TMI Blog2023 (6) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... e Skill Development, Cluster Development, Research Studies, Micro Enterprises Development, Environmental Management etc. But the assessee is only engaged in providing Project Management, Cost Management and Management Consultancy Services. Thus, functionally APITCO is not a comparable company to the assessee. We are of the opinion that APITCO is functionally different and the same should be excluded from the list of comparables selected by the TPO.Appeal of the assessee is allowed. - I.T.A. No. 8763/DEL/2019 - - - Dated:- 28-6-2023 - Shri Anil Chaturvedi, Accountant Member And Shri Yogesh Kumar U.S., Judicial Member For the Assessee : Shri Mr. Bhaumik Goda, CA For the Department : Shri Mrinal Kumar, Sr. D. R.; ORDER PER YOGESH KUMAR U.S., JM This appeal is filed by the assessee against the order dated 28.06.2019 passed by the ld. Commissioner of Income Tax (Appeals) (hereinafter referred to CIT (Appeals )Delhi-44, for assessment year 2012-13. 2. The assessee has raised the following substantive ground of appeal :- Based on the facts and circumstances of the case and in law, the Appellant respectfully craves leave to prefer an appeal against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant ), is a company incorporated on 19th September 2008, as a subsidiary of Turner Townsend International Limited. The Company is a part of the wide global network of Turner Townsend Plc and is engaged in the business of providing construction project management, cost management and management consultancy services. In the Assessment Year under consideration i.e. AY 2012-13, the Appellant filed its Return of Income u/s 139(1) of the Income Tax Act, 1961 declaring total income of Rs. 74,16,650 as per the normal provisions of the Act and claiming tax deducted at source amounting to Rs. 1,74,90,886. Subsequently, the Return of Income was selected for scrutiny assessment under section 143(2) of the Act and assessment was framed vide an order dated 27.05.2016 (received on 01.06.2016) under section 143(3) read with section 144C of the Act by the Learned Assistant Commissioner of Income Tax, Circle 25(2), New Delhi (hereinafter referred to as the 'Ld. AO'). Consequently, the returned income of the Appellant was assessed at Rs. NIL (i.e. Rs. 1,55,51,154 Less brought forward business losses Rs. 1,55,51,154) after making impugned addition(s)/ disallowance(s) to the tune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed comparables in the three years preceding the year under consideration. (iv) That the Appellant, had earned a margin [operating profit on operating cost) of 3.05% as per the Transfer Pricing documentation and revised margin computed at 7.51% based on safe harbour rules, whereas the comparable companies earned a corresponding three year average margin of 5.47% thus satisfying the arm's length principle. (v) Pursuant to the aforesaid reference being made by the Ld. AO, the Ld. TPO initiated the transfer pricing assessment proceedings by issuing notice dated 06.01.2016 under section 92CA(2) and 92D(3) of the Act, to the Appellant. (vi) Based on the documents / information furnished by the Appellant, the Ld. TPO examined the economic analysis undertaken, and accepted the international transactions involving receipt of share application money and reimbursement of expenses to Associated Enterprise AE to be at arm's length. (vii) However, with respect to the international transaction involving professional Services to/from AE and Reimbursement of expenses in connection to the services performed, the Ld. TPO had, in the show cause notice dated January 05, 2016 to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o justify that the said comparables need to be rejected. Working capital adjustment of the alleged comparables taking into account the impact of outstanding receivables on the profitability. (ix) The Ld. TPO, without considering the factual and legal submissions made by the Appellant and without giving any cogent reasons concluded thereby considering six companies as comparables with the Appellant and imputed an arm's length value. (x) The Ld. TPO proceeded by comparing their average operating margin to cost ratio with that of the Appellant and thereby made a transfer pricing adjustment amounting to Rs. 38,94,442. B. As regards the disallowance made on account of non-deposition of employee's contribution to PF within the time allowed as per the relevant statute under section 36(1)(va) of the Act to the tune of Rs. 42,40,062/-. (i) During the year under consideration, the total employee's contribution payable towards provident fund amounted to Rs. 43,52,705. Out of which, amount of Rs. 1,12,643 was duly paid within the time limit allowed as per the relevant statute and the balance amount of Rs. 42,40,062 was duly paid by the Appellant before the due date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiative project, therefore, the same is not comparable. The assessee relied on several judicial precedents. 6. On the other hand, the Ld. Departmental Representative relied on the order of the CIT(A) and submitted that the appeal of the assessee deserves to be dismissed. 7. We have heard both the parties and perused the material available on record. The assessee is primarily engaged in the business of providing integrated range of Project Management, Cost Management and Management Consultancy Services to any entity engaged in the field of construction projects. The Ld. TPO included APITCO Ltd. as comparable for bench marking the international transaction. The Ld. Assessee's Representative made a detailed submission stating that the said company does not satisfy functional comparability criterion adopted by the TPO and should be excluded from the list of final comparables. 8. On going through the records and also the submissions made by the assessee it is found that the APITCO provides numerous services which are not provided by the assessee, the assessee is not involved in to skill development entrepreneurship development and training, research studies, asset reconstr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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