TaxTMI 
TaxTMI 
2016 (2) TMI 916
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....ferred 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 manufactures. * Business development/coordination and liaisoning. a TSPL assists ....
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.... 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. Aggrieved the assessee carried the matter in appeal before us. 4. The grounds of appeal read as follows. "On the facts and circumsta....
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....siness 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 certain functionally dissimilar companies to the final set of comparable companies. 13. The learned AO/TPO/DRP have erred by not making suitable adjustments to account. for differences in the risk profile of the Appellant vis-a-vis the comparable companies. 14. The learned AO/TPO/DR....
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....turing 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 assessee. She relied on the order of the DRP and submitted that the DRP had carefully considered each and every argument being made by the assessee with respect to the comparables. She relied on the order of the DRP and submitted that the same should be upheld. She also opposed the contentions of the assessee that the foreign exchan....
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....rtificates 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 Products as it may require upon the receipt of a request for such additional information from the Purchasers; and Observe all reasonable directions and instructions given to it by aSL in relation to the purchase and manufacture of the Products and, in the absence of any such directions or instructions, act in such manner as it reasonably considers to be most beneficial to aSL's interests; Establish for close any bran....
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....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 providing the comprehensive range of procurement related advisory services at inter-allied activities for projects in India and abroad and hence is functional comparable. The ITAT Delhi I-2 Bench in the case of International SOS Services Ltd. vs. DCIT in ITA 1631/Del/2014 order dt. 8.12.2015, at para 4 has held as follows. "4. Global Procurement Consultant Limited: 12.6 The ld. Counsel for the assessee submitted that this is an 100% Government owned company as it is promoted by E....
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....her 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 broad functional profile of rendering skilled professional support services, should be taken as comparable companies, the proposition laid down in Rampgreen Solutions Pvt. Ltd.(supra), cannot be applied to the facts of the case on hand. In view of the above discussion we are of the considered opinion that Global Procurement Consulting Limited has rightly be taken as the comparable by the TPO. Hence we dismiss this argument of the assessee." Consistent with the view taken therein, we agree with the Ld.TPO that this company has ....
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.... 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 Corporation P.Ltd. vs. DCIT in ITA no.5766/Del/2011; ii. Premier Exploration Services P.Ltd. vs. ITO in ITA no.4935/Del/2011. In our considered opinion TSR Darashaw Ltd. cannot be taken as a comparable as 57.4% of its income is from share registry services segment. This shows the functional profile of the assessee is different. In the case of Miscrosoft Corporation Ltd. (supra) at para 18 the Tribunal has held as follows. "Coming to the merits of comparability, we find that this company has three segments, which inter alia include: 'Pay ....