TaxTMI 
TaxTMI 
2019 (2) TMI 1945
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....esolution Panel [hereinafter referred as "DRP"]/Transfer Pricing Officer [hereinafter referred as "TPO"] are bad in law and void ab-initio. 1.1 That on facts and in law, the assumption of jurisdiction by the AO/TPO to determine Arm's Length Price is bad in law and void ab-initio. 2. That on facts and in law the DR P erred in sustaining an adjustment to total income of Rs. 5,19,03,911/- under Chapter-X of the Income Tax Act, 1961. 2.1. That on facts and in law the DRP erred in holding that for the purpose of benchmarking the international transactions the TPO was justified in using current year data only while computing the Profit Level Indicator of the comparables. 2.2 That on facts and in law the TPO erred in observing that the assessee is providing following services: (a) Lounge Services (b) Ticketing (c) Crew briefing (d) Fueling Supervisions (e) Passenger Boarding Bridges Handling (f) Aircraft Security (g) Executive Aviation Handling (h) Floor Walker Service (i) Government Aircraft Handling 2.3 That on facts and in law the DRP erred in upholding and the TPO erred in p....
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....e draft assessment order was passed by the learned assessing officer on 15/12/2010 wherein the adjustment of INR 84737202 proposed by the learned transfer pricing officer was added to the total income of the assessee. The assessee filed the objection before the learned dispute resolution panel that passed the direction on 25/04/2011. Consequently final assessment order was passed by the learned assessing officer on 31/05/2011 making the final adjustment to the arm's-length price of the international transaction of INR 5903911/-. Consequently the total income of the assessee was assessed at INR 93254530/-against the returned income of Rs. 41350620/-by order u/s. 143(3) rws 144C of the Act dated 31/5/2011. Assessee aggrieved with the order of the learned assessing officer has preferred this appeal before us. 4. The learned authorised representative submitted that assessee is only pressing issue of exclusion of 1 comparable company selected by the learned transfer pricing officer. He submitted that the learned transfer pricing officer has introduced Kerala state industrial enterprises Ltd. with which the assessee is aggrieved. The learned authorised representative referred the ....
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....mparable. 5. The learned departmental representative vehemently objected to the argument of the learned authorised representative and stated that the comparables selected by the learned transfer pricing officer is perfect comparable. He submitted that the trading activity are nominal and does not have any impact on the profit and loss of the comparable company. He further stated that such profit can already be computed on the basis of the information available from the annual accounts of the assessee. He further stated that the government company cannot be held to be comparable cannot be a rule. He stated that the several government companies are engaged into the business and are earning much higher profits than the private enterprises and therefore the rule cannot be laid down that government companies cannot be selected as a comparable company if the functional profile of those companies matches with the functional profile of the assessee. He submitted that in the present case it is so. He further stated that merely the fee earning income cannot be a filter and it is not a relevant criterion for the exclusion of the above comparable. He further referred to page number 6 of the....
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.... satisfy as the comparable company is carrying out altogether a different business activity which is not comparable with the business of the assessee. 7. We have carefully considered the rival contentions and also perused the orders of the lower authorities. Firstly it is important to identify the exact nature of the services rendered by the assessee to understand the functional profile of the assessee. Such profile has been disputed by the assessee wide ground number 2.2 of the grounds of appeal. The functional profile stated in the transfer pricing study report prepared by the assessee is sketchy and does not deserve any mention. The learned transfer pricing officer in para number 2 is extracted the activities carried out by the assessee from the website of the assessee. On that basis the learned transfer pricing officer and stated that the assessee is providing a very specific mission services and having a specialized functions which require critical knowledge of the dynamics of the industry, specialized training of the staff of the assessee. And therefore looking at the present environment of high security the functions and responsibility of the company and the employees of ....
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....strial Corp Ltd. which is considered by the learned transfer pricing officer and the learned DRP as a comparable company for determining arm's-length price of the international transactions entered into by the assessee with its associated enterprise. The assessee has placed the annual accounts of the above company for the financial year ending on 31st of March 2007 at page number 265-313 of the compilation. In the directors report of the above company it was stated in para number 2 that during the year 2006-2007 the company under total income of INR 121,695,000 as compared to INR 101,733,000 and in the previous year. Major portion of the income was earned from operation of air cargo complexes followed by income from trading activities. In para number 3 it was further stated that the cargo operation showed an increasing trend during 2006-07. The cargo complexes achieved a turnover of INR 85,830,600 against the turnover of 6,88,87,000 in the previous year. During the year under report 18896 metric ton of import cargo and 30075 metric turn of export cargo handled by the air cargo complex are managed by your company compared to 14990 metric ton of import cargo and 24166 metric ton ....
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....of INR 20,80,402/- is shown in the accounts at INR 80402/-after deducting INR 20 Lacs reimbursed by MPEDA. Further it is mentioned that INR 1 95.50 Lexus grant-in-aid from government of India through KINFRA under ASIDE scheme and an amount of INR 6,465,000 received from APEDA was fully utilized for acquiring the assets sanctioned under the scheme. Hence the grant is shown at nil value. Further this company is the premier agency of the Government of Kerala, mandated to for industrial and investment promotion in Kerala. Formed in 1961, KSIDC's primary objective was to promote, facilitate and finance large and medium scale industries and catalyze the development of physical and social infrastructure required for industrial growth in the state. Over the years this company has developed in to activities of investment in Kerala and the single point contact for investors setting up shop in the state. It offers a comprehensive set of services encompassing support in developing business ideas and viable projects, assistance in conducting feasibility studies, providing various financial products tailor made for different types of investments, handholding and facilitation from project con....