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TMI Blog2023 (3) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... being general in nature, is not pressed, hence, dismissed. 3. In ground no. 2, the assessee has raised the issue of rejection of segmental profitability furnished by the assessee. 3.1 Briefly the facts are, the assessee is a resident corporate entity and is a subsidiary of WSP GRP Cyprus Holding Ltd. As stated by Transfer Pricing Officer (TPO), the assessee is engaged in providing design and engineering services to property, environment, transport and infrastructure sectors. In the year under consideration, the assessee has provided engineering drawing and design services to its Associated Enterprises (AEs). In Form 3CEB report furnished for the year under dispute, the assessee has reported the following transactions: Sl. No. Nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover. By adopting the aforesaid approach, he proceeded to compute the margin of the assessee by allocating operating cost to AE and non-AE segments. In the process, he determined the PLI of the assessee at (-)15.41%. Due to the computation of PLI, as aforesaid, and change in comparables, and upward adjustment of Rs.4,76,89,336/- to the ALP of the transaction with AE was worked out. In the draft assessment order, the Assessing Officer incorporated the TP adjustment. Challenging the TP adjustment, the assessee raised objections before learned DRP. However, learned DRP upheld the adjustment proposed in the draft assessment order. 3.3 Before us, learned counsel appearing for the assessee submitted that there is no valid reason for allocatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute is only with regard to computation of operating cost. It is observed from the facts on record that the TPO, though, has accepted the segmental analysis of the assessee in part while accepting that certain indirect expenses are allocable only to non-AE segment, however, with regard to employee cost, TPO has not accepted assessee's claim and allocated to both the AE and non-AE segments on the basis of the turnover of the respective segments. Through materials placed in the paperbooks, learned counsel for the assessee has demonstrated before us that the assessee has maintained separate accounts with regard to AE and non-AE segments. Even, the details of employees working in AE segment with salary paid to them has been maintained project-wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llenged inclusion of certain comparables. The comparables under challenge are as under: Korus Engineering Solutions Pvt. Ltd. 4. Objecting to selection of this comparable, learned counsel for the assessee submitted that this company is functionally dissimilar as it is engaged in wide range of activities in respect of steel industries and sufficient information with regard to the business profile of the company is not available in public domain. In this regard, learned counsel drew our attention to the annual report of the company. Proceeding further, he submitted, the foreign exchange receipt of the company is below 6%. Hence, it fails export turnover filter. Whereas, the assessee has substantially high foreign exchange revenue. Thus, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, nor TPO have applied the export turnover filter. However, for the reasons discussed above, we direct the Assessing Officer to exclude this company as a comparable. TCE Consulting Engineers Ltd. 5. The only ground on which the assessee seeks exclusion of the aforesaid company is due to substantially low export sales turnover, which works out to 6.21% of the total turnover as compared to 100% exports of the assessee. 5.1 We have heard the parties and perused the materials on record. On a specific query, learned counsel appearing for the assessee fairly submitted that neither the assessee has applied the export turnover filter in its TPSR, nor the TPO has applied the said filter. Therefore, in our view, at this stage, we cannot in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Needless to mention, the assessee must be afforded reasonable opportunity of being heard to the assessee before deciding the issue. This ground is allowed for statistical purposes. 8. In ground no. 5, the assessee has raised the issue of computational error in computing the operating profit margins of the comparables. 8.1 Having considered rival submission, we direct the Assessing Officer to examine assessee's claim with reference to the facts and materials on record and rectify the computational error, if any, in computing the profit margin of the comparables. The assessee must be afforded reasonable opportunity of being heard before deciding the issue. 9. Ground no. 6 is not pressed, hence, dismissed and ground no. 7, being pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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