SIEMENS LTD, MUMBAI V. DCIT 8(2)(1), MUMBAI

CO 158/MUM/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5463 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 20-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Related party transaction; Transfer pricing; International transaction; Question of law; Wholly owned subsidiary
• Section: 143(3); 10B; 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA , HON'BLE ACCOUNTANT MEMBER ITA NO. 1 907 /MUM/201 6 (A.Y: 2011 - 12) DCIT 8(2)(1) ROOM NO. 624 , 6 TH FLOOR A AYAKAR BHAVAN M.K. ROAD MUMBAI 400 020 V. M/S. SIEMENS POWER ENGINEERING PVT. LTD., { THROU GH THE IR SUCCESSOR M/S. SIEMENS LTD.,} 130, PANDURANG BUDHKAR MARG WORLI, MUMBAI 400 018 PAN: AACCS5323F (APPELLANT) (RESPONDENT) CO.NO. 158/ MUM /2016 [ARISING OUT OF ITA NO.1 907 /MUM/201 6 (A.Y: 2011 - 12)] M/S. SIEMENS POWER ENGINEERING PVT. LTD., {THROUGH THEIR SUCCESSOR M/S. SIEMENS LTD.,} 130, PANDURANG BUDHKAR MARG WORLI, MUMBAI 400 018 PAN: AACCS5323F V. DCIT 8(2)(1) ROOM NO. 624, 6 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NITESH JOSHI DEPARTMENT BY : SHRI ANAND MOHAN DATE OF HEARING : 30.07.2019 DATE OF PRONOUNCEMENT : 30 .09 .2019 2 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL AND CROSS OBJE CTION ARE FILED BY THE REVENUE AND ASSESSEE AGAINST THE ORDER OF THE DISPUTE RESOL U TION PANEL 2, MUMBAI, [HEREINAFTER FOR SHORT DRP] IN EXCLUDING TWO COMPARABLE COMPANIES NAMELY M/S. RITES LTD., AND M/S. HSCC (INDIA) BOTH BEING THE GOVERNMENT COMPANIES SELE C TED BY THE TRANSFER PRICING OFFICER [FOR SHORT TPO] FOR THE PURPOSE OF BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE . 2. BRIEFLY STATED THE FACTS ARE THAT, ASSESSEE A WHOLLY OWNED SUBSIDIARY OF M/S. SIEMENS AG, GERMANY IS ENGAGED IN THE BUSINESS OF PREPARING DESIGNS AND DEVELOPING DRAWINGS AND DE SIGNS USING CUSTOMIZED COMPUTER AIDED DESIGNS [CAD] TOOLS WHICH HELD THE ASSOCIATE ENTERPRISES [FOR SHORT AES ] IN PLANNING, DESI GNING AND SETTING UP OF POWER PLANTS. THE ASSESSEE ADOPTED TNMM METHOD WITH OP/COST AS THE PLI IN THE TRANSFER PRICING STUDY REPORT. THE ENTITY LEVEL OPERATING MARGIN OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION HAS BEEN CALCULATED AT 14.71%. I N THE TRANSFER PRICING STUDY REPORT ASSESSEE SELECTED THE FOLLOWING NINE COMPARABLE COMPANIES FOR THE PURPOSE OF BENCHMARKING ANALYSES: - 3 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., SR. NO, NAME OF THE COMPANY OP/COST (%) 1 AKSHAY SOFTWARE TECHNOLOGIES LIMITED 0.69 2 C S STECHENERGY LIMITED 9.46 3 CHAKKILAM INFOTECH LIMITED 7,47 4 I - DESIGN ENGINEERING SOLUTIONS LIMITED 13.32 5 KLG SYSTEL LIMITED (45.89) 6 NEILSOFT LIMITED (2.21) 7 POWERSOFT GLOBAL SOLUTIONS NOT AVAILABLE 8 TATA EL XSI LIMITED 8.59 9 VARNA INDUSTRIES LIMITED 14.59 ARITHMETIC MEAN 0.75 3. THUS, ASSESSEE CONSIDERED ITS TRANSACTION WITH AES ARE AT AR MS LENGTH . HOWEVER, TRANSFER PRI CING OFFICER REJECTED ALL THE COMPARABLE SELECTED BY THE ASSESSEE EXPECT I - DESIGN