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TMI Blog2023 (3) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... P acceptable. Firstly, as discussed earlier, the assessee has maintained project-wise list of employees working in AE segment. Therefore, the allegation of DRP that on what basis the common employees were allocated is not known does not seem to be borne out from record. Insofar as, the non-maintenance of hourly work-sheet of employees, we are of the view that there is no valid reason for the assessee to maintain such hourly worksheet, when it is not raising its invoices on hourly basis. We do not approve the decision of the TPO and learned DRP in allocating employees cost between the AE and non-AE segments. Therefore, the PLI computed by the assessee has to be accepted. This ground is allowed. Comparable selection - Korus Engineering Solutions Pvt. Ltd. - On perusal of the annual report of the company placed in the paper-book, it is observed that the information regarding the business profile of the company is sketchy and lacks necessary details. Further, the balance-sheet and profit and loss account do not give the break-up of the source of revenue earned. Therefore, due to lack of information regarding the functional profile of the company available in the public domain, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tify the computational error, if any, in computing the profit margin of the comparables. The assessee must be afforded reasonable opportunity of being heard before deciding the issue. X X X X Extracts X X X X X X X X Extracts X X X X ..... us, learned counsel appearing for the assessee submitted that there is no valid reason for allocating the operating expenses, that too, only the salary expenses to AE and non-AE segments on the basis of turnover, when, such expenditure is separately identifiable on the basis of accounts maintained by the assessee. He submitted, as per the business model of the assessee, the services are rendered to the AE on cost plus markup basis wherein the assessee recovers all costs with a markup of 8% from the AE. 3.4 Drawing our attention to the documents placed on record, learned counsel submitted, the assessee has maintained segmental accounts and insofar as the salary expenditure is concerned, the assessee has maintained project-wise account with regard to the transactions with the AEs. He submitted, not only the persons working on a particular project but the salary paid to them is separately identifiable. Thus, he submitted, there is no reason to allocate the salary expenses to AE and non-AE segments, as such expenditure was specifically incurred in the AE segment. He submitted, in case, assessee's segmental analysis is accepted, the PLI will be 11.52% only. 3.5 Learned Departmental R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not approve the decision of the TPO and learned DRP in allocating employees cost between the AE and non-AE segments. Therefore, the PLI computed by the assessee has to be accepted. This ground is allowed. 3.7 In ground no. 3, the assessee has challenged inclusion of certain comparables. The comparables under challenge are as under: Korus Engineering Solutions Pvt. Ltd. 4. Objecting to selection of this comparable, learned counsel for the assessee submitted that this company is functionally dissimilar as it is engaged in wide range of activities in respect of steel industries and sufficient information with regard to the business profile of the company is not available in public domain. In this regard, learned counsel drew our attention to the annual report of the company. Proceeding further, he submitted, the foreign exchange receipt of the company is below 6%. Hence, it fails export turnover filter. Whereas, the assessee has substantially high foreign exchange revenue. Thus, he submitted, the company, being functionally different, cannot be treated as comparable. 4.1 Strongly relying upon the observations of the TPO and learned DRP, learned Departmental Representative sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f more than 25%. 6.1 Before us, learned counsel for the assessee submitted that RPT as a ratio of sales works out to 25.78%. However, he fairly submitted, this issue was neither raised before the TPO, nor before the DRP. 6.2 Learned Departmental Representative submitted, since, the assessee is raising this issue for the first time, it may be restored to the AO/TPO. 6.3 Having considered rival submissions, we find, both the TPO and learned DRP have applied RPT filter of more than 25%. Therefore, any company having RPT of more than 25% has to be excluded. However, considering the fact that the assessee is raising the issue of RPT for the first time before the Tribunal, we are inclined to restore the issue to the Assessing Officer for examining assessee's claim and excluding the comparable in case RPT is found to be more than 25%. Ground is partly allowed. 7. In ground no. 4, the assessee has raised the issue of working capital adjustment. 7.1 Having considered rival submissions, we direct the Assessing Officer to examine assessee's claim, keeping in view the relevant statutory provisions and judicial precedents applicable to the assessee. Needless to mention, the assessee must b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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