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Global Turbine Services India Pvt. Ltd., vs. Assistant Commissioner of Income Tax,
February, 19th 2013
                                                            I.T.A. NO. 5586/DEL/2011

                       DELHI BENCH "C", NEW DELHI
                            I.T.A. No. 5586/Del/2011

                                 A.Y. : 2007-08
Global Turbine Services India Pvt.     vs. Assistant Commissioner of Income
Ltd.,                                      Tax,
(Now Called Granite Services               Circle 12(1),
International India Pvt. Ltd.),            New Delhi
B-6/8, Local Commercial Complex,
3rd floor, Safdarjung Enclave,
New Delhi ­ 110 029
(Appellant )                                (Respondent )

             Assessee by                :   Sh. Amitava Sen, CA
            Department by               :   Sh. Satpal Singh, Sr. D.R.

     This appeal by the Assessee is directed against the order of the
Assessing Officer    dated 31.10.2011 passed u/s. 143(3) /144C of the
I.T. Act pertaining to assessment year 2007-08.

2.   The     grounds raised read as under:-

      "1.         The Ld. Disputes Resolution Panel and the Ld. ACIT
                  (Ld. Assessing Officer) (following the directions of the
                  DRP), erred on facts and in law, in enhancing the
                  income of the appellant by ` 9,589,796/-, on account
                  of the transfer pricing adjustment u/s. 92CA(3) of the

                                                I.T.A. NO. 5586/DEL/2011

      Income Tax Act, 1961 made by the Ld. ACIT, Transfer
      Pricing Officer-1(2).

2.    The DRP and consequently the Assessing Officer
      (following    the directions of the Ld. DRP), erred on
      facts and in law by :

2.1   subjectively disregarding the arm's length price (ALP)
      as determined by manipulating the fresh search
      submitted by the appellant in course of transfer
      pricing assessment proceeding which was otherwise
      admitted by the TPO;

2.2   including high profit making companies in the final
      comparables' set for determination of ALP of the
      appellant and disregarding         judicial pronouncements
      of the jurisdictional Tribunals on the issue;

2.3   including certain high profit making companies that
      are not comparable to the appellant in terms of
      functions    performed,    assets    employed      and     risks

2.4   resorting to arbitrary rejection of low profit / loss
      making       companies     based     on    erroneous        and
      inconsistent reasons;

      That the above grounds of             appeal are without
      prejudice to each other.

                                                                I.T.A. NO. 5586/DEL/2011

                  That the appellant craves to add, alter, amend or
                  withdraw any ground of appeal either before or at the
                  time of hearing of this appeal.

3.      In this case assessee was incorporated on 15.2.2005 as a wholly
owned subsidiary of Granite Services International Inc. During financial
year 2006-07, the assessee was primarily engaged in providing
technical services to its associated enterprises.         During financial year
2006-07 it entered in following international transactions:-

S.No.     Nature of transactions                         Value (INR in crore)
1.        Provision   of     sourcing   and    support 17.05
2.        Availing services                              4.87
3.        Provision     of    business       promotion 1.80
4.        Purchase of computer hardware                  0.00

For the purpose of justifying the arm's length nature of its international

transactions, the appellant         in its TP documentation, applied the

Transactions Net Margin Method (TNMM) using Operating Profit (OP) /

Total Cost(TC) as the Profit Level Indicator (PLI).

             Arms's length price (ALP as per TP Study

               No. of comparables                    7
              Comparables' mean OP/TC                4.93%
              Appellant's OP/TC                      20.80%

                                                      I.T.A. NO. 5586/DEL/2011

              Conclusion                       At arm's length

3.1   However, the TPO rejected the analysis as carried out by the

assessee in his transfer pricing documentation.                Assessee's

submissions in this regard was that TPO retained an abnormally high

profit making company namely Oil Field Instrumentation (India) Ltd. in

his final comparable set.   Further, the TPO rejected the contention of

the assessee regarding Fugro Geotech Pvt. Ltd. Thereafter, the TPO

made the addition of ` 95,89,796/- to the international transaction of

the assessee. In this regard, assessee has submitted that if the TPO

was of the opinion that Oil Field Instrumentation India Ltd. which was

engaged in the mud logging activities ought to be accepted, the Fugro

Geotech Pvt. Ltd. which was engaged in offshore drilling activities

should also be accepted.     Assessee    raised objections to the DRP.

However, the DRP upheld the order of the TPO and confirmed the

addition of    ` 9,589,796/- on the international transactions of the


4.    Against the above order the Assessee is in appeal before us.

5.    We have heard the rival contentions in light of the material

produced and precedent relied upon. At the threshold, in this case the

ld. Counsel of the assessee sought permission to file additional

                                                       I.T.A. NO. 5586/DEL/2011

evidence in support      of the grounds of the said appeal.              The

additional evidences sought to be admitted were with regard to the


      i) Annexure-A    Annual Repot of Oil Field Instrumentation (India)

                       Limited for Financial year 2006-07.

      ii)Annexure-B    Annual Report of Oil Field Instrumentation (India)

                       Limited for Financial Year 2007-08

      iii)Annexure-C   Annual Report of Fugro Geotech Limited for

                       Financial year 2006-07

      iv)Annexure-D    Internet reference for products and services for

                       Furgo Geotech Limited.

      v)Annexure-E     Relevant extract of OECD guidelines (Para 3.59)

5.1   We have carefully considered the submissions. In our considered

opinion, assessee should be granted permission to file the additional

evidences as the same will go to the root of the matter and facilitate

adjudication of the issue raised in the appeal. Hence, we admit the

additional evidences. Having so admitted the additional evidences, we

find that Assessing Officer   should be provided an opportunity to go

through the same and give his perspective in this regard.       Hence, we

                                                         I.T.A. NO. 5586/DEL/2011

remit the issue to the file of the Assessing Officer.          The Assessing

Officer      shall adjudicate the issue afresh, after considering the

additional evidences submitted by the assessee.

6.    In the result, the Assessee stands allowed for statistical purposes.

      Order pronounced in the open court on 15/2/2013.

      Sd/-                                                Sd/-

[RAJPAL YADAV]                                  [SHAMIM YAHYA]
JUDICIAL MEMBER                              ACCOUNTANT MEMBER

Date 15/2/2013
Copy forwarded to: -
1.    Appellant 2.     Respondent            3.    CIT    4.      CIT (A)
5.    DR, ITAT

                            TRUE COPY
                                                   By Order,

                                                     Assistant Registrar,
                                                     ITAT, Delhi Benches

    I.T.A. NO. 5586/DEL/2011

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