I.T.A. NO. 5586/DEL/2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "C", NEW DELHI
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
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
(PAN: AACCG3374Q)
(Appellant ) (Respondent )
Assessee by : Sh. Amitava Sen, CA
Department by : Sh. Satpal Singh, Sr. D.R.
ORDER
PER SHAMIM YAHYA: AM
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
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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
assumed.
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.
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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
services
2. Availing services 4.87
3. Provision of business promotion 1.80
outsourcing
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%
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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
assessee.
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
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evidence in support of the grounds of the said appeal. The
additional evidences sought to be admitted were with regard to the
following
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
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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/- Sd/-
Sd/-
[RAJPAL YADAV] [SHAMIM YAHYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date 15/2/2013
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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