning and Co-ordination (c) Assistance in import of equipments and warehousing (d) Accounting and documents maintenance (e) Invoicing and collection (f) TDSIPL i.e. assessee performs other support administrative activity that would enable the Transocean group entities to execute the contract efficiently. 10.4. When the transaction is in the reimbursement of expenses to AE, the third party cost incurred is a Comparable Uncontrolled Price (CUP) for reimbursement. Accordingly, the CUP method chosen by the assessee considering the nature of transaction and degree of comparability as the Most Appropriate Method, is hereby upheld. 10.5. We find that either way all these expenses have been duly included in the total expenses included by the assessee on which mark-up of 10% has been claimed by the as ..... 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