TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 563
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....essee has Trading segment, Manufacturing segment, Technical support services segment, Marketing support services segment and Software development services segment. Return was filed declaring certain international transactions in Form No.3CEB. The Assessing Officer (A.O.) made a reference to the Transfer Pricing Officer (TPO) for determining the arm's length price (ALP) of such international transactions. Instantly, we are concerned with the international transaction of 'Rendering of Marketing support services' whose transacted value was shown at Rs. 21,50,07,391/-. The assessee applied Transactional Net Margin Method (TNMM) with the Profit level indicator (PLI) of Operating Profit/Total Cost (OP/TC) for demonstrating that this international transaction was at ALP. Six comparables were chosen by the assessee which have been listed on page 67 of the TPO's order. The TPO rejected all the comparables selected by the assessee. In the final analysis, the TPO selected ten new comparables as have been specified on page 87 of his order. Considering the adjusted mean margin (after working capital adjustment) of these comparables at 22.55%, the TPO proposed transfer pricing adjustment of Rs. ....
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....t 2,408,000 Technology Facilitation - Asset Reconstruction & Management Services 20,193,454 Emerging Areas 530,475 105,140,438 7. A careful perusal of the operations carried out by Apitco Limited divulges that it is providing services in the nature of Project management consulting, Feasibility studies, Micro enterprise development, Skill development, Environment management, Energy related services, Social research and Asset reconstruction management services. No segment-wise profitability data of these services is available. The TPO has considered this company as comparable on entity level. The services rendered by it, taken as one unit, are different from what the assesee is doing under this international transaction. We fail to appreciate as to how all the above listed services, taken in unison, can be construed as comparable to the services provided by the assessee, which are restricted to marketing support services discussed above. 8. The ld. DR strenuously argued that all the activities done by this company are basically 'Business services' and the assessee is also rendering business services alone. Justifying the inclusion of this company, he submitted ....
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.... comparables drawn by the TPO. Whereas the assessee is aggrieved against three inclusions sustained in the first appeal and two noninclusions, the Revenue has challenged the exclusion of Alphageo and the inclusion of TCIL in the final set of comparables. 12. Before we proceed to consider the comparability or otherwise of the companies assailed by both the sides, it is significant to note the functional profile of the assessee under this international transaction. Page 26 of the Transfer pricing study report gives details of 'Technical services' under para 4.3.25 which is as under:- "4.3.25 Alcatel Lucent India provides technical services with respect to telecom equipment sold to customers in India. Alcatel Lucent India's services include services in the range of installation, commissioning, testing, software configuration, system integration to post implementation equipment support. Typically, Alcatel Lucent India provides services like: * Project management services; * Installation and commissioning services; equipment support and maintenance services to its customers; * Emergency services: Consisting of telephone support or on-site support to take care of eme....
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....comparability, we need to see the nature of products sold. Sale of cars and electronics can't be compared because of difference in functions, assets employed and risks assumed. Comparability can be established only w.r.t. the nature of goods sold. Similar is the position qua 'Consultancy services'. One needs to examine the nature of consultancy services rendered by two companies so as to decide on their comparability. When we examine the nature of consultancy services rendered by the assessee, the same are found to be quite different from those rendered by Mahindra Consulting Engineers Ltd. We, therefore, order for the exclusion of this company from the list of comparables. (ii) STUP Consultants Pvt. Ltd. 16. The TPO included this company in the list of comparables on the basis of his own search process. There is no discussion on the functional profile of this company in his order. The ld. CIT(A) retained it in the list of comparables by observing that the majority of income of this company was from 'Professional fee' from technical services. The assessee is aggrieved against its inclusion. 17. We have gone through the Annual report of this company, whose copy is available in t....
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.... CIT(A), the assessee submitted results of fresh search for comparables in 'Technical support services segment' which were forwarded to the Assessing Officer/TPO for examination and comments. Intarvo Technologies Ltd., is the first company, which the assessee sought to include in the list of comparables for the first time before the ld. CIT(A). In the absence of the availability of the audited accounts of this company in the data base, the TPO as well as the ld. CIT(A) decided not to include it in the list of comparables. 22. A copy of Annual report has been now placed on record. We have gone through such Annual report which is available in the paper book. Under the head 'Segment reporting', this company has mentioned that the services provided by different segments include 'Call centre services of technical support' to various clients, such as, Hewlett Packard, IBM, Lenovo and Acer etc. We find that these services cater to hardware of computers, which is not the case under consideration. In addition, this company is also engaged in providing services of installation of BTS equipments for telecom towers for customers, such as, Nokia, Hutch, Idea, Reliance and Ericsson etc. A brief....