FIELDCORE SERVICE SOLUTIONS INTERNATIONAL INDIA P.LTD,NEW DELHI V. DCIT, CIRCLE 7(1), NEW DELHI

ITA 1499/DEL/2023

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The case involves Fieldcore Service Solutions International India Pvt. Ltd., which appealed against the inclusion of HSCC India Ltd. and Mitcon Consultancy and Engineering Services Ltd. as comparable companies in a transfer pricing assessment for the assessment year 2012-13. The Transfer Pricing Officer (TPO) had initially included these companies as comparables, leading to a transfer pricing adjustment. The appellant contested this inclusion, arguing that these companies were functionally dissimilar. The Tribunal examined the functional similarities and differences, considering factors such as the nature of services provided, government ownership, and the specific activities of the comparable companies. Ultimately, the Tribunal sided with the appellant, leading to the exclusion of the contested comparables.

• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Delhi
• Assessment Year: 2012-2013
• Appeal Filed On: 15-05-2023
• Other Referred Cases: Haldor Topsoe India Pvt. Ltd vs. TS-1080-ITAT-2019(DEL)-TP, Thyssen Krupp Industries India (P.) Ltd vs. ITA No. 2218 of 2013, Shell India Markets Pvt. Ltd vs. TS-430-ITAT-2014(Mum)TP, Bechtel India Private Limited vs. TS-285-ITAT-2020(DEL)-TP, Intercontinental Hotels Group (India) Pvt Ltd vs. TS-550-ITAT-2020(DEL)-TP, NGC Network (India) Private Limited vs. TS-152-ITAT-2020(Mum)-TP, IOT Design & Engineering Limited vs. TS-362-ITAT-2020(Mum)-TP, CH2MHill (India) Pvt. Ltd vs. TS-36-ITAT-2022(DEL)-TP
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIKHIL KUMAR GOVILA
• Assessee Lawyers: K.M. GUPTA
• Keywords: Opportunity of being heard; Transfer pricing; Wholly owned subsidiary
• Section: 143(3)

