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TMI Blog2015 (4) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... of above three comparables from the list of comparables, the PLI would come within (+)(-) 5% range and, therefore, this ground has become academic. - Relating to levy of penalty, is premature and stands rejected accordingly.he charging of interest u/s 234A/B/C is consequential. The AO shall recalculate the charging of interest, if any, while giving effect to appellate order. - Decided partly in favour of assessee. - ITA no. 5582/Del/2012 - - - Dated:- 27-2-2015 - SHRI S.V. MEHROTRA AND SHRI H.S. SIDHU, JJ. For The Appellant : Shri Himanshu S. Sinha; Sh. Manoneet Dalal Ms. Megha Agarwal AR For The Respondent : Shri Ajit Kumar Singh CIT(DR) ORDER PER S.V. MEHROTRA, A.M:- This appeal, preferred by the assessee, is directed against the assessment order dated 19-09-2012, framed by the AO pursuant to DRP directions u/s 144C, pertaining to assessment year 2007-08. 2. Brief facts are that the assessee for the relevant assessment year filed it return of income declaring income of ₹ 1986319/-. The assessee had entered into following international transactions: No. Description of transaction Method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the arm's length price and, instead, has adhered to the use of single year updated data to conclude the arm's length price of the international transaction. 5. That on facts and in law, the learned AO has entered in determining the ALP by considering data relating to FY 2007- 08 only and using powers u/s 133(6) to obtain information from third parties, which were not available in the public domain at the time of compliance with TP documentation requirement. 6.The Honorable DRP and the learned AO has erred in Law and facts by not providing suitable adjustments on account of risk profile of the assessee with comparable companies. / 7.The Honorable DRP learned AO has erred in Law by not considering that the adjustments to the ALP, should be limed to the lower end of 5 percent range as the assessee has the right to exercise this option under the proviso to section 92C of the Act. 8. That the learned AO has erred, in law, and on facts in initiating penalty proceedings under section 271(1)(c) of the Act against t he appellant. 9. Without prejudice to the above grounds, the learned AO has erred in levying interest under section 234A/B/C of the Act while complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vel. There is no dispute on these issues. 4.3. The asessee has also not pressed the ground relating to selection/ use of multiple year data vis a vis current year s data for computing the ALP. 4.4. The assessee s main objection before DRP was that it was in supporting/ cooperation services under broad category of business support whereas the comparables selected by TPO and confirmed by ld. DRP were in sophisticated engineering and technical consultancy having different FAR. Ld. counsel pointed out that ld. DRP, after considering the assessee s objections, had excluded Apitco Limited, RITES Ltd. and Vapi Waste Effluent Management. As regards the three comparables in dispute viz. Chokshi Laboratories Ltd., Indus Technical Financial consultants Ltd.; and WAPCOS Ltd. (Seg.), ld. DRP did not agree with the assessee s contention that it was an engineering company since it had consultancy segment also. The Ld. DRP further observed that since neither the department nor the assessee had found any consultancy comparables in the tourism sector, therefore, this comparable could not be rejected. 5. Ld. counsel pointed out that Chokshi Laboratories Ltd was engaged in providing ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (As per the Annual Report for financial year 2003-04). WAPCOS has been providing consultancy services in all facets of Water Resources, Power and Infrastructure Sectors in India and Abroad. Main fields of the company cover Irrigation, Water Management, Drainage, Ground Water Exploration, Development, Flood Control, Reclamation and River Management, Dam and Reservoir, Power Engineering; Hydro Power Generation; Agricultural Development; Waterways; Systems Studies and Information Technology, Human Resources Development. WAPCOS has also been venturing into newer fields such as Software Development, City Development Plans, financial Management System Technical Education, Quality Control and Construction supervision, Roads Bridges. 5.6. He further pointed out that high risk profile of EIL, Rites, Wapcos and TCE rendered the company s financial results non-comparable to the margins earned by the assessee from its marketing support activities. The Tribunal, after considering these submissions, accepting the finding of first appellate authority, observing as under: We agree with the view of the First Appellate Authority that EIL, Rites, Wapcos and TCE are engineering compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of ld. DRP. 7. In rejoinder, ld. counsel pointed out that assessee had raised specific objection before ld. DRP, which is available at pages 12 13 of the objections raised before ld. DRP. 8. We have considered the rival submissions and have perused the record of the case. There is no gain saying that unless the comparable is functionally similar to the tested party s function, the same cannot be included in the list of comparables for computing ALP as per the provisions of Rule 10B(2)(b). Ld. DRP while considering the comparable Wapcos, inter alia, observed that neither the department nor the assessee has found any consultancy comparables in the tourism sector. Therefore, it becomes imperative that only those comparables should be taken into consideration which have close similarity with the functions carried out by tested party. 8.1. As regards Wapcos Ltd., we find that ld. DRP has approved the inclusion of this comparable on the basis that there is consultancy segment of Wapcos. However, no segmental details of this comparable have been brought on record. Therefore, since this comparable was admittedly an engineering company, the same could not be included in the li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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