ENGINEERING SOLUTIONS LIMITED . ACCORDING TO TPO SINCE THESE COMPANIES WERE FOUND TO BE FUNCTIONALLY DIFFERENT F ROM THE ASSESSEES BUSINESS PROFI LE , WHILE COMPLETIN G THE ASSESSMENT FOR THE A .Y. 2010 - 11 , HE SELECTED THE FOLLOWING COMPARABLE S FOR BENCHMARKING ANALYSIS OF THE INTERNATIONA L TRAN SACTIONS OF THE ASSESSEE: - SR. NO. NAME OF THE COMPANY OP/COST _ (% ) _ 1 CADES DIGITECH PVT. LTD, 5.05% 2 DALKIA ENERGY SERVICES LTD. 6.65% 3 ENGINEERS IN DIA LIMITED (CONSULTANCY SEG) 73.50% 4 HSCC (INDIA) LIMITED 21.89% 5 IBI CHEMATUR (ENGINEERING & CONSULTANCY) LTD. 25.96% 6 KIRLOSKAR CONSULTANTS LTD. 13.32% 7 KITCO LTD. - 0.64% 8 MAHINDRA CONSULTING ENGINEERS LIMITED 27.48% 9 RITES LTD. 30.96% 10 TCE CONSULTATION ENGINEERS LTD. 46.59% 11 L - DESIGN ENGINEERING SOLUTIONS LIMITED 27.70% ARITHMETIC MEAN 25. 31% 4 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., 4. ASSESSEE MADE ITS DETAIL SUBMISSIONS VIDE LETTER DATED 18.12.2014 EXPLAINING AS TO HOW THE AFORESAID COMPANIES ARE FUN CTIONALLY NOT COMPARABLE TO THE ASSESSEES BUSINESS PROFILE. THE TPO ACCEPTED THE CONTENTIONS OF THE ASSESS EE ONLY IN RESPECT OF TWO COMPAR ABLES ENGINEERS INDIA LIMITED (CONSULTANCY SEG) AND IBI CHEMATUR (ENGINEERING & CONSULTANCY) LTD. AS NOT COMPA RABLE COMPANIES APPLYING THE CRITERIA THAT THESE COMPANIES HAVING EMPLOYEE COST TO TOTAL COST RATIO LESS THAN 25% AND ALSO HAVING SERVICE INCOME TO TOTAL INCOME RATIO LESS THAN 75% WHICH WAS A LSO ADOPTED BY THE TPO IN THE A.Y 2010 - 11. EXCLUDING THOSE TWO COMPARABLE THE TPO F I NALLY SELECT ED THE FOLLOWING FINAL SET OFF COMPARABLE S FOR BENCH MARKING ANALYSI S AND ARRIVED AT THE ARITHMETIC MEAN OF 19.89%. SR. NO. NAME OF THE COMPANY OP/COST (%) 1 CADES DIGITECH PVT. LTD. 5.05% 2. DALKIA ENERGY SERVICES LTD. 6.65% 3. HSCC (INDIA) LIMITED 21.89% 4 KIRLOSKAR CONSULTANTS LTD. 13.32% 5 KITCO LTD. - 0.64% 6 MAHINDRA CONSULTING ENGINEERS LIMITED 27.48% 7. RITES LTD. 30.96% 8 TCE CONSULTATION ENGINEERS LTD. 46.59% 9 L - DESIGN ENGINEERING SOLUTIONS LIMITED 27.70% ARITHMETIC MEAN 19.89% 5. THE TPO ADOPTED PLI O F THE ASSESSEE AT 13.33% AS OP/ OC PERCENTAGE AS WAS SHOWN IN THE PREVI OUS ASSESSMENT YEAR I.E. A.Y. 2010 - 11 AND ACCORDINGLY THE ARMS LENGTH PRICE OF INTERNATIONAL 5 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., TRANSACTION S RELATING TO ENGINEERING AND DESIGN SERVICES OF THE ASSESSEE WAS COMPUTED AND THE DIFFERENCE IN PLI AND ACTUAL PRICE CHARGED TO AE WAS ARRIVED AT .7 , 31 , 64 , 631/ - AND FINALLY IT WAS AD JUSTED IN PRORATE BASIS FOR THE VALUE OF INTERNATIONAL TRANSACTIONS AND MADE ADJUSTMENT OF . 6 , 33 , 82 , 492/ - . ASSESSEE FILED ITS OBJECTIONS BEFORE DRP. DRP ACCEPTED THE SUBMISSIONS OF THE ASSESSEE THAT M/S. RITES LTD., AND M/S. HSCC (INDIA) BEIN G GOVERNMENT COMPANIES AND THE R EVENUE OF THESE COMPANIES IS SUBSTANTIALLY FROM PROJECTS CONTROLLED BY THE GOVERNMENT OR PUBLIC SECTOR UNDERTAKINGS AND ALSO IN VIEW OF THE DECISION S OF THE OF MUMBAI BENCH OF THE TRIBUNAL , THE DRP DIRECTED THE TPO TO EXCLUDE THESE TWO COMPANIES FROM THE SET OF COMPARABLE COMPANIES SE LECTED BY THE TPO. 6. LD. COUNSEL FOR THE ASSESSEE AT TH E OUTSET SUBMITS THAT THE DISPUTE IS ONLY IN RESPECT OF THESE TWO COMPARABLES BEING GOVERNMENT COMPANIES AND REFERRING TO THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W. S 144C( 13) OF THE ACT GIVING EFFECT TO THE DIRECTION S OF THE DRP SUBMITS THAT IF THESE TWO COMPANIES ARE EXCLUDED THE ARITHMETIC MEAN OF THE COMPARABLE SELECTED AS DIRECTED BY THE DRP IS 18.02.% AS AGAINST THE ARITHME TIC MEAN ARRIVED AT BY TPO AT 19.89%. THEREFORE, THE TPO MADE NO ADJUSTMENT SINCE THE DIFFERENCE IS WITH IN 5% OF THE INTERNATION AL TRANSACTIONS. 6 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., 7. LD. COUNSEL FOR THE ASSESSEE FURTHER REFERRING TO THE DECISION OF THE HON'BLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT V. THYSSEN KRUPP INDUSTRIES INDIA (P.) LTD., [385 ITR 612] SUBMITS THAT A QUESTION WHETHE R ON THE FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW THE T RIBUNAL WAS JUSTIFIED IN EXCLUD ING M/S. ENGINEERS INDIA LTD., FROM THE LIST OF COMPARABLES HAS COME UP BEFORE THE HON'BLE HIGH COURT AND THE HON'BLE HIGH COURT AFFIRMED THE ORDER OF THE TRIBUNAL IN EXCLUDING THE GOVERNMENT CO MPANY FROM THE LIST OF COMPARAB LES. 8. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. INTERNATIONAL SOS SERVICES INDIA PVT. LTD., IN ITA 454/2016 DATED 30.05.2017 FOLLOWI NG THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. THYSSEN KRUPP INDUSTRIES INDIA (P.) LTD., (SUPRA) . LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT SLP FILED AGAINST HON'BLE DELHI HIGH COURT JUDGEMENT BY THE REVENUE HAS BEEN DISMISSED IN SLP CIVIL NO. 18255 / 2018 DATED 03.07.201 8. LD. COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. SHELL INDIA MARKETS PVT. LTD., V. ACIT IN ITA.NO. 193/MUM/2013 DATED 10.12.2014 WHEREIN M/S. RITES LIMITED HAS BEEN REJECTED A S COMPARABLE COMPANY FOR THE REASON THAT IT IS ENGAGED INTO 7 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., DIVERSIFIED ACTIVITIES AND IT IS A GOVERNMENT OF INDIA UNDERTAKING PROVIDING END TO END SOLUTIONS FOR TURN - KEY PROJECT S . 9. LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IF THESE TWO COMPARABLE ARE EXCLU DED FROM THE FINAL LIST OF COMPARABLES AS DIRECTED BY THE DRP THERE SHALL BE NO ADJUSTMENT SINCE THE DIFFERENCE IN ARITHMETIC MEAN OF THE COMPARABLE S SELECTED BY TPO AND THE DRP IS WITHIN 5% OF THE INTERNATIONAL TRANSACTION S AND IN WHICH CASE THE GROUNDS R AISED IN CROSS OBJECTIO N MAY NOT BE GONE INTO. 10. ON THE OTHER HAND, THE LD. DR SUBMITS THAT THERE IS NOTHING IN THE ACT TO SHOW THAT GOVERNMENT COMPANIES CANNOT BE CONSIDERED AS COMPARABLE COMPANIES . LD. DR PLACED RELIANCE ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF BG EXPLORATION & PRODUCTION INDIA LTD., V. JCIT IN ITA.NO. 1170/DEL/2015 AND 1581/DEL/2015 DATED 24.04.2017 AND THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. SAME DEUTZ FAHR INDIA (P.) LTD., [ 89 TAXMAN N . COM 47] . REFERRING TO THE DECISION OF THE HON'BLE MADRAS HIGH COURT LD. DR SUBMITTED THAT WHILE SELECTING M/S. HMT LIMITED AS COMPARABLE THE HON'BLE HIGH COURT HELD THAT THERE IS NO PROVISION OF LAW WHICH MAKES ANY DISTINCTION BETWEEN GOVERNMENT OWNED COMPANY AND THE COMPANY UNDER PRIVATE MANAGEMENT FOR THE PURPOSE OF TRANSFER PRICING ADJUSTMENT AND 8 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., THERE IS NO REASON WHY THE GOVERNMENT OWNED COMPANY CAN NOT BE TREATED AS COMPARABLE. 11. LD. DR FURTHER SUBMITS THAT LOWER AUTHORITIES HAVE NOT EXAMINED FAR ANALYSIS OF THESE TWO COMPANIES NAMELY M/S. RITES LTD., AND M/S. HSCC (INDIA). LD. DR SUBMITS THAT SIMPLY BECAUSE THE S E TWO COMPARABLES ARE GOVERNM ENT COMPANIES THEY CANNOT BE EXCLUDED. 12. IN REPLY THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF BG EXPLORATION & PRODUCTION INDIA LTD V. JCIT (SUPRA) AND SUBMIT TED THAT THE TRIBUNAL FOUND THAT THIS COMPANY IS NOT A GOVERNMENT COMPANY SINCE ONLY THE SPECIFIED PERCENTAGE OF THE SHAREHOLDING IS HELD BY EXIM BANK AND THEREFORE ONLY THE PROVISIONS WITH RESPECT TO THE APPOINTMENT OF THE AUDITORS ARE REGULATED AND IT WAS ALSO FOUND THAT IT DOES NOT HAVE ANY IMPACT ON THE BUSINESS MO DEL OF THE COMPANY . THEREFORE, LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE TRIBUNAL FOUND THAT BG EXPLORATION & PRODUCTION INDIA LIMITED IS NOT A GOVERNMENT COMPANY AT ALL. THEREFORE, THE DE CISION MAY NOT BE APPLIED SINCE IT IS CONTRARY TO THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. THYSSEN KRUPP INDUSTRIES INDIA (P.) LTD., (SUPRA). LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE TPO HAS NOT BROUGHT ON R ECORD ANY MATERIAL TO SHOW THAT THESE TWO 9 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., COMPANIES ARE FUNCTIONALLY COMPARABLE TO THE ASSESSEES COMPANY AND THEREFORE, THEY HAVE TO BE EXCLUDED. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE CASE LAWS RELIED ON. IN THE CASE OF CIT V. THYSSEN KRUPP INDUSTRIES INDIA (P.) LTD., (SUPRA) T HE TRIBUNAL EXCLUDED M/S. ENGINEERS INDIA LIMITED WHICH IS A GOVERNMENT COMPANY FROM THE LIST OF COMPARABLE S OBSERVING THAT SUBSTANTIAL PART OF ITS REVENUE IN EXECUTION OF TURNKEY PROJECTS AROSE OUT OF EXECUTING PROJECTS OF PUBLIC SECTOR UNDERTAKINGS AND M/S. ENGINEERS INDIA LIMITED ENGINEERS COULD NOT BE CONSIDERED TO BE A COMPARABLE SINCE THE CONTRACTS BETWEEN PUBLIC SECTOR U NDERTAKING S ARE NOT DRIV EN BY PROFIT MOTIVE ALONE BUT OTHER CONSIDERATIONS SUCH AS DISCHARGE OF SOCIAL OBLIGATIONS ETC ALSO WEIGH . FOR THIS REASON, THE TRIBUNAL HELD THAT M/S. ENGINEERS INDIA LIMITED A GOVERNMENT COMPANY IS NOT COMPARABLE. 