Judgement Text

"P a g e | 1 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No.1499/Del/2023 (Assessment Year:2012-13) Fieldcore Service Solutions International India Private Limited A-18, First Floor, Okhla Industrial Area, Phase-II Tehkhand, South East, Delhi – 110020 Vs. DCIT, Circle 7(1) CR. Building, I.P. Estate, New Delhi - 110002 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AACCG3374Q Appellant .. Respondent Appellant by : Sh. K.M. Gupta, Adv. Ms. Shruti Khimta, AR Respondent by : Sh. Nikhil Kumar Govila, CIT, DR Date of Hearing 10.03.2026 Date of Pronouncement 25.03.2026 Printed from counselvise.com P a g e | 2 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) O R D E R PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the order dated 14.03.2023 of the Ld. CIT(A)-42, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN& Order No: ITBA/APL/S/250/2022-23/1050714487(1) arising out of the order dated 26.11.2021 u/s 143(3) r.w.s 254 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the NFAC, Delhi for AY: 2012-13. 2. Heard and perused the records. Assessee / appellant, Fieldcore India (earlier known as Granite Services International India Ltd.) was incorporated in India on February 15, 2005 as a wholly owned subsidiary of Fieldcore Service Solutions International LLC, USA. During the year, the Appellant was primarily engaged in providing technical support and payroll administrative services to its associated enterprises ('AEs).The Ld. TPO computed arm's length price under section 92CA(3) of the Act and made transfer pricing adjustment amounting to INR 3,97,61,547. The Ld. AO, following the Ld. TPO order dated January 28, 2016 under section 92CA(3) Printed from counselvise.com P a g e | 3 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) of the Act, issued the draft assessment order dated March 22, 2016 by incorporating the aforesaid adjustment.Aggrieved by the draft assessment order, Appellant filed the objections before the Hon'ble Dispute Resolution Panel (\"DRP\") dated April 25, 2016.During the DRP proceedings, the Appellant submitted its detailed contentions on the additions made by the Ld. AO in draft assessment order.DRP passed the directions dated November 18, 2016 and upheld Ld. TPO's approach and granted working capital adjustment on comparable companies. 2.1 Then the Appellant filed an appeal before this Tribunal on February 9, 2017, for the exclusion/inclusion of the functionally dissimilar/similar comparable companies and the co-ordinate bench passed the order dated June 19, 2018 in respect of the certain specific comparable companies and referred the matter to the file of TPO for necessary adjudication. (The copy of this order is available at Page No. 69-93 of the Appeal set) 2.2 Pursuant to the order dated 19/06/2018, the Ld. TPO passed impugned order dated January 12, 2021, disregarding the contentions on few of the comparable companies thereby reducing the transfer pricing adjustment to INR 1,78,51,646. The Ld. AO, following the Ld. TO order passed final Printed from counselvise.com P a g e | 4 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) assessment order dated November 26, 2021. Assessee preferred before Learned Commissioner of Income Tax Appeals (\"Ld. CIT(A)\") for the exclusion of the functionally dissimilar comparable companies i.e. HSC India Limited and Mitcon Consultancy and Engineering Services Limited. However, ld. CIT(A) dismissing the contentions of the Appellant concluded that the Ld. TPO was justified in including HSC India Limited and Mitcon Consultancy and Engineering Services Limited as suitable comparables. Accordingly assesse is in appeal raising following grounds; 3. We have considered rival contentions and find that Ground no. 1 is a general ground. No specific averments have been made in respect of this ground. Similarly ground no. 3 and 4 are consequential. 4. Ground no. 2 with sub-grounds; The issue is if Ld. CIT(A) has erred in including HSC India Limited (\"HSCC\") and Mitcon Consultancy and Engineering Services Limited (\"Mitcon\") as suitable comparables. The contentions of ld. Counsel of Appellant on exclusion of HSCC is primarily thatHSCC India Ltd. is a Government company and works in completely different environment with no risk and assured assurance. Printed from counselvise.com P a g e | 5 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) 5. We find that earlier in first round the coordinate bench had examined this company with observation that it is not clear from the submission filed by the assessee as to whether HSCC (India) Ltd. has received any grant or incentives from theGovernment.Further the submission of Ld. Counsel for the assessee that HSCC(India) Ltd. is engaged in diversified activities also requires to be verified.Thus the bench had restored the issue of inclusion / exclusion of this company to the file to the TPO with the direction to verify from the annual accounts and otherdetails to be furnished by the assessee and decide the issue. It is pertinent to mention that Bench had specifically directed that while doing so TPO shall also keep in mind the decision of the Tribunal in assessee's own case for A. Y. 2011-12 wherein this company was excluded from the list of comparables. 6. The Ld. TPO in the impugned order stated that the HSSC India Ltd has not received any grant or incentives from the Government and on perusal of the annual report and the website of this company concluded that same clearly show that this company is functionally similar to the assessee and also pass all the filters. Accordingly held that this company is suitable comparable. The Ld. CIT confirmed the same by observing as follows; Printed from counselvise.com P a g e | 6 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) \"It is observed that the TPO has scrupulously followed the directions of the Hon'ble IT AT and verified the annual accounts and checked the website of the company. The TPO has noted that the company has not received any grant or incentives from the Government during the year under consideration. Therefore, for all practical purposes, it remains as a normal company. It has not received any special treatment from the Government in terms of any grant etc. This fact is not disputed by the appellant. The TPO has observed from the website of this company that this company is functionally similar to the assessee and also passed all the filters. In view of these facts, it is concluded that the TPO was justified in including this company as a suitable comparable after verification as directed by Hon'ble ITAT. I see no reason to interfere in the findings of AO/ TPO in this regard.\" 7. Now in regard to this comparable admittedly HSCC is a Government of India enterprise wherein Central Government owns 99.98% shares. Admittedly in Appellant's own case for AssessmentYear 2011-12HSCC was excluded by this Tribunal on being a Government Company and having high operating profit margin and the appeal filed by Revenue for AY 2012-13 against exclusion of HSCC before the High Court has been dismissed. 8. On Verification of Annual report of HSCC, it is observed that it is engaged in providing comprehensive consultancy services in the field of Printed from counselvise.com P a g e | 7 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) Hospital Planning, design, detail engineering,qualitycontrol, projectmanagement and monitoring as well as procurement, supply, installation and commissioning of medical equipments for the projects assigned to it by the Ministry of Health & Family Welfare, Private & Public Sector Organization as well as various State Governments. Few of the Government projects are - Master Plan of AIIMS, Kalpana Chawla Govt. Medical College, LRSI Delhi, PGI, Chandigarh, Construction of NEIGRIHMS Shillong, AyushSaritaVihar, NIUM Bangalore, Naharlagun, RIMS Imphal, AIIMS-Underground parking, PC Teaching block, Dining Block, Hostel block, Outreach OPD block Jhajjar etc. Further, it is also evident from the annual report of HSCC that it has been exploring business opportunity abroad with help and support of Ministry of External Affairs which is not available to other players/Appellant in the market. 