9911796707
TMI Blog2015 (8) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... ator (PLI) of the comparables at 30.84%. 3. The learned AO/ TPO erred in rejecting the documentation to the extent of the search process adopted by the appellant without providing any cogent reasons and requesting the appellant to conduct a fresh search for comparable companies: 4. Without prejudice, in the fresh search conducted by the appellant the learned A.O / TPO erred in rejecting five low margin earning comparable companies and accepting four high margin earning companies as comparable to the appellant without considering the fact that the low margin companies were engaged in the same activities as that of high margin companies. 5. The learned AO / TPO erred in identifying comparable companies based on the data available in the public domain at the time of conducting the assessment i.e using noncontemporaneous data for calculating arm's length price of the international transaction entered by the appellant. 6. The learned AO / TPO erred in using single year data for undertaking a comparability analysis that will not produce accurate results. 7. The learned AO / TPO erred in not considering the provisions of Section 92C(2) of the Act while determining the ALP." 2. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Risk and Compliance Management Overseeing the implementation of LTSB'S risk management strategy and encouraging LTSB best practices in risk and compliance management in relation to the outsourced activities at the outsource partners offices / sites in India. Conduct regular checks / audits, in conjunction with the LTSB International Security Consultant and LTSB business unit risk teams, on the Outsource Partners' business practices In the context of the performance of the outsourced activities and the welfare, health and safety of LTSB employees, if arty, visiting the Outsource Partners work site. Incident end Crisis Management coordination In the event of a country specific or isolated risk to LTSB employees visiting India the CEO, GSL is responsible for convening and managing the Crisis Management Team, and implementation of the Crisis Management Plan, if deemed appropriate, and and in the manner agreed with LTSB. It is clarified that GSL's responsibilities are restricted to employees of LTSB visiting India and that the Outsource Partners are responsible for Crisis Management within their own businesses. Corporate Social Responsibility (CSR) GSL is responsible for overseei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer under Section 92CA(1) for determining ALP on International Transactions, rejected the assessee's selection for multiple year data on the ground that as per rule 10B, relevant year data should be used. He, therefore, required the assessee to compute Profit Level Indicator (for short "PLI") of the comparables using the F.Y. 2007-08 data. Thereafter, the assessee submitted that out of thirteen comparables selected by it, eight were not comparable due to various factors, which are enumerated in para 9 of TPO's order. The TPO finally rejected the assessee's entire T.P. study report on various grounds which has been discussed at Para-11 of the order. 8. The TPO further required the assessee to conduct fresh search for the comparables using data of F.Y. 2007-08 and in pursuance of which the assessee submitted fresh set of following nine comparable companies having arithmetic mean of 16.10% as against 10.32% shown by the assessee. Sl.no. Name of Company PLI 1. Access India Advisors Ltd. 45.97% 2. E D C I L (India) Ltd. 5.2% 3. I C R A Management Consulting Services Ltd. 3.22% 4. I D C (India) Ltd. 14.87% 5. In House Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the functional comparability of the five comparable companies rejected by him, the same has been discussed from Pages-7 to 11 of the TPO, however, The TPO rejected the said contentions of the assessee and after short listing following set of four comparable companies for the purpose of bench marking the international transactions :- Sl.no. Name of Company PLI (OP/OC) IN % 1. Access India Advisors Ltd. 45.97 2. E D C I L (India) Ltd. 14.87 3. Indus Technical and Financial Consultants Ltd. 13.53 4. Inmacs Management Services Ltd. 49.00 Average PLI 30.84 He made the upward adjustment of ALP at Rs. 2,67,50,954/- 11. Thereafter, the assessee preferred to file detail objections before the DRP for the inclusion of five comparable companies which has been rejected by the TPO. However, the DRP rejected the assessee's contention and upheld the findings of the TPO. Against such directions, the assessee is in appeal before the Tribunal. 12. Learned Counsel, Mr. M.P.Lohia, after referring to the facts of the case and the nature of services provided by the assessee to its parent company, submitted before us that out of the nine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... projects. Regarding segmental information about SEL and ARMS which has been taken into account by the assessee for benchmarking, he submitted that this division of ITDC is also functionally different which is evident from the description of the said activities given in Director's report, the relevant portion of which has been given at Pages- 248 and 249 of the paper book. He submitted that this division carries on the functions of handling of events and conferences, promotion and marketing of ITDC hotels and reservation of ITDC hotel by centralized reservation services. Whereas, assessee's scope of activities is entirely different, therefore, the functional test fails in the case of this company even at segmental level with that of the assessee and, hence, it has been rightly rejected by the TPO. He also drew our attention to the Profit & Loss account and the segmental details of ITDC and pointed out that income from services rendered by this company itself is functionally different from that of the assessee. 15. Regarding EDCIL, Educational Consulting India Ltd., he submitted that this company is also a public sector undertaking which is mainly engaged in recruitment of teachers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is entirely different from the functions carried out by the assessee. He further submitted that its main business is healthcare and media division which too are only related to KPO only and is also doing inhouse production. In support of his contention, he referred to the Director's report of the company as appearing in the paper book. Thus, this company, he pleaded, is also entirely different from the assessee and, therefore, the same has been rightly rejected by the TPO for taking into comparability analysis. 19. The learned Counsel for the assessee, in his rejoinder, submitted that one has to see the overall function and cannot see vertically because otherwise no two companies have similar functions. All these companies are into business support services which has a very vide connotation. If the criteria of rejection as have been canvassed by the learned Departmental Representative and by the TPO, then even the four comparables selected by the TPO are also functionally different. Just because the four companies have very high profit margin, therefore, they cannot be held to be functionally same and other companies which have a lower profit margin can be held to be functiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of the assessee's business activities. Be that as it may be, the four companies viz.; (i) Access India Advisors Ltd.; (ii) IDC India Ltd.; (iii) Indus Technical and Financial Consultants Ltd. and (iv) Inmacs management Services Ltd., both the parties have accepted to be a fit comparable cases. Now we have to see whether other five comparables are to be included in the comparability analysis or not. The business activities carried out by the assessee has been discussed in detail in the forgoing paragraphs which are mostly in the nature of business support services and liaisoning. 21. In the case of ITDC Ltd., it is seen that this company is mainly engaged in the business of running of hotel and restaurants at various tourist places besides providing transport facilities. Its main business activities revolve around promotion of tourism in India. Even going by the segmental data of reservation, marketing service and event management as adopted by the assessee for comparison, it is seen that these functions are entirely different from that of the activities of the assessee company. Under the ARMS division i.e., reservation and marketing services, this company is mainly handling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arability analysis for determining the ALP of the international transactions of the assessee company. 23. Regarding Overseas Manpower Corp. Ltd., it is seen that it is purely recruitment and placement company and its main revenue is from recruitment services only. Thus, not only the functional profile, the other test of comparability analysis also fails in this case. Therefore, we fully agree with the contention of the Ld. CITDR that this company has rightly been rejected by the TPO for the purpose of comparability analysis and is to be excluded. 24. Lastly, in the case of Inhouse Productions Ltd., it is seen that this company is mainly engaged in the business of Knowledge Process Outsourcing (KPO) in the field of healthcare and is also engaged in media. The functions and the business activities of this company as seen from the records is not comparable to that of the business activities carried on by the assessee and the functional profile is also different. Therefore, this company has rightly been rejected by the TPO. 25. Thus, in our view, besides four companies, accepted both by the TPO as well as by the assessee, two more companies should also be included namely EDCIL and I ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
