2020 (3) TMI 1079

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....keting services in India to its Associated Enterprises (AEs) located abroad. The nature of services provided by the assessee include:- (a) Answering customer inquiries, telemarketing calls (b) Building awareness about the products by conducting exhibitions, road shows, conferences, customer events etc. (c) Liaison with PR Agencies for marketing activities (d) Other related marketing support to AEs. 4. The assessee had received a sum of Rs. 15.00 crores from it's A.E. on account of marketing and technical support services. The assessee bench marked the transaction under TNM method by adopting OP/OC as profit level indicator (PLI). The PLI of the assessee was 10.04% and the arithmetic mean of PLI of the comparable companies selected by the assessee was 10.72%. Accordingly, the assessee claimed that the international transaction with it's A.E. was at arm's length. The TPO rejected the transfer pricing study of the assessee and finally selected following 6 comparable companies with an arithmetic mean of 24.48%. Sl.No. Name of the company OP/Cost (%) 1. Asian Business Exhibition & Conferences Ltd. 58.64 2. Cyber Media Res....

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....5% services revenue filter. (C) Hindustan Housing Co. Ltd:- This company does not derive any revenue from marketing activity. Instead, it is engaged in providing diversified services like air-conditioning services, lift services, computer services, communication services, general administrative services, photocopying services, housekeeping services, dining room services, strong room services and board room services. The related party transactions (RPT) is 26.97%, i.e., more than 25% of total sales. The Ld A.R submitted that coordinate bench, in the case of Electronics for Imaging India Pvt. Ltd. (2016) 70 taxmann.com 299, has excluded M/s. HCCA Business Services Pvt. Ltd. and Killick Agencies and Mktg. Ltd. from the list of comparables. He further submitted that M/s. Hindustan Housing Company Ltd. was restored to the AO/TPO to examine the RPT filter by the co-ordinate bench in the case of ITO Vs. Alcon Laboratories Pvt. Ltd. (2017) 88 taxmann.com 240. 9. We heard Ld. D.R. and perused the record. We noticed that the coordinate bench in the case of Electronics for Imaging India Pvt. Ltd. (pertaining to AY 2010-11) has excluded M/s. HCCA Business Services Pvt. Ltd. a....

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....nce of segmental results, this company was sought to be excluded from the set of comparables. 45. The DRP found that this company conducts business as an agent of the foreign principal and deal in maritime equipments. Further, the receipts are mainly in the nature of commission income and service charges. Therefore, this company was functionally dissimilar to that of assessee. 46. We have heard the ld. DR as well as ld. AR and considered the relevant material on record. 47. The ld. DR has submitted that the TPO has considered the relevant information as reported in the annual report of the company and it was found that this company is acting as an agent for various foreign principals for sale of dredgers, dredging equipment and also offers after sales service. Therefore, this company was found to be in the business of marketing support services which is similar to the assessee. 48. On the other hand, the ld. AR has submitted that this company is engaged in the business of construction equipments and earth moving machinery and is not into marketing support services. 49. Having considered the rival submissions as well as ....

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....ng support to AEs. We notice that the TPO has selected this company as good comparable only for the reason that this company is also providing market support services. While M/s Killick Agencies & Marketing Ltd., is acting as marketing agent for foreign companies for their products, the assessee is seen providing marketing support services to its AE. The former is marketing the products on commission basis, while the assessee is only providing only support services. Hence, in our view, functions performed by both the companies are different. Accordingly we direct exclusion of M/s Killick Agencies & Marketing Ltd from the list of comparables. 12. In respect of Hindustan Housing Co. Ltd, the contention of the assessee was that this company was providing various types of services. Another contention raised was that the Related Party Transaction of this company exceeds 25%. We notice that the coordinate bench has restored this company to the file of AO/TPO for examining it afresh in the case of Alcon Laboratories P Ltd (supra). Accordingly, following the above said decision, we restore this comparable company to the file of AO/TPO for examining afresh by considering the RPT....