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TMI Blog2020 (3) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... ident And Shri B.R. Baskaran, Accoutant Member For the Appellant : Shri Rishi Harlalka, A.R. For the Respondent : Shri Priyadarshi Misra, D.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: The appeal filed by the assessee is directed against the order dated 30-09-2019 passed by Ld CIT(A)-2, Bengaluru and it relates to the assessment year 2010-11. 2. The ground Nos.1 and 6 are general in nature. At the time of hearing, the Ld A.R did not press ground nos. 3 4 by making necessary endorsement in the grounds of appeal. The remaining grounds relate to the following two issues:- (a) Wrong inclusion of certain comparable companies (b) Non-granting of working capital adjustment and risk adjustment while computing Transfer pricing adjustment. 3. The facts of the case are set out in brief. The assessee company is engaged in providing marketing services in India to its Associated Enterprises (AEs) located abroad. The nature of services provided by the assessee include:- (a) Answering customer inquiries, telemarketing calls (b) Building awareness about the products by conducting exhibitions, road shows, conferences, customer events etc. (c) Liaiso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit margin of another comparable company named IDC (India) Limited (earlier known as Cyber Media Research Ltd ) correctly. 7. It is pertinent to note that the assessee has mentioned in the grounds of appeal the name of M/s. Asian Business Exhibition Conferences Ltd., for exclusion. However, the same has been amended by way of an additional ground of appeal by replacing the above said company with HCCA Business Services Pvt. Ltd. 8. We heard the parties and perused the record. The Ld. A.R. submitted that all these three companies are not functionally comparable. He furnished business profile of these three companies as under:- (A) HCCA Business Services P Ltd:- This company is engaged in HR consultancy services like payroll processing compensation structuring, HR operations administration, management of labour and legal compliances, reimbursement processing, accounting services. (B) Killick Agencies and Mktg Ltd:- This company is engaged in the business of supplying construction and earthmoving machinery. Further it is also engaged in the business of purchase and sale of products like micro switches, engineering items, acoustics items, head sets etc. It also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP directed the AO to exclude the said company from the comparables. 43. We have heard the ld. DR as well as ld. AR and considered the relevant material on record. The DRP has considered the fact that payroll processing services was main part of the operations of the company and quantitative details of sales and certain information as required under Part II of Schedule VI to Companies Act was not possible. Thus, in the absence of any contrary fact on record brought before us, we do not find any reason to interfere with the finding of the DRP, when the functions and business activity of this company was found to be different from marketing and sales support services of the assessee. Accordingly, the objection of the Revenue is rejected. (2) Killick Agencies Marketing Ltd . 44. The assessee objected against this company on the ground that commission/service charges income of this company is ₹ 2,19,00,000 out of the operating revenue of ₹ 3,39,00,000. Therefore, the commission/service charges income constitute about 65% of the operating revenue which is less than 75% of the operating revenue filter applied by the TPO. In the absence of segmental r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding this company by the co-ordinate bench, we are of the view that the decision taken therein can be conveniently applied here also. Accordingly, we direct the AO/TPO to exclude this company. 11. With regard to Killick Agencies and Mktg. Ltd, the main business of the company as mentioned in its Annual Report (Page 843 of paper book) is given below:- Killick Agencies Marketing Ltd is public limited company. Company is acting as agent for various foreign principals for sale of Dredgers, Dredging equipments, Steerable Rudder Propulsions, Maritime and aviation lighting, Acoustic communication equipments etc. Company also offers after sales services. Apart from this company is involved in export of micro switchers, engineering items, acoustic items head sets. However, the business profile of the assessee company is noted by the TPO as under:- (a) Answering customer inquiries, telemarketing calls (b) Building awareness about the products by conducting exhibitions, road shows, conferences, customer events etc. (c) Liaison with PR Agencies for marketing activities (d) Other related marketing support to AEs. We notice that the TPO has selected this company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parable companies. Hence, this issue requires examination at the end of AO/TPO. Accordingly, we restore this issue to the file of AO/TPO for examining it. 15. The assessee in ground No.5 has contended that the working capital adjustment and risk adjustment should be given to the assessee. The Ld. A.R. submitted that the assessee has claimed this adjustment before Ld. CIT(A) and accordingly, the Ld. CIT(A) called for remand report from the A.O. The TPO has expressed the view that these adjustments could not be given for want of required details. The Ld. A.R. submitted that the working capital adjustment and risk adjustments are given in various cases and accordingly pleaded that suitable direction may be issued to the AO/TPO. 16. We heard the Ld. D.R. on this issue and perused the record. It is stated by the AO/TPO in the remand report that the required details were not furnished by the assessee. Hence we direct the assessee to furnish required details to the AO/TPO. Since this issue also requires examination at the end of the A.O./TPO, we restore this issue also to their file. 17. After affording adequate opportunity of being heard, the AO/TPO may take appropriate decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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