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TMI Blog2019 (2) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... aishree Sharma, Sr. DR And Shri H. K. Choudhary, CIT DR ORDER PER N. K. BILLAIYA, ACCOUNTANT MEMBER: This appeal by the Revenue is preferred against the order dated 28.10.2015 framed u/s 144C(5) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] pertaining to A.Y 2011-12. 2. The grievances of the revenue read as under : (i) On the facts and in the circumstances of the case, the DRP-2 erred in directing AO to complete the assessment as per observations made by DRP in the order which resulting in reducing the addition to ₹ 3,87,54,545/- in place of original recommended ALP of ₹ 6,55,34,938/- for the International transactions undertaken the assessee company with its associate/parent enterprise. (ii) On the facts and in the circumstances of the case, the DRP-II erred in directing TPO to exclude below mentioned companies from the final set of comparables : i) Bengal S R E Infrastructure Devp. Ltd. ii) Certification Engineers International Ltd. iii) Indus Technical Financial Consultants Ltd. iv) Pallavan Transport Consultancy Services Ltd. v) Usha Hydro Dynamics Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NTPC Electric Supply Company Ltd. 18.01% Average 32.27% 6. Accordingly, the ALP of the international transaction related to engineering services is computed as under: Operating Cost 18,88,60,313 OP/OC % 32.27 Arm s Length Price (ALP) 24,98,05,536 Price shown in the international 18,42,70,598 Shortfall being adjustment u/s 6,55,34,938 7. Aggrieved by this, the assessee carried the matter before the DRP. 8. After considering the facts and objections of the assessee, the DRP directed the TPO and directions of the DRP can be understood from the following chart: Comparable TPO Assessee DRP 1. Ashok Leyland Project Services limited The company is involved in provision of consultancy services which are in the nature . of technical serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a Government Company with FAR not comparable. 6. Kitco Limited The company is engaged in engineering and infrastructure activities which are in the nature of technical services and thus is comparable to the Assessee. KITCO is engaged in providing ~ project consultancy, detailed engineering and project execution, technical services, environmental engineering and HRD consultancy. This is a good comparable in view of similar FAR. 7. Mahindra Consulting Engineers Limited The company is engaged in various engineering and infrastructure activities which are in the nature technical services and thus is comparable to the Assessee. The company is engaged in provision of consultancy services in the areas of special economic zones, water supply and sewerage etc. This is a good comparable in view of similar FAR. 8. Mitcon Consultancy Engineering Services Limited Mitcon is engaged in provision of engineering services in the nature of technical services and thus is compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the business of generation of electricity and allied activities. NTPC is owned by the Government. This is to be excluded as it is a Government Company with FAR not comparable. 14 Rites Limited Rites consultancy services segment has been considered, in which Rites is involved in provision of technical services, and thus is comparable to the Assessee. The company provides consultancy in areas such as Airports, transport, highways, industrial engineering etc. Rites is a Government owned enterprise and comes under the Ministry of Railways This is to be excluded as it is a Government Company with FAR not comparable. 9. Aggrieved by this, the Revenue is before us. 10. The ld. DR strongly contended that without assigning any specific reason, the DRP has held that the aforesaid comparables are either government companies or functionally not comparable. It is the say of the ld. DR that without assigning any specific reasons, the DRP erred in excluding the seven comparables. 11. Per contra, the ld. counsel for the assessee supporting the findings of the DRP pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to certification, re-certification, safety audit and Health and Safety management systems, inspection of equipment and installations in the Hydrocarbon Industry to central government and state owned enterprises. 100 percent shares are held by Engineers India Ltd. and its nominees and 80.40% shares of Engineers India limited are held by President of India and rest are held by government controlled bodies. Being a government company, the Revenue comes from Government and is functionally not comparable with the assessee. Exclusion is upheld. Indus Technical and Financial Consultant Ltd 17. The FAR of this company is not at all comparable with that of the assessee since this company is into financial consultancy. Further, this company fails the TPO s own filter of rejection of companies where Revenue is less than ₹ 1 crore. Further, this company has diversified sources of income and segmental accounts are not available. This company has been rightly excluded by the DRP. Pallavan Transport Consultancy Services Limited 18. 100% of the shares of this company are held by the Governor and nominees on behalf of the Government of Tamil Nadu. This company provides co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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