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TMI Blog2024 (12) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional profile of the comparables are similar. It would be erroneous to compare companies with different functionalities as similar only on the ground that TNMM is a more tolerant method. TCE Consulting Engineers Ltd. is concerned, the Tribunal accepted that the said company was providing high end technical services, which were also not comparable with the functions performed by the Assessee. Similarly, the ITAT also examined the FAR comparability of Project and Development India Ltd. and Mahindra Consulting Engineers Ltd. on the basis of their respective FAR analysis. Project and Development India Ltd. is concerned, the learned ITAT concluded that it could not be compared with the limited functions as performed by the Assessee. A similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of a US Company named Fluor Corporation and Daniel International. 3. It is a captive service provider and provides services solely to its PE. The Assessee filed its income for AY 2011-12 declaring an income of Rs. 19,87,61,183/-, which was subsequently revised to Rs. 19,87,61,183/-. 4. The Assessee had declared the following international transaction during the previous year: 2.1 International Transactions Sl. No. International Transaction Amount (In Rs.) 1 Provision of services 1,224,193,283 2 Receipt of services 45,276,486 3 Training costs 4,960,379 4 Payment of software charges 47,515,618 5 Reimbursements received 21,037,547 5. The Assessee furnished its transfer pricing analysis to establish that the consideration received was on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and risk) analysis of the said entities indicated that the same were not similar to that of the Assessee. However, the learned DRP rejected the said objections on the ground that the dissimilarity as pointed out by the Assessee was not significant. The DRP also held that TNMM method was tolerant to functional dissimilarity and therefore, rejected the Assessee s objection to the inclusion of the aforesaid four entities as comparables. 9. Aggrieved by the said decision, the Assessee preferred the appeal before the learned ITAT. 10. In regard to the inclusion of Kitco Ltd. as a comparable, the learned ITAT examined the Kitco Ltd. s functional profile and held that the same was not comparable. 11. It is material to note that the Assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT services, HRD, financial services etc. which are dissimilar to the functional profile of the assessee company. Snapshot enclosed. In our considered opinion this company is involved in executing huge projects with a motive to earn profits. We therefore reject the argument of Ld. Counsel that since this company is owned by government it cannot be considered to be a fit comparable. However we observe that functions performed, risks assumed and assets owned by this company is huge and fast as compared to that of assessee who is acting as a sub contractor for its AE, rendering engineering and design services and is remunerated on cost plus basis. We therefore reject this company as it does not satisfy the functionality test with that of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviding high-end technical services. Profile submitted by the assessee at page 310-395 of paper book volume 1 shows that it successfully managed complex engineering projects across infrastructure spectrum and is associated with prestigious urban infrastructure facilities such as Airports, Railways and metropolis engineering consulting projects. Therefore, in our view it is apparent that this company is engaged in providing high end engineering consulting services which is not comparable with limited functions performed by assessee. Therefore we direct to exclude this comparable. 15. Similarly, the learned ITAT also examined the FAR comparability of Project and Development India Ltd. and Mahindra Consulting Engineers Ltd. on the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-contract basis. From the above, it is evident that this comparable is not functionally comparable due to difference in functions performed by this company with that of assessee, In our view this company cannot be compared with limited functions performed by assessee, because it is the nature of services rendered and not per se rendering of services that is relevant in accepting or rejecting it as comparable. Therefore, we direct exclusion of this comparable from the list of comparables. (IV) Mahindra Consulting Engineers: Ld. TPO included this comparable into the final list, as it provides engineering and designs services to its customers. On the contrary Ld. Counsel submitted before us that it is not a fit comparable as it is function ..... X X X X Extracts X X X X X X X X Extracts X X X X
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