TaxTMI 
TaxTMI 
2015 (5) TMI 1275
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....f the case are that the assessee, a wholly owned subsidiary of the GS Engineering & Construction, Korea (in short, GS Korea) in the relevant assessment year, was engaged in the business of Engineering, Procurement and Construction services (in short, EPC) to its customers globally, especially in oil and gas sector. In relation to EPC contracts procured by GS Korea, GS India rendered engineering design support services to GS Korea. Thus, GS India was engaged purely in engineering design support services. GS India operated through six departments which are as under :- "● Process department is engaged in making drawings and specifications for building the plant considering the final product, capacity and operation schematic acco....
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....ent u/s 92CA D = B - C Rs. 3,38,78,728 Percentage of adjustment E = D/C*100 18.72% While determining the ALP, the assessee had put its claim of idle capacity being first year of its operation as to the cost of infrastructure on the ground that no commensurate revenue was derived by assessee. Further, it was pointed out that none of the comparables selected by the TPO were in the first year of their operation. Ld. TPO has accepted the assessee's contention in principle because this being their first year of operation, the unabsorbed fixed cost required to be appropriately adjusted. The assessee had claimed that out of the total operating cost of Rs. 16,10,86,767/-, an amount of Rs. 82,59,925/- had to be adjusted under the f....
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.... 4. Ld. Counsel submitted that assessee had advanced its claim as regards idle capacity to the extent of 37% whereas ld. TPO and DRP had accepted that idle capacity up to 50% is to be allowed. Ld. Counsel filed the following chart in this regard :- Month /Year Regular Employee (A) Contractual (B) To- tal (A+ B) Wo- rk Sta- tion Un- Uti- Lis- Ed Empls/ Work- station Un- Uti- lized Wo- rk- Sta- tion % Rent Per Month Un- Utilized Rent Maintenance Per Month Unuti-Lised Main- Tenance Elect Per Month Un- Utilized Electri- City Expense Elect Utilised Work- Station/ Elect For Avail- Able Work- Station% Op- en- ing No. Ad- di- tion ....
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....7 115 13 5 115 6 1 1 6 129 211 82 61% 39% 1247338 484747 455758 177119.22 156942 60992 56% Nov-07 123 13 2 123 6 0 0 6 140 211 71 66% 34% 1247338 419720 455758 153359.33 131155 44133 43% Dec-07 134 22 3 134 6 1 0 7 160 211 51 76% 24% 1247338 301489 455758 110159.52 128134 30971 37% Jan-08 153 5 3 153 7 1 0 8 163 ....
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....pacity vis-a-vis the claim advanced by assessee. In the aforementioned chart, the assessee has given specific number of work stations in different months out of which how many work stations remained unutilized. We have noted earlier the various departments through which the assessee was rendering services. Once the assessee has given specific details, there remains no scope for any estimation. We, therefore, direct the AO/TPO to allow the adjustment for idle capacity as claimed by assessee in regard to rent and maintenance charges. Accordingly, this ground is allowed. 6. The next ground which needs adjudication is ground no.3 which reads as under :- "3. That the learned TPO/AO have erred in ignoring the other income and transfer....
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....r :- GS ENGINEERING AND CONSTRUCTION INDIA PVT. LTD. COMPUTATION OF INOCME TAX ASSESSMENT YEAR 2008-09 MINIMUM ALTERNATIVE TAX (SECTION 115JB) Net Profit as per the Profit & Loss Account 22003032 Add : Out of Book adjustment 1438913 Less : Provision for Fringe Benefit Tax 1120000 Book Profit subject to MAT 22321945 Rounded Off 22321950 Income Tax on Rs.2,23,21,950 (10% of Book Profit) 2232195 Add : Surcharge @ 10% 223220 2455415 Add : Cess @ 3% 73662 2529077 Less : Tax deducted at source 163362 2365715 Add : Interest u/s 234B on Rs.23,65,700 for 6 month @ 1% p.m. Interest u/s 234C 141942 - Upto 15.6.2007....