2017 (11) TMI 1756

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....order dated 8th May 2017 has given following directions:- "16.... Consequently, the following directions are issued: (i) the impugned order of the ITAT dated 24th August 2016 is modified by directing the following issues will not be remanded to the TPO but will be decided by the ITAT itself on merits after hearing both the parties. (a) issue concerning exclusion of WAPCOS and Mahindra and inclusion of Kirloskar as comparables for the TSS segment b) issue regarding exclusion of Sasken as comparable for the CDS segment c) issue of denial of working capital and risk adjustment in both the segments, i.e., TSS and CDS; and d) issue of proportionate adjustment in the TSS segment (ii) ....

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....124,800 3. Receipt of Technical Services 493,803,543 4. Receipt of training services  28,581,092 5. Service Revenue 389,604,691 6. Provision of contract software development 7,274,905,626 7. Payment for deputed employees 112,961,710 8. Reimbursement of expenses (Received)  44,455,170 9. Reimbursement of Expenses (Paid)  9,782,132 10.  Interest on Loan 5,379,000 During the relevant assessment year, the assessee had entered into the following international transactions with its AEs - Particulars Most Profit Level Indicator (PLI) Margin earned by the Appellant No. of comparables considered Average margin CSD services  Tra....

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....nologies Ltd. 24.36% 12. Tata Elxsi Lgtd. (Segment) 13.00% 13. Wipro Technologies Limited 54.42% 14. Zylog Systems Ltd. 28.74%   AVERAGE  26.72% 3. The Ld. AR submitted that the issue mentioned in the directions by the Hon'ble High Court in B & C category are not pressed by the assessee as the DRP has given said relief. As related to issue related to A & D the assessee is agitating the same and therefore, the same are taken for hearing. 4. On the ground relating to the issue of Transfer Pricing adjustments made in respect of Technical Support Services (TSS) Segment, it was the submission of the Ld. AR that under this segment the assessee provided technical support service with respe....

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....rned, the TPO held that under the application of TNMM as the most appropriate method, the difference in functional profile gets evened out and as such the company can be considered as a comparable. The Ld. AR submitted that this company is functionally dissimilar as it is engaged in rendering consultancy services in Water Resources, Power and Infrastructure and includes preliminary investigations, feasibility studies, field studies, engineering design, drawings and tendering process, project management operations and maintenance and institutional/human resource development. The Ld. AR also submitted WAPCOS is a Government of India undertaking with an abnormally high margin of 30.55%. The Ld. AR submitted that WAPCOS has been rejected as com....

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....this company has been rejected as a comparable by the DRP in assessee's own case for AY 2010-11 against which the department has not preferred any appeal. The Ld. AR also submitted that Mahindra Consulting has been rejected as a comparable in Rolls Royce India P. Ltd. in ITA No. 6636/Del/2015. The Ld. AR also relied on the decision of Rampgreen Solutions P. Ltd. in ITA No. 102/2015, wherein the Hon'ble Delhi High Court held that functionally different company cannot be considered as comparable company. 8. The Ld. DR submitted that for Kirloskar the TPO has not verified the RPT margin whether 25% or not. For exclusion of WAPSCO, the Ld. DR submitted that technical and consultation services run parallel to each other and it is the margin w....