TaxTMI 
TaxTMI 
2016 (2) TMI 916
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....the other adidas Group companies are being collectively referred to as associated enterprises or ("AEs"). Accordingly, the Assessee's role is limited to supporting its AEs i.e, providing various support services towards facilitating the communication between the manufacturers in India and the AEs and monitoring the quality of goods manufactured by them based on the specifications provided by the AEs. Thus, the AEs set the broad strategies and guidelines, while adidas Technical Services Private Limited ('aTSPL') provides execution support. Functional Performed. The functions performed by aTSPL and its AE in relation to the international transaction pertaining to the provision of support service by aTSPL to its AE are summarized below. * Conceptualization of entrepreneurial services aSL is responsible for determining the scope of work to be performed by aTSPL. and it provides the relevant details pertaining to the type of products to be manufactured, qualify details, quantity etc. so that aTSPL can coordinate with the local contract manufacturers. Participation by aTSPL in this process is limited to the process of coordinating with the local manufacture....
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....ies which are providing high end services should not be selected is not correct. He held that the assessee is rendering high end services of varied nature and that this can be concluded by seeing the employees profile, salary structure etc. He also held that, provision for high end service or low end service cannot be a criteria by a comparable company for acceptance or rejection of a comparable, especially when the tax payer and the comparables have similar employee profile because, TNMM is accepted as the Most Appropriate Method (MAM) where the standard of comparability are relatively relaxed and only broad similarity of functions are required. (ii) After considering all the contentions of the assessee and dealing with the same, the TPO rejected some of the comparable companies selected by the assessee company and included certain other comparable companies. He proposed an adjustment u/s 92CA of Rs. 2,63,83,909/-. The assessee carried the matter before the DRP. The DRP rejected some of the comparables selected by the assessee company and included certain comparables. Consequent to the order of the DRP the A.O. made a transfer pricing adjustment of Rs. 2,18,26,570/-. 3....
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.... The learned AO/TPO/DRP have erred in rejecting following comparable companies identified by the Appellant using employee cost greater than 25 percent of the total cost as a comparability criterion: * Asian Business Exhibition & Conferences Ltd. * Times Innovative Media Ltd * Concept Public Relations Ltd * Impresario Event Management India Ltd 8. The learned AO/TPO/DRP have erred in selecting following companies (which are earning super normal profits) as comparable to the Appellant: " * Apitco Ltd. *Global Procurement Consultants Ltd. *TSR Darashaw Ltd 9. The learned AO/TPO/DRP have erred in rejecting Ma Foi Global Services on the basis of erroneous application of negative net worth filter. 10. The learned AO/TPO /DRP have erred in rejecting certain comparable companies identified by the Appellant using "Turnover less than INR 1 Crores" as a comparability criterion. 11. The learned AO/TPO/DRP have erred in rejecting fresh search conducted by the appellant. 12. The learned AO/TPO /DRP have erred in rejecting certain companies which comparable to the Appellant and adding certa....
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....ed that aTSPL is engaged in provision of support services to aSL in connection with sourcing services to its adidas Group entities. He pointed out that the actual manufacturing is done by, third party contract manufacturers, who are located at different locations across the country. The assessee regularly inspects the manufacturing process, from the material procurement stage onwards to the final packaging stage and provides advisory services in respect to manufacturing of products. 5.3. On a query from the Bench he submitted that the basic issue in dispute is adoption of certain comparables by the A.O. which as per the assessee is not correct. He filed a chart giving details of the companies taken as comparables and made detailed arguments on each one of these comparables. We would be adverting to the same during the course of this order as and when necessary. Further he made submissions challenging the treatment of foreign exchange loss/profit as non operating. He relied on certain case laws and submitted that foreign exchange gain/loss should be treated as an operating profit/loss. 6. The Ld.CIT, D.R. Smt. Anupama Anand, on the other hand opposed the contentions of the ass....
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....the Products; Obtain offers, , quotations and samples of Products, as may be appropriate, and submit the same to the Purchasers pursuant to their written instructions, and inform the Purchasers of the failure of any samples to conform to their standards of quality; Randomly inspect the relevant factory conditions and the Products under order and verify and execute production certificates and other factory documentation required for clearance; Monitor and support all arrangements for overseas shipment of the Products; Respect the instructions provided by the Purchasers on the carrier to be chosen and the other shipping particulars as specified by the Purchasers; Advise the Purchasers of the particulars of any individual shipment, such as port of dispatch, name of the vessel or aircraft on which merchandise is shipped, the entry port in the country of destination and the expected date of arrival; Procure that all necessary shipping documents be collated in the country of export and be forwarded to the Purchasers or its designated agent. Furnish the Purchasers with further information with respect to the shipment of the Pr....
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....he policy requirements of the government and the fact that it is a preferred company of the Government of India for entrustment of works, cannot be ignored. Be it as it may, in our considered opinion, the functional profile of this company is different from that of the assessee company and hence the same should be excluded from the list of comparable companies while computing the ALP. (b) Global Procurement Consultants Ltd.:- The Ld.Counsel for the assessee submitted that the functional profile of the company is different and that Global Procurement Consultants Ltd. is merely rendering services to government bodies and international organisations. It was further submitted that it is engaged in providing varied services in consultancy segment which are as follows. (a) Bid support services; (b) Performance review; (c) Valuation assignments; (d) Financial advisory services and other assignments. It was further argued that no segmental details are available and hence it cannot be taken as a comparable. The Ld.D.R. submitted that this comparable company as a client's representative in taking on the total responsibility of procurement by provi....
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....ber of other Private Companies. b) The functional profile of this company is rendering of highly specialized procurement support services. The quality of service, the skills are comparable with the quality and skill of support services provided by the assessee, though in functionally different areas. As the ld. Counsel for the assessee has accepted before us that comparable companies rendering services in the same field as that of the assessee company cannot be found, companies rendering support services in other fields have to be taken as comparables. c) We have also perused the decision of the Hon'ble Jurisdictional High Court in the case of Rampgreen Solutions Pvt. Ltd.(supra). The claim of the ld. Counsel for the assessee is based on the propositions laid down in this case law. If on such an argument, the comparable Global Procurement Consulting Limited is excluded, then all the other comparables cited by the assessee as well as the ld.TPO have to be excluded on the same principle. This will leave us with no other comparable. The assessee cannot advance contradictory arguments. As it has been accepted by both the parties before us that, companies having a broa....
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....provided to local clients and not the foreign clients and hence they are not similar to ITES services. The TPO observed that ITES companies have the advantage of location savings, while the business service companies do not have advantage. Since in this case the services are predominantly provided in India, the company is a correct comparable. He also held that the assessee had not gone into the verticals or high end or low end distinctions while selecting the comparables and has selected companies operating in various verticals. The TPO has also selected comparables which are broadly engaged in the field of marketing support services which has similar to the services provided by the assessee. The Ld.Counsel for the assessee on the other hand submitted that the company is not functionally comparable. It is contended that there can be no comparison between a specific pay roll service rendered and marketing support service provided. It was contended that TSR Darashaw Ltd. is a broking and investment banking house and as 57.4% of its income is from the share registry services segment and hence not a comparable. Reliance is placed on the following decisions. i. Microsoft Corpo....