TaxTMI 
TaxTMI 
2023 (9) TMI 683
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....unt of addition/disallowance inter-alia that: ITA No.5743/M/2015 (Grounds of Revenue): "1. Whether on the facts and circumstances of the case, the DRP erred in retaining a single comparables namely Tamil Nadu Ex Servicemen Corporation Ltd., which is government owned company, contrary to the binding precedent laid down by Jurisdictional ITAT, Mumbai in the case of Novartis Healthcare (P.) Ltd. Vs Additional Commissioner of Income- tax, Range-7(1), Mumbai and in the case of Shell India Markets (P) Ltd. V. Assistant Commissioner of Income-tax, Large Taxpayer Unit, Mumbai, wherein it has been consistently held that Government company cannot be the sole comparable in the final set of comparable. 2. Whether on the facts and circumstances of the case, the DRP erred by adopting different yardstick for undertaking functional analysts of comparable companies namely Engineers India Ltd, Tata Consulting Engineers Ltd, and Mahindra Consulting Engineers Ltd. by testing them against a very high degree of comparability but at the same time not testing the case of Tamil Nadu Ex Servicemen Corporation Ltd., against the same high degree of comparability. 3. Whether....
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....ot the 13 "charging provision" under the Income Tax Act, 1961 and there is no corresponding provision to charge "such adjustments" as income of the appellant U/s. 4 of the Act and U/s. 5 of the Act; 1.4 making the reference to the Ld. TPO as per the CBDT Instruction No.10/2013 dated 05-08-2013 as regards threshold limit of Rs. 15 Crores as the said "administrative limits" under the said Circular had no force in law and the reference made by following the said Circular by the Learned AO was illegal and bad in law; 2. On the facts and circumstances of the case and in law, consequent to the directions of Hon'ble DRP, if a single comparable company is retained, then, the same cannot be considered as bad in law, 3. On the facts and circumstances of the case and in law, the Hon'ble Members of the Dispute Resolution Panel (DRP) ought to have accepted the following adjustments in computing the appellant's Operating Margin on Cost: (a) Reduction of the "pass through cost", being the re-imbursement of travelling and conveyance expenses of Rs. 4,98,93,649/- incurred in connection with the personnel sent on deputation of providing technical suppo....
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....d 49% of the capital respectively is into the business of providing homeland security solutions and into providing personnel for rendering technical project management and implementation services in connection with AGT group's overseas projects for providing homeland solutions to their customers. During the year under consideration the assessee entered into international transactions with its Associate Enterprises (AEs) as reported in form 3CEB as under: No. Nature of International Transactions Amount (Rs.) Method by assessee 1 Professional charged paid for services availed 1,97,82,797 TNMM 2 Technical support services rendered by the assessee 11,89,41,144 TNMM 3 Reimbursement of expenses to AE 4,98,93,649 TNMM Total 18,86,17,590 4. The assessee in order to benchmark its international transactions with its AEs applied Transactional Net Margin Method (TNMM) at entity level with operating profit/operating cost (OP/OC) as profit level indicator (PLI) as the Most Appropriate Method (MAM), chosen three comparables viz. Cades Digitech Private Limited, U.B. Engineering & Shakya Technologies Ltd. having mean margi....
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....n in South Asia. It provides EPC services focused on oil and gas, Infrastructure, water and waste management, solar and nuclear power, fertilizers and petrochemical Industries. It is a total solution engineering Consultancy Company providing services from concept to commissioning of a project. Hence it cannot be compared with the assessee. We have carefully considered the facts and the submissions made. The assessee is not into providing services similar or comparable to EIL. The assessee provides homeland security solutions tailored for the Indian threat environment and leverage cutting edge technology deployed globally by the AGT group to protect critical assets. It provides Technical support services to the AEs. Mere providing engineers on deputation basis to the AE do not mean that services similar to EIL or end to end engineering services are provided. In providing services like EIL, responsibilities for the design, engineering and commissioning of the project are to be borne by EIL. Hence, TPO is directed to reject EIL as comparable. 4.5.2 It has been submitted on the basis of profile that Mahindra Consulting Engineers Limited is into Project design and Engi....
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....1 is not sustainable. If the profit & loss account of a government company shows some preferential treatment to the government company, impacting profit only then government company can be excluded. 11. However, in case of Engineers India Ltd. Ld. DRP has found it functionally dissimilar vis-à-vis the assessee who is into providing homeland security solutions tailored for the Indian Threat Environment and Leverage Cutting Edge Technology deployed global by AGT Group to protect critical assets. Whereas as per annual report available at page 41 to 46 of the paper book Engineers India Ltd. is into providing certification services, project management services, process design services, engineering services, commissioning services, construction management services, procurement services etc. which is not comparable to the assessee. So the Ld. DRP has rightly rejected this comparable chosen by the Ld. TPO. 12. So far as the question of excluding Mahindra Consulting Engineers Ltd. (MCEL) as a comparable to benchmark the international transactions vis-à-vis the assessee is concerned, it is also functionally dissimilar being into project design and engineering including pl....