TaxTMI 
TaxTMI 
2017 (10) TMI 481
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....e additions made to the returned income deserve to be deleted and the income as returned by the appellant deserves to be accepted as the correct taxable income. 2 That the Ld. AO/ Learned Deputy Commissioner of Income Tax, Transfer Pricing 3(2)(1), Mumbai ("the learned Transfer Pricing Officer" or the " Ld. TPO") / Hon'ble DRP have erred in rejecting the arm's length price (ALP) for the international transaction of provision of engineering services, as determined by the appellant in its transfer pricing documentation by following a scientific search process, by application of entity-wide Transactional Net Margin Method (TNMM1) with operating profit/ operating cost ('OP/OC') as the Profit Level Indicator ('PLI'). 3 That the Ld. AO / Ld. TPO/ Hon'ble DRP have erred in considering the consolidated engineering segment as appearing in the audited financial statements of the appellant, instead of considering only the engineering services segment, for benchmarking the transaction pertaining to provision of engineering services (impugned transaction). 4 That the Ld. AO / Hon'ble DRP have erred by not considering the audited segment....
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....pos ground nos. 3, 4, and 5 relating to the transfer pricing adjustment. Brief facts of the case are as under: The assessee company, Valmet Automation Private Limited ('VAPL' or the 'company' or the 'assessee') is engaged in manufacturing and production of Industrial Valves. Automated and Distributed Control System. It also provide Engineering services, offering innovative automation products, solutions and value adding life cycles fitted to customer's specific needs. It offers environmental technology services e.g. advance process control, advance emission monitoring and authority reporting to help customers in oil and gas, paper and pulp, Power sector and other Industries. The details of International Transactions undertaken by the assessee during the previous year ended 31.03.2012 as per the TP report and Form 3CEB are as under: Sr. No. Description of the International Transaction Amount (in INR) Method adopted 1 Import of Raw Material 4,98,58,970 TNMM 2 Import of Fixed Assets 30,11,426 TNMM 3 Engineering Services Income 7,28,37,036 TNMM 4 Marketing Services (Commission) 11,58,95,479 TNMM 5 Technical Supp....
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....he year FY 2011-12; c) The segments/sub-segments of previous and succeeding year also shows that due to the expansion at Vadodara and forex, fluctuation; the company has reported negative margin in the engineering goods segment in FY 2011- 12. Further, the assessee submitted vide submission dated 26 April 2016: "10.6 The assessee is in the process of preparing a detailed working of the 'Engineering segment' giving a bifurcation into "Engineering Services" and "Engineering Goods". A no opportunity was given to the assessee to demonstrate that the "engineering segment" consisted of both "Engineering Services" and "Engineering Goods", the assessee craves leave to file the audited copy of the working at the hearing. From a perusal of the statement, it would be seen that the "engineering services" division has earned a profit. The overall loss of the "Engineering" segment is attributable to the "Engineering Goods" division. A perusal of the Annual Reports of the assessee for the AY 2012-13 it can be seen that this loss is as result of the expansion of the "Engineering Products" division by establishment of a Vadodara supply centre and a division in Mumbai. ....
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....s furnished by the assessee should be used when details were not given in the audited financial statement: * Sandoz Pvt. Ltd. vs. CIT (Mumbai ITAT) (25 ITR 347) dated 5 April 2013 * M/s. Tecnimont ICB Pvt. Ltd. vs. ACIT (Mumbai ITAT) (ITA No. 7098/Mum/2010) dated 25 February 2011) * M/s. Tecnimont ICB Pvt. Ltd. vs. DCIT (Mumbai ITAT) (ITA No.6394/Mum/2012) dated 28 August 2013 * M/s. Paradigm Geophysical (I) Pvt. Ltd. vs DCIT (Mumbai ITAT) (ITA No. 1878/Mum/2014) dated 13 July 2016 * M/s. Infotech Limited v/s. ITO (Chennai ITAT) (ITA No. 21/Mds/2013) dated 7 May 2013 * M/s. Honeywell Electrical Devices & Systems India Ltd. vs. ACIT (Chennai ITAT) (29 ITR 347) dated 12 December 2013 * M/s. Sysarris Software (India) Pvt. Ltd. vs. DCIT (Bang ITAT) (IT(TP)A No. 639/Bang/2012) 17 April 2015 12. Per contra, the ld. Departmental Representative (DR) could not cogently dispute the proposition that when the segmental data are available, the same should be taken into account. However, the ld. DR submitted that since the assessee has not provided the detailed segment of engineering services and goods earlier before the A.O., now....