14. THE HON'BLE HIGH COURT AFFIRMED THE ORDER OF THE TRIBUNAL OBSERVING AS UNDER: - 5. RE QUESTION (B): (A) THE GRIEVANCE OF THE RESPONDENT ASSESSEE BEFORE THE TRIBUNAL WAS THAT M/S. ENGINEERS INDIA LTD. HAS BEEN ERRONEOUSLY INTRODUCED AS A COMPARABLE BY THE TPO FOR DETERMINING THE ALP OF THE RESPONDENT ASSESSEE'S INTERNATIONAL TRANSACTIONS. THE IMPUGNED ORDER OF THE TRIBUNAL RECORDS THE FACT THAT THE ENGINEERING INDIA LTD. IS A GOVERNMENT COMPANY AND ITS ANNUAL REPORT INDICATES THAT A SUBSTANTIAL PART OF ITS REVENUE IN EXECUTION OF TURNKEY PROJECTS AROSE OUT OF EXECUTING PROJECTS OF PUBLIC SECTOR UNDERTAKINGS. IN THE 10 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., CIRCUMSTANCES, THE IMPUGNED ORDER OF THE TRIBUNAL HOLDS THAT THE ENGINEERS INDIA LTD. COULD NOT BE CONSIDERED TO BE COMPARABLE FOR THE REASON THAT CONTRA CTS BETWEEN PUBLIC SECTOR UNDERTAKINGS ARE NOT DRIVEN BY PROFIT MOTIVE ALONE BUT OTHER CONSIDERATION ALSO WEIGH IN SUCH AS DISCHARGE OF SOCIAL OBLIGATIONS ETC. THUS, IT IS NOT COMPARABLE. MOREOVER, FROM THE ANNUAL REPORT, IT IS CLEAR THAT THE REVENUE EARNE D IN EXECUTING TURNKEY PROJECT FOR OTHER PUBLIC SECTOR UNDERTAKINGS WAS MUCH MORE THAN THE FILTER OF 25%, WHICH HAS BEEN APPLIED BY THE TPO IN HIS ORDER UNDER SECTION 92CA(3) OF THE ACT, WHILE TAKING TRF LTD. AS A COMPARABLE ON THE GROUND THAT ITS RELATED PARTY TRANSACTION WAS NOT IN EXCESS OF 25% OF ITS TOTAL TURNOVER. THUS, APPLYING CONSISTENT FILTER OF 25% OR LESS OF RELATED PARTY TRANSACTION ALONE TO BE CONSIDERED COMPARABLE, ENGINEERS INDIA LTD. COULD NOT BE CONSIDERED TO BE COMPARABLE. (B) WE FIND THA T THE VIEW TAKEN BY THE TRIBUNAL IN THE IMPUGNED ORDER IS A REASONABLE AND POSSIBLE VIEW. NOTHING HAS BEEN SHOWN WHICH WOULD JUSTIFY OUR INTERFERENCE IN THE IMPUGNED ORDER OF THE TRIBUNAL EXCLUDING ENGINEERS INDIA LTD. FROM THE LIST OF COMPARABLES. (C) IN THE ABOVE VIEW, QUESTION (B) AS FRAMED ALSO DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED 15. IN THE CASE O F PR. CIT V. INTERNATIONAL SOS SERVICES INDIA PVT. LTD., (SUPRA) THE HON'BLE DELHI HIGH COURT AFFIRMED THE ORDER OF THE T RIBUNAL IN EXCLUDING ECIL, ITD CL AND APITCO BEING 100% GOVERNMENT COMPANIES FROM THE LIST OF CO M PARABLE S OBSER VING AS UNDER: - 8. MR. RUCHIR BHATIA, LEARNED COUNSEL APPEARING FOR THE REVENUE, SUBMITTED THAT THERE WAS NO LOGIC IN EXCLUDING 100% GOVERNMENT OWNED COMPANIES FROM THE LIST OF COMPARABLES ONLY BECAUSE THE PROFIT MOTIVE IS NOT THE ONLY RELEVANT CONSIDERATION IN THE CASE OF A GOVERNMEN T UNDERTAKING. LIE SUBMITTED THAT NO REASONS WHATSOEVER HAVE BEEN GIVEN BY THE ITAT FOR EXCLUDING APITCO LIMITED AS A COMPARABLE. 9. MR. NEERAJ JAIN, LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND POINTED OUT THAT THE MUMBAI BENCH OF THE ITAT HAS IN A N ORDER DATED 27 TH FEBRUARY. 2013 IN THE CASE OF THYSSENKRUPP INDUSTRIES INDIA PVT. LTD. EXCLUDED 100% GOVERNMENT OWNED COMPANIES AS COMPARABLES FOR THE SAME REASONS GIVEN BY THE ITAT IN THE PRESENT CASE. THAT DECISION OF THE MUMBAI BENCH OF THE ITAT WAS AFFIRMED BY THE BOMBAY HIGH COURT IN ITS JUDGMENT DATED 28 T H 11 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., MARCH, 2016 IN I TA NO. 2218 OF 2013 (CIT V. THYSSENKRUPP INDUSTRIES INDIA PVT. LTD.). 10. THE COURT ON PERUSING THE AFOREMENTIONED JUDGMENT OF THE BOMBAY HIGH COURT FINDS THAT IN. PARA 4(A) AND 4 (B) OF THE SAID ORDER THE BOMBAY HIGH COURT HAS HELD THAT THE VIEW TAKEN BY THE MUMBAI BENCH OF THE ITAT IS A REASONABLE AND PLAUSIBLE VIEW . IT NOTED THAT THE ITAT MUMBAI BENCH HAD HELD THAT THE ENGINEERS INDIA LTD. COULD NOT BE CONSIDERED TO BE COMPARAB LE FOR THE REASON 'THAT CONTRACTS BETWEEN PUBLIC SECTOR UNDERTAKINGS ARE NOT DRIVEN BY PRO FIT MOTIVE ALONE BUT OTHER CONSIDERA T I ON ALSO WEIGH IN SUCH AS DISCHARGE OF SOCIAL OBLIGATIONS ETC. THUS, IT IS NOT COMPARABLE' INTERESTINGLY IN THE PRESENT CASE THE ASSESSEE ITSELF PICKED UP TWO OF THE 100% GOVERNMENT OWNED COMPANIES NAMELY ECIL AND ITDCL AS ITS COMPARABLES BUT THAT WAS NOT ACCEPTED BY THE TPO OR THE DRP. THE REASON F OR THE ITAT EXCLUDING APITCO AS A COMPARABLE IS ALSO FOR THE SAME REASON THAT IT WAS A 1 00% GOVERNMENT OWNED COMPANY. 11. THE COURT FINDS THAT THE VIEW TAKEN BY THE ITAT IN THE PRESENT CASE, WHICH IS CONSISTENT WITH THE VIEW EXPRESSED BY THE MUMBAI BENCH OF THE ITAT AND WHICH HAS BEEN AFFIRMED BY THE BOMBAY HIG H COURT, IS INDEED A PLAUSIBLE ONE TO TAKE. 12. WHETHER TAKING UP A 100% GOVERNMENT OWNED COMPANY AS A COMPARABLE WOULD BE JUSTIFIED OR NOT WOULD DEPEND ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE BASIC RULE AS CONTAINED IN RULE 10B OF THE INCOME TAX R ULES WOULD APPLY. IN THE FACTS OF THE PRESENT CASE, HOWEVER, THE COURT FINDS THAT THE VIEW TAKEN BY THE ITAT DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. 16. WE ALSO OBSERVE THAT SLP FILED AGAINST THE JUDGME NT OF HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. INTERNATIONAL SOS SERVICES INDIA PVT. LTD., H AS BEEN DISMISS ED BY THE HON'BLE SUPREME COUR T IN SLP NO. 18255 /2018 DATED 03.07.2018. IT IS NOT IN DI S PUTE BEFORE US THAT THE COMPANIES SELECTED BY THE TPO ARE GOVERNMENT COMPANIES. 17. EVEN THOUGH WE FIND SOME FORCE IN THE SUBMISSIONS OF THE LD. DR AS THIS BENCH IS B O UND BY THE D ECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT , WE RESPECTFULLY FOLLOWING THE DE CISION OF THE HON'BLE JURISDICTI ONAL 12 ITA NO.1907/MUM/2016 (A.Y: 2011 - 12) CO.NO. 158/MUM/2016 M/S. SIEMENS POWER ENGINEERING PVT. LTD., HIGH COURT IN THE CASE OF CIT V. THYSSEN KRUPP INDUSTRIES INDIA (P.) LTD., (SUPRA), WE DISMISS TH E GROUNDS RAISED BY THE REVENUE . IN THE RESULT, APPE AL OF THE REVENUE IS DISMISSED. 18. SINCE WE HAVE AFFIRMED THE ORDER OF THE DRP IN EXCLUDING THE GOVERNMENT COMPA NIES FROM THE FINAL LIST OF COMPARABLE S THE GROUND S RAISED IN THE CROSS OBJECTION OF THE ASSESSEE ARE NOT GONE INTO AND LEFT OPEN WITHOUT MAKIN G ANY COMM ENTS ON MERITS OF THE GROUNDS. 19. IN THE RESULT, BOTH APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH SEPTEMBER , 2019 SD/ - SD/ - ( G. MANJUNATHA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 30 / 0 9 / 2019 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM