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TMI Blog2023 (9) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... So the Ld. DRP has rightly rejected this comparable chosen by the Ld. TPO. Mahindra Consulting Engineers Ltd. (MCEL) as a comparable to benchmark the international transactions vis- -vis the assessee is concerned, it is also functionally dissimilar being into project design and engineering including planning and scheduling statutory and laboratory approvals, procurement advisory, venture evaluation, bid process, project supervision etc. whereas the assessee is providing homeland security solution to their customer. As such the Ld. DRP has rightly excluded MCEL as a comparable vis- -vis assessee. Tata Consulting Engineers Ltd. (TCEL) is shown to be engaged in integrated engineering consultancy solution including commissioning solutions in construction management, advanced technologies, power, nuclear, infrastructure, industrial, mining, minerals, steels and metals, transportation, water, building, manufacturing, spatial planning, environment etc. again which is not comparable to the assessee who is into providing homeland security solutions to their customers. So the Ld. DRP has rightly excluded TCEL as a comparable vis- -vis assessee. Adjustment on account of capacity uti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs Ltd, and Mahindra Consulting Engineers Ltd. by testing them against a very high degree of comparability but at the same time not testing the case of Tamil Nadu Ex Servicemen Corporation Ltd., against the same high degree of comparability. 3. Whether on the facts and circumstances of the case, the DRP erred in not appreciating that broadly all these four comparables namely Engineers India Ltd, Tata Consulting Engineers Ltd, and Mahindra Consulting Engineers Ltd and Tamil Nadu Ex Servicemen Corporation Ltd. are functionally comparable to the assessee company. 4. Whether on the facts and circumstances of the case, the DRP was correct in allowing the adjustment on account of capacity utilization at Rs. 10,72,349/- failing to note that the rationale for adjustment is the difference in the level of capacity utilization between the assessee and the four comparables applied by the TPO and hence when DRP rejected three of the comparables, the adjustment was also no longer required/ or required calculation. 5. Whether on the facts and circumstances of the case, the DRP erred in giving benefit of adjustment of Rs. 10,72,349/ on account of idle manpower to the assessee, ig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st: (a) Reduction of the pass through cost , being the re-imbursement of travelling and conveyance expenses of Rs. 4,98,93,649/- incurred in connection with the personnel sent on deputation of providing technical support services to AEs overseas project(s) from operating revenue and from 'operating cost (b) Reduction of start-up cost of Rs. 1,33,95,000 from operating cost as the same was incurred for conducting a detailed survey for Tata Steel Limited, Jamshedpur Plant, the contract for which materialised in the financial year 2014-2015; and (c) Reduction of operating cost by 5% on account of under utilization of capacity, as the current year was the appellant's first year of operations and the operation of the assessee company were not at its optimum level. 4. Alternatively and without prejudice to any of the above grounds, on the facts and circumstances of the case and in law, the Hon'ble DRP ought to have accepted the following companies as comparables: (a) Cades Digitech Private Limited; (b) Mistral Solutions Private Limited; and (c) Siemens Building Technologies Private Limited. 5. On the facts and circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 18,86,17,590 4. The assessee in order to benchmark its international transactions with its AEs applied Transactional Net Margin Method (TNMM) at entity level with operating profit/operating cost (OP/OC) as profit level indicator (PLI) as the Most Appropriate Method (MAM), chosen three comparables viz. Cades Digitech Private Limited, U.B. Engineering Shakya Technologies Ltd. having mean margin of 6.48% as against assessee s entity level margin of 8.27% and found its transaction at arms length, however, the transfer pricing analysis made by the assessee has been rejected by the Ld. Transfer Pricing Officer (Ld. TPO) who has proceeded to make fresh TP study. The Ld. TPO selected 4 comparables to which the assessee has raised objection. The assessee again given two more comparables which were also rejected by the Ld. TPO. The Ld. TPO computed the margin of the 4 comparables so chosen at 30.20% as against margin of the assessee at 8.91% and proposed the arms length margin at 24.54.% on the operating cost and proposed the adjustment of Rs. 3,00,11,075/-. 5. The assessee carried the matter before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services similar or comparable to EIL. The assessee provides homeland security solutions tailored for the Indian threat environment and leverage cutting edge technology deployed globally by the AGT group to protect critical assets. It provides Technical support services to the AEs. Mere providing engineers on deputation basis to the AE do not mean that services similar to EIL or end to end engineering services are provided. In providing services like EIL, responsibilities for the design, engineering and commissioning of the project are to be borne by EIL. Hence, TPO is directed to reject EIL as comparable. 4.5.2 It has been submitted on the basis of profile that Mahindra Consulting Engineers Limited is into Project design and Engineering including planning and scheduling, statutory and regulatory approvals, procurement advisory, vendor evaluation, bid process, project supervision, etc. services and hence it is not comparable. We have carefully considered the facts and the submissions made. The assessee is not into providing services similar or comparable to Mahindra Consulting Engineers. The assessee provides homeland security solutions tailored for the Indian threat en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AGT Group to protect critical assets. Whereas as per annual report available at page 41 to 46 of the paper book Engineers India Ltd. is into providing certification services, project management services, process design services, engineering services, commissioning services, construction management services, procurement services etc. which is not comparable to the assessee. So the Ld. DRP has rightly rejected this comparable chosen by the Ld. TPO. 12. So far as the question of excluding Mahindra Consulting Engineers Ltd. (MCEL) as a comparable to benchmark the international transactions vis- -vis the assessee is concerned, it is also functionally dissimilar being into project design and engineering including planning and scheduling statutory and laboratory approvals, procurement advisory, venture evaluation, bid process, project supervision etc. whereas the assessee is providing homeland security solution to their customer. As such the Ld. DRP has rightly excluded MCEL as a comparable vis- -vis assessee. 13. So far as case of excluding Tata Consulting Engineers Ltd. (TCEL) as a comparable vis- -vis assessee is concerned the same is again excluded by the Ld. DRP on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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