9911796707
TMI Blog2023 (11) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... . The revenue has filed revised grounds of appeal in due course which read as under: 1. The order of the Ld.CIT(A) is contrary to law and facts of the case. 2. The Ld. CIT(A) erred in directing the AO / TPO on the issue of 'Market Support Services' to calculate the margins of the comparables on the basis of annual report to be provided by the appellant, in the absence of the power to set aside after amendment of Sec. 251 w.e.f. 01.06.2001? 3. The Ld. CIT (A) erred in rejecting the comparable companies selected by the TPO while deciding Market Support Services, by applying close functional similarity without appreciating the fact that for TNMM broad functional comparability is sufficient? 4. The Ld. CIT(A) erred while deciding Market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has made a categorical finding that SEL &ARMS segment of India Tourism Development Corporation Ltd was engaged in event management which is different from market support services provided by the assessee? 9. The Ld. CIT(A) erred in directing the AO / TPO to include comparable companies namely EDCIL (India) Ltd and In House Production Ltd which are functionally dissimilar that of the assessee. 10. The Ld. CIT(A) erred in assuming that the TPO had accepted the comparable companies namely EDCIL (India) Ltd and in House Production Ltd. in AY 2009-10 and 2010-11 whereas TPO did not comment on the comparability of these two companies in AY 2009-10 and 2010-11? 11. The Ld. CIT(A) erred in directing the AO to delete the disallowance of 50% a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. TPO determined the ALP of these transactions vide order dated 19-01-2015. The assessee being resident corporate entity is stated to be wholly owned subsidiary of Compagnie Financiere Michelin. The assessee entity was established to carry out manufacturing and trading of all varieties of Tyres and Tubes. However, in the current year, the assessee was engaged in import and trading of Tyres under the brand name 'Michelin'. 3.2 The first dispute of present appeal is adjustment made by lower authorities while determining ALP of marketing support services under TP mechanism. The assessee provided marketing support services to its AE. The assessee's computed its own Profit Level Indicator (PLI) OP/TC at 4% of cost as against PLI of compara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that this entity was functionally different as it was responsible for ensuring the integration of power grid whereas the assessee was providing limited marketing support services. Therefore, this entity was to be excluded. Aggrieved, the revenue is in further appeal before us. We find that this entity is a government company and responsible for ensuring the integration of power grid whereas the assessee is providing only limited marketing support services. The sale magnitude of this entity is quite high and not comparable to the assessee. In the case of Mentor Graphics (Sales and Service) Pvt. Ltd.(102 Taxmann.com 117), which is an entity having similar functional profile as that of the assessee, Ld. DRP has excluded this entity from co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment and their project execution agencies and therefore, a comparable entity. The Ld. CIT(A), upon perusal of Annual Report, concurred with assessee's submissions that this entity was engaged in providing consultancy services and review of procurement services for various projected funded by the World Bank and other significant financial institutions. Therefore, this entity was directed to be excluded. In our opinion, the assessee's marketing functions could not be compared with an entity providing high end technical consultancy to entities like World Bank and other significant financial institutions where the magnitude would be very high and the objective would be different. Therefore, this entity has rightly been excluded by Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o change in functional profile of that entity has been demonstrated before us. (vi) In House Production Ltd. The Ld. TPO rejected this entity on the ground that it fails sales as % of sales turnover less than 50% turnover criteria. The Ld. CIT(A) directed for inclusion of this entity on the ground that this company was accepted as a comparable entity by TPO in AYs 2009-10 and 2010-11. The undisputed position that emerges is that this entity has been accepted to be comparable entity in earlier years and therefore, there is no reason for rejection of the same in the current year. No change in functional profile of that entity has been demonstrated before us. 4. The revenue has also assailed the directions of Ld. CIT(A) with respect to ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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