TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 1398
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.... under the heads 'provision of application engineering services' and 'corporate fees'. The assessee filed objections before the Dispute Resolution Panel(DRP)-2, Mumbai. After receiving the directions of the DRP, dated 09/09/ 2016,the AO finalised the assessment, determining the income of the assessee at Rs. 11. 28 crores. 2.1.Vide its application, dated 25/07/2017,the assessee has requested for admitting additional evidences under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 (Rules).In its application, the assessee has stated that ground number 8 to 12 were about TP adjustment of Rs. 4.88 crores relating to corporate fees for intra-group services, that it had furnished details about services rendered before the TPO and the DRP, that both the authorities completed the Arm's Length Price(ALP)at nil holding that no services were received by the assessee from the AE's, that it wanted to file certain documents to the decision of the revenue authorities were not based on facts, that the TPO and the DRP had acknowledged the fact that it had received services from its AE's, that after receiving the final order of the AO it realised that there was an understanding mismatch betw....
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....Ltd.(HCPL) and Cather Consulting Engineers Ltd(CCEL) having margin of 18.92%, 47.36% and 54.5% respectively. He directed the assessee to explain as to why the abovementioned comparable should not be considered for deciding the ALP of the IT.s. After considering the submission of the assessee, the TPO selected seven companies in the final set of comparables and arrived at arithmetic mean of 20.51 for benchmarking the IT.s entered into by the assessee. He held that margin earned by the assessee fell beyond the range of (+/-) 5%, that the transactions were not at arm's length. He proposed an addition of Rs. 78.71 lakhs. 4.1.As stated earlier, the AO, in his draft order proposed to made the addition of the said amount under the head AES. The assessee filed detailed objections before the DRP stating that TPO did not conduct a structured search, that he had done cherry picking of companies as comparables, that cherry picking of comparables had distorted the comparability analysis. It also raised objections about inclusion of three new comparables by the TPO. After considering the order of the TPO and the submission of the assessee, the DRP held that the TPO had not resorted to cherry pi....
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...., that as per the website of HCPL the auditor had qualified his report and had mentioned that the company had not provided any segmental report as required by the Accounting Standards (page 474 of PB), that it was having machinery as part of its fixed assets and inventory in its books of accounts, that it had also large portion of costs as subcontracting, that the assessee was engaged in engineering design and drawing services for various overseas clients.With regard to CCEL,he argued that it was involved in providing comprehensive services, that the report of the director of the company mentioned that it had received various orders for project management services for a thermal power plant and order for preparation of thermal power plant, that it had also received orders for basic and detailed imaging services, that no segmental details were available for such activities. Referring to the page 56 of the PB, he stated that it was operating only in segment which was engineering consultancy. He referred to the case of Bechtel India Private Ltd.(66 taxmann.com 160) in his support. The DR argued that in the matter of ATL the assessee had failed to prove that the alleged extra ordinary ....
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....elevant portion of the order of the Tribunal and it reads as under : "13.A bare perusal of the profile of the aforesaid company goes to prove that the same is engaged in offerings comprehensive services from concept to commissioning for green-field, modernization/conversion expansion of cement as well as captive power plant/waste heat recovery based power plant projects. Holtec also engaged in providing engineering support services for bulk material handling and structural steel detailing etc. having plant and machinery as part of its fixed assets and inventory in its books, it has also large portion of cost as sub-contracting and profile of Holtec is diametrically opposed to the assessee company which is engaged in engineering design and drawing for various overseas AEs to support overseas offices turnkey project execution. The assessee company has neither any plant and machinery as part of its fixed assets and inventory in its books nor has large portion of its cost as sub-c0ntracting cost. So, it cannot be taken as a comparable in any case." In case of ATL it is found that extra ordinary events had taken place and the impact of mergers/acquisitions were not considered in the ....