TaxTMI 
TaxTMI 
2017 (9) TMI 1024
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....d maintenance, inspection, renovation and modernization services for power plants and turbines. For the AY 2011-12 the assessee filed the return of income on 29.11.2011 declaring a total income of Rs. 6,95,32,697/-. In respect of the international transactions, the matter was referred u/s 92CA of the Income Tax Act, 1961 (hereinafter for short called as the 'Act') and the Transfer Pricing Officer by way of order dated 16.01.2015 proposed an adjustment to a tune of Rs. 4,24,88,928/-. By way of draft order dated 27.02.2015 AO proposed the addition of Rs. 4,24,88,928/- and computed the total income of the assessee at Rs. 11,20,21,630/-. Assessee carried the matter before the Dispute Resolution Panel by filing objections. During the course of the proceedings before the Ld. DRP, the DRP raised a query in respect of the tax deductible at source (TDS) compliance being made in respect of certain expenses but the assessee opposed the same stating that the said issue was not borne out of draft assessment order nor from the additions proposed by the AO, but without prejudice to such contentions, furnished the details sought by the DRP. DRP gave certain directions to the AO to verify and compu....
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....urmises. 3.2 The TPO/the AO/the DRP failed to appreciate the submissions made/contentions raised by the appellant. 3.3 The TPO/the AO/the DRP erred in enhancing the income of the appellant by Rs. 2,99,41,266 holding that the international transactions of the appellant pertaining to provision of technical services to its Associates Enterprises (AEs) do not satisfy the arm's length principle envisaged under the Act and in doing so, have grossly erred in: 3.4 disregarding the Arm's Length Price (ALP) as determined by the appellant in the Transfer Pricing (TP) documentation maintained by it in terms of section 92D of the Act read with Rule 10D of the Income Tax Rules, 1962 ('Rules'). 3.5 Rejecting comparability analysis undertaken by the appellant in the TP documentation and conducting a fresh comparability analysis based on application of additional/revised filters, in determining the ALP for the international transactions. 3.6 Including companies having high growth in revenues and profits in the final comparables' set for benchmarking a low risk captive unit such as the appellant; 3.7 Including certain companies in the final set o....
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..... That on the facts and circumstances of the case and in law, the AO and the DRP erred in holding that the Travel and Conveyance expenses of Rs. 2,32,85,369 warrant disallowance under section 40(a)(i) of the Act. 6.1 The AO and the DRP erred in holding Travel and Conveyance expenses to be in the nature of Fee for Technical Service (FTS) as per section 9(1)(vii) of the Act and Fee for Included Services (FIS) as per article 12(4) of Double Taxation Avoidance Agreement (DTAA) between India and USA. 6.2 The AO and the DRP failed to appreciate that the said amount represents merely reimbursement of expenses on a cost-to-cost basis to the group company. 6.3 Without prejudice, that on the facts and circumstances of the case and in law, the AO and the DRP erred in not appreciating that the services provided by the employees seconded to appellant company do not 'make available' any technical know-how, skills, etc., as provided under the DTAA between India and USA. 7. That in the facts and circumstances of the case and in law, the AO and the DRP failed to appreciate that the sum of Rs. 8,19,24,990 was incurred on account of mere reimbursement of Salary and....
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....Mitcon Consultancy & Engg. Services Ltd. and Rites Ltd. (Consultancy division), and two comparables excluded by the TPO, namely, EDAC Engineering Limited and MN Dastur & Company (P) Limited. He further brought to our notice that in assessee's own case in ITA No. 1486/Del/2015 for the AY 2010-11 a coordinate bench of this Tribunal considered Mahendra Consulting Engineers Ltd. and MN Dastur & Company (P) Limited and found that these two companies are includible in the list of comparables and to that extent those two comparables are covered by the earlier year orders. What, therefore, remains to be considered, it is the challenge of the assessee for the inclusion of HSCC India Limited, Mitcon Consultancy & Engg. Services Ltd. and Rites Ltd. (Consultancy division) and the exclusion of EDAC Engineering Limited. Now we shall proceed to consider the respective arguments in respect of these four companies. In so far as HSCC India Ltd. is concerned both the parties submitted that this is a Government Company with the major shareholding held by the Government. Ld. AR placed reliance on the decision reported in Thyssenkrupp Industries India (P) Ltd. vs. Additional Commissioner of Income Tax (....
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.... that these two companies cannot be good comparables. On facts, Ld. DR does not dispute the same. We, therefore, hold that these two companies also cannot be comparables to the assessee company. 8. Now turning to the prayer of the assessee to include MN Dastur & Company (P) Limited & EDAC Engineering Limited is concerned, as already noted above, in assessee's own case for the AY 2010-11 a coordinate bench of this Tribunal has considered the includibility of MN Dastur & Company (P) Limited held that this company is includible in the list of comparables. No new facts are brought to our notice disturbing this finding. We, therefore, while respectfully following the said finding of the coordinate bench for the earlier year hold that this company has to be included in the list of comparables. 9. Now coming to the EDAC Engineering Limited, it is the observation of the TPO, vide paragraph no. 8.1(b) that on the analysis of the annual report of the company which was found that the company was having 100% RPT with AEs. Ld. AR submits that factually this finding is incorrect and invited our attention to paragraph no. 4.121 & 4.122 at page no. 38 of the objections submitted before the D....
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.... proposed in the draft order notwithstanding that the issue was raised or not by the assessee before the DRP, the DRP will have jurisdiction in respect of Issue No. C also inasmuch as such an issue emanates from the assessing order. However, in so far as any other issue the DRP shall have no jurisdiction even after the explanation to Section 144C(8) that was inserted by the Finance Act, 2012 w.e.f. 1.4.2009. According to him whether or not the assessee raises any objection, the jurisdiction of DRP is strictly confined to the variation proposed in the assessment order but nothing else. Basing on this analogy Ld. AR submitted that the DRP raising the issues which are not relating to any variance proposed in the assessment order in this case is clearly beyond the jurisdiction of the DRP, as such, any addition proposed by the DRP to be verified by the AO has to be quashed. 12. On this aspect, it is relevant to refer to the decision of the Hon'ble Jurisdictional High Court in Lahmeyer Holding GMBH vs. Deputy Director of Income Tax (2015) 59 taxmann.com 336 (Delhi), wherein vide paragraph nos. 23 & 24 the Hon'ble High Court held as follows: "23. One more aspect which needs so....