9911796707
TMI Blog2017 (5) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... services rendered by it. 2. The facts relating to the above said issue are discussed in brief. The assessee is engaged in the business of providing Engineering consultancy services in the field of Chemicals, Petrochemicals, Fertilisers, Cement, Pharmaceuticals and allied industries. The major portion of Equity capital of the assessee company is held by M/s Jacobs Engineering Ltd, U.K and M/s Jacobs Engineering Inc., USA. During the year under consideration, the assessee had carried out international transactions with its Associated Enterprises (AE) located in USA, Netherlands, U.K., Belgium, Singapore, Finland, France, Canada and Hong Kong. The issue urged before us relates to the Engineering Services rendered by the assessee to its AEs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited (8) Telecommunications Consultants India Ltd (9) Vardaan projects (10) Water & Power Consultancy services Ltd It is pertinent to note that the comparable M/s Agrima Consultants International Ltd was not identified through search process, but the assessee took the same as a comparable case from the AY 2007-08, as it was considered as final comparable in that year. We notice that the assessee had used multiple year data to arrive mean average of 16.23% (Page 112 of the paper book). Subsequently it revised the same by adopting single year date and arrived at arithmetic mean of 26.43% (Page 126 of paper book). 6. The TPO did not accept internal TNMM for the reasons discussed in page 9 of his order and hence proceeded to examine th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngineers India Ltd (2) Water & Power Consultancy services Ltd The TPO noticed that the assessee has rejected comparable companies named M/s TCE Consulting Engineers Limited and M/s TOYO Engineering India Ltd for want of sufficient segmental information. Since the data relating to the above said companies were available at the time of assessment proceedings, the TPO proposed to include both the companies, but finally included only M/s TCE Consulting Engineers Limited. Thus the TPO identified following three companies as final set of comparables:- (1) Engineers India Ltd (2) Water & Power Consultancy services Ltd (3) TCE Consulting Engineers Ltd The arithmetic mean average of the operating profit/Operating Cost of above said comparables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ault with by the Hon'ble Bombay High Court. 12. In the instant case, the comparables viz., Engineers India Ltd and Water and Power Consultancy Ltd are Government Companies. Accordingly, consistent with the view taken in the cases referred to preceding paragraph, we hold that the Government Companies cannot be taken as Comparable. 13. The next contention of the assessee is that the two comparables, viz., M/s L&T Sargent & Lundy Limited and M/s Telecommunications Consultants India Ltd should be taken as comparables. We have noticed earlier that the TPO has excluded the above said two companies by applying turnover filter of 1/4th or 4 times of turnover of the assessee. In case of L& T Sargent & Lundy Limited, the TPO has rejected on more gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded then the Related Party transaction would be well within the criteria of 25%. We find merit in the said contentions of the also. The "Infrastructure and overhead recoveries" is mere reimbursement of expenses incurred by a group concern on behalf of the assessee and hence the same should not be considered as a commercial transaction involving profit element. Accordingly we direct the AO to exclude "Infrastructure and overhead recoveries" while computing the percentage of Related party transactions. 16. The TPO had rejected Telecommunications Consultants India Ltd by observing that the same is not functionally comparable to the assessee company. However, it is the contention of the assessee that the same is accepted as a comparable i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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