9. Assessee on the other hand during the year was engaged in providing technical support and payroll administrative services to its associated enterprises ('AEs). Thus HSCC is functionally quite dissimilar to Appellant as HSCC is engaged in providing consultancy services which includes Conceptual Studies & Management Consultancy, Engineering Studies, Printed from counselvise.com P a g e | 8 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) Facility Design, Project, Management, Procurement, Logistics & Installation and Information Technology etc.. There is substance in the contention of ld. Counsel that HSCC is engaged into diversified business which makes it functionally dissimilar to that of Appellant's profile. 10. The Ld. TPO and Ld. CIT have not provided any detailed reason for including and considering HSCC as a functionally similar but citing broad similarity of consultancy have held the two companies functionally similar. The ld. Counsel of appellant has also placed reliance on decision in the case law Haldor Topsoe India Pvt. Ltd[TS-1080-ITAT-2019(DEL)-TP], whereby HSCC, has been excluded being a Government of India Enterprise. The Ld. Counsel of appellanthas placed reliance on the decision in case of Thyssen Krupp Industries India (P.) Ltd[ITA No. 2218 of 2013] of Hon'ble Bombay High Court, Shell India Markets Pvt. Ltd. [TS-430-ITAT-2014(Mum)TP]; Bechtel India Private Limited [TS-285-ITAT-2020(DEL)-TP]; Intercontinental Hotels Group (India) Pvt Ltd [TS-550-ITAT-2020(DEL)- TP]; NGC Network (India) Private Limited [TS-152-ITAT-2020(Mum)-TP] ; IOT Design & Engineering Limited [TS- 362-ITAT-2020(Mum)-TP]wherein Printed from counselvise.com P a g e | 9 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) it has been held that Government owned companies cannot be selected for the purpose of benchmarking. 11. Although Learned DR has contended that due to non-receipt of any subsidy or financial assistance from the Government of India, the assessee and this comparable company have similar financial and risk exposure but we fail to appreciate the same as there is no discussion and reasoning in impugned orders as to how any subsidy or financial assistance from the Government of India would only be relevant factor while otherwise it is apparent that assessee company has to procure contracts from the open market or otherwise provide its services to it’s AE only. While the comparable company,HSCC, has successfully got its contracts from the government agencies and is extending its services exclusively to state or central government entities in the upgrading the health sector with sponsorship of government schemes.We would like to observe that during the years HSCC may not have directly got subsidy or any financial assistance from the Central Government, as the sponsoring agency which has established this company but the matter of fact remains that government funding in the health sector ultimately reach the HSCC and in that way it has Printed from counselvise.com P a g e | 10 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) a greater advantage in terms of risk and therefore certainly is not comparable with assesse. 12. Coming to second comparable Mitcon Consultancy and Engineering Services Limited ( here in after referred as Mitcon), we find that in the first round the co-ordinate bench had held that; “So far as Mitcon Consultancy and Engineering Services Ltd., is concerned we find this company provides services to the banking division, entrepreneurship and vocational training division, E-schools and BT and Pharma sector. Revenue earned by the company from services other than consultancy is approx. 43% of the total revenue. Mitcon also owns fixed assets such as wind turbine generators and therefore, has a high fixed asset to sales ratio of 34.09. We find this company was rejected by the Tribunal in assessee's own case vide ITA No. 532/ Del/ 2016 for A. Y. 2011-12. We therefore, restore this issue to the file of the TPO to find out whether RPT is more than the threshold limit and whether segmental data is available or not and decide the issue in the light of the order of the Tribunal in assessee's own case for A. Y. 2011- 12. Needless to say the Assessing Officer shall give one opportunity of being heard to the assessee and decide the issue as per law.\" Printed from counselvise.com P a g e | 11 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) 13. Now in second round the Ld. TPO stated that the comparable company pass RPT filter.The Segmental data of this is available in public company domain. Perusal of the annual report and the website of this company clearly show that this company is functionally similar to the assessee and also pass all the filters. Accordingly, this company is robust and suitable comparable. This was sustained by ld. CIT(A) by observing that TPO has duly followed the directions of the Tribunal andverified the RPT filter and segmental data. 14. Ld. Counsel has submitted it is clearly evident from the annual report of Mitcon that it provides services to Banking, Infrastructure, Textile, Biotechnology Sectors, vocational training division, E-schools and BT and Pharma sector. Mitcon provides to its clients, customized solutions including preinvestment services, pre-contract engineering, post contract project management, IT based Training courses besides variety of skill based training professional training programs. Hence, Mitcon is engaged into diversified business which makes itfunctionally dissimilar to that of Appellant's profile. 14. Now quite apparently the Ld. TO and Ld. CIT have not provided any detailed reason for including and considering Mitcon as a functionally similar company and actually no segmental data was available and Mitcon has Printed from counselvise.com P a g e | 12 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) reported income from consultancy fees, income from vocational training, income from IT, income from laboratories and income from wind power generation but without there being no segment data is available in the signed financialstatements as to which segment has reported how much revenue. The ld. Counsel has placed reliance on the decision in the case of CH2MHill (India) Pvt. Ltd [TS-36-ITAT-2022(DEL)-TP], whereby Mitcon, was excluded on the ground of non-availability of segmental accounts and Mitcon has been excluded by this Tribunal in Appellant's own case for Assessment Year 2011-12 for the same reasons and appeal filed by Revenue for AY 2012-13 against exclusion of Mitcon before the High Court has been dismissed. Ld. DR was unable to cite anything from the record or the impugned orders that learned tax authorities had rightly observed about availability of segmental data. In these circumstances we are inclined to hold that this comparable deserves to be excluded. 15. As a consequence of the aforesaid discussion we are inclined to hold that the learned tax authorities have failed to reach a conclusion based on sound reasoning and accordingly we sustain the ground number 2 with its Printed from counselvise.com P a g e | 13 ITA No.1499/Del/2023 Fieldcore Service Solutions International India Pvt. Ltd. (AY: 2012-13) sub-grounds. The appeal of the assessee is allowed and the impugned comparables are directed to be deleted. Order pronounced in the open court on 25.03.2026 Sd/- (Naveen Chandra) Sd/- (Anubhav Sharma) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 25.03.2026 Rohit, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "