Haldor Topsoe India Pvt. Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 1289/DEL/2017

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6216 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 03-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA
• Assessee Lawyers: H P AGARWAL; PRASHUKA JAIN
• Keywords: Related party transaction; Transfer pricing; Opportunity of being heard; International transaction; Set aside
• Section: 144C; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-1 : NEW DELHI) BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AN D SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1289/DEL./2019, A.Y. 2012-13 HALDOR TOPSOE INDIA PVT. LTD. VS. ACIT ELEGANCE TOWER, 2 ND FLOOR, SPECIAL RANGE-4 JASOLA DISTRICT CENTRE NEW DELHI NEW DELHI PAN : AABCH7781F (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. H.P.AGARWAL, FCA & MS. PRASH UKA JAIN, FCA REVENUE BY : SHRI SANJAY I. BARA, CIT, DR DATE OF HEARING : 04.11.2019 DATE OF ORDER :19.11.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, HALDOR TOPSOE INDIA PVT. LTD. (HEREINAFTER REFERRED TO AS THE TAXPAYER) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 26.12.2016 PASSED BY THE ASSESSING OFFICER (AO) IN CONSONANCE WITH THE ORDERS PASSED BY THE LD. DRP/TPO UNDER SECTION 254 /143 (3) READ ITA NO. 1289/DEL./2017 2 WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2012-13 ON THE GROUNDS INTE R ALIA THAT :- 1. THE LEARNED ADDL. CIT (AFTER INCORPORATING HON BLE DRP'S ORDER) HAS ERRED ON FACTS AND IN LAW IN NOT A CCEPTING THAT THE ORDER PASSED BY THE LD. TPO IS BAD IN LAW ON THE GROUND THAT NO SHOW CAUSE NOTICE [SCN] WAS ISSUED T O THE APPELLANT IN RESPECT OF TRANSFER PRICING ASSESSMENT , THEREBY, DENYING THE OPPORTUNITY OF BEING HEARD ON TRANSFER PRICING ISSUES. HENCE, THE ORDER PASSED IS BAD IN LAW BEING WHOLLY ARBITRARY AND AGAINST THE PRINCIPLES OF NATURAL JUS TICE. 2. THE LEARNED ADDL. CIT (AFTER INCORPORATING HON BLE DRPS AND LD. TPOS ORDER) HAS ERRED ON FACTS AND IN LAW IN NOT REMOVING M/S MAHINDRA ENGINEERING SERVICES LTD. FRO M THE LIST OF FINAL COMPARABLES SINCE IT FAILS RPT FILTER DESPITE THE DIRECTION OF THE HONBLE DRP IN PARA 4.4.3 OF ITS O RDER DATED 26.12.2016. 3. THE LEARNED ADDL. CIT (AFTER INCORPORATING HONB LE DRPS AND LD. TPOS ORDER) HAS ERRED ON FACTS AND IN LAW IN MAKING ADDITION OF RS. 2,35,50,348 ON ACCOUNT OF: (A) ADJUSTMENT IN VALUE OF INTERNATIONAL TRANSACTION ( BY INCREASING THE MARGIN OF COMPARABLE COMPANIES TO 19 .40% AS AGAINST ACTUAL MARGIN OF