9911796707
TMI Blog2018 (11) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed, assets employed and risks assumed; 2.9 excluding certain companies on arbitrary/ frivolous grounds even though they are comparable to the Appellant in terms of functions performed, assets employed and risks assumed; 3. The Ld. AO, while following the directions of the Hon'ble DRP of treating gain/ loss on account of foreign exchange fluctuation as non-operating in nature, erred in not disclosing the computation of the revised adjustment in this regard to the Appellant." 3. The representatives of both the sides were heard at length. The case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules. Judicial decisions relied upon were carefully perused. 4. Briefly stated, the facts of the case are that the appellant company is engaged in the business of I.T. Enables Services [ITES]. The scope of services are as under: "SCOPE OF SERVICES 1. Civil and Structural Detailing Carry out following services in accordance with requirements of LOR. * General Arrangement / Concrete out line drawings and IT enabled Re-bar detailing conform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g & Drafting This includes 2D Detailing & Drafting, 3D Modeling, 3D Fabrication Drawings and As fitted/ As-built drawings 3. Schematic Designing and Design Detailing Services * Mechanical Designing of Heating, Ventilation & Air Conditioning (HVAC) Systems, Plumbing, Sanitary & Rain Water Services, Fire Fighting, Water Services and Effluent Treatment etc. Plants including designing & selection of equipment, layouts, Plant room detailing & Sections etc. Carrying out Design Calculations for Selection of Major Mechanical Equipment. Electrical Designing of Main Power Distribution System, Preparation of Schematics for Main Power Distribution, Preparation of Main Receiving Electrical Substation & Switchyards Layouts, Preparation of Technical Specifications & Tender Documents. Carrying out Design Calculations for Selection of Major Electrical Equipment. 6. ARHITECTURAL SERVICES 1. 2D/3D/4D Modeling. Detailing & Drafting * This includes 2D Detailing & Drafting, 3D Modeling, 3D Fabrication Drawings and As fitted/ As-built drawings. 2. Schematic Designing and Design Detailing Services" 5. The TPO, after considering the scope of the services of the appellant company m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R pleaded for inclusion of the following comparables: i) KITCO Limited ii) M.N Dastur & Company (P) Ltd. iii) Consulting Engineers services (India) Private Limited iv) Development Consultants Private Limited 11. We will first address the issues relating to exclusion of the comparables. i) Mahindra Consulting Engineers Limited 12. Ass per Annual Report of this company, Exhibited at pages 288 to 317 of the paper book, the operations, as reported by the Director of the company read as under: "During the year under review, your Company consolidated its presence in high growth areas of its operation. The profit before taxation after exceptional items for the year was Rs. 113.24 lakhs as compared to Rs. 47.48 lakhs for the previous year. Your Company has further strengthened its position in Infrastructure Sector by providing consultancy services in the areas of Special Economic Zones, Water Supply & Sewerage, Solid Waste Management, Urban infrastructure, Agri infrastructure, Social infrastructure, Ports & Harbour & Offshore Terminal, Industrial infrastructure, etc. Your Company has received repeat orders from its existing clientele which affirms the goodwill of the Company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der has observed as under:- "5.9 We have heard the rival submission and perused the relevant material on record including the paper book of the assessee. On perusal of the annual report of M/s Alphageo, we find that during the year under consideration the comparable company has shown income from seismic survey and other related services. On perusal of page 326 of the paper book, which is part of the annual report of M/s Alphageo , we find that the company was engaged in providing services of design and preplanning of 2-D and 3-D surveys, seismic data acquisition, seismic data interpretation , topographic surveys etc. as compared to the services of engineering design by the assessee. Thus, in our opinion, the comparable company was engaged in providing designs for survey as well as in conducting the surveys and data acquisition etc. Thus, we find that the assessee is engaged in providing only engineering design services whereas M/s Alphageo has provided many other engineering services. Further, the asset employed by M/s Alphageo is higher in terms of net fixed assets/sales ratio. In the case of the assessee, net fixed asset/sales ratio is 4.86%, whereas the same ratio in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only reason claimed for exclusion of this company is non-availability of Annual report for F.Y. 2007-08. Though the TPO has referred to the Annual Report, but it pertains to F.Y. 2008-09. In our considered opinion, the TPO should have called for Annual Report for F.Y. 2007-08 and then should have decided whether this company is a good comparable or not. We, accordingly, restore this issue to the file of the Assessing Officer/TPO with the direction to call Annual Report of F.Y. 2007-08 and decide the issue afresh. v) Kirloskar Consultants Limited 20. The Annual Report of this company is exhibited at pages 212 to 235 of the paper book. The operations of this company show that the company was under financial restructuring and after restructuring of Phase - 1, the result of the operations of this company showed a N.P. of 15.61% as against 6.93% in the immediately preceding F.Y. This increase in profit is attributed to the increased business and improved productivity. In our considered opinion, this company has undergone a thorough financial restructuring, which has to be considered as an extraordinary event and, therefore, the company needs to be excluded from the final set of compar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
