TaxTMI 
TaxTMI 
2013 (5) TMI 199
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....ot at arm's length. 3. Without prejudice to the above grounds, the learned A.O/TPO/DRP have erred in placing reliance on the financial data which was not available in the public domain at the time when the economic analysis was undertaken and transfer pricing study was documented. 4. Without prejudice to the above grounds, the learned A.O/TPO/DRP have erred in using single year data for determination of ALP instead of multiple year data which evens out variations in industry and product cycles. 5. Without prejudice to the above grounds, the learned A.O/TPO/DRP have erred in computing the margins of Asian Business Exhibition & Conference Limited without giving consideration to adjustments on account of differences of working capital adjustment. 6. Without prejudice to the above grounds, the learned A.O/TPO/DRP have erred in law and in fact by considering companies whose turnover is significantly larger as compared to the appellant as comparable. 7. Without prejudice to the above grounds, the learned A.O/TPO/DRP have erred in law and in fact by considering companies earning super-normal profits as comparable to the appellant. 8. Without prejudice to the above grounds, the learn....
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.... September, 2005. H&M India acts as a facilitator between the Indian manufacturers and its AEs and ensure that the supplier manufactures the products according to the quality and design segments specified by the AEs. The assessee, during the year, made provision of sourcing and procurement service. For providing the above mentioned services, H&M India employed non-technical people who possessed general skills. The employees were not technical people like engineers, PhDs, software programmers, etc. For these activities, the assessee was remunerated on cost plus 12 percent basis wherein cost include all operating expenses and costs in performing the services, other than income tax, wealth tax, fringe benefit tax, interest, etc. In determining the arm's length nature of the international transaction, the assessee used Transactional Net Margin Method ("TNMM"), as the most appropriate method using operating profit/operating cost as the profit level indicator ("PLI"). During the course of assessment proceedings, the TPO re-characterized the assessee as a risk bearing agent and rejected the transfer pricing analysis undertaken by the assessee. The TPO rejected the comparable companies use....
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....uneration of a company would depend upon the level of value addition made by the company in the entire supply chain and economic significance of the activities undertaken by the company in the value chain. The H&M group is engaged in fashion wear. Designing and marketing would contribute the most to H&M group's value chain. H&M India does not perform any of these functions. It merely assists its group companies in sourcing material from India. Even the services provided by H&M India to its group entities are more in the nature of administrative support. The services provided by H&M India to its group entities are not high end technical services or services that require a high degree of creativity from it. Hence, it is inappropriate to attribute super normal profits earned by an engineering service provider, given that these companies provide highly technical services to their clients and thus make significant value addition to their clients as compared to H&M India. Further, the TPO has not brought anything on record to suggest that the activities carried out by the engineering service providers and a support service provider are the same. It has been submitted that RITES and WAPCO....
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....lea of rejecting the above mentioned engineering companies. 7. The ld. counsel for the assessee has contended that under similar circumstances, in 'MCI Com India P. Ltd.', a decision rendered by the Delhi Bench of the Tribunal (co-authored by one of us - the JM) on 30.08.2012, in ITA Nos.4187/Del/2010 (copy at pages 1-19 of the case laws paper book filed by the assessee), has excluded Rites Ltd. and WAPCOS as comparables. 8. Apropos the action of the DRP in maintaining the inclusion of Apitco Ltd. as a comparable, the ld. counsel for the assessee could not raise any serious objection. 9. The Ld. DR, on the other hand, has placed strong reliance on the impugned order and it has been contended that the exclusion of Rites Ltd. and WAPCOS Ltd. in 'MCI Com India P. Ltd.' (supra) is peculiar to the facts and circumstances of that case and that decision has no applicability hereto as the facts herein are totally different. 10. We have heard the parties and have perused the material on record. The only surviving dispute before us, as seen from the above, is as to whether Rites Ltd. and WAPCOS Ltd. are to be maintained as comparables. 11. This dispute stands settled in favour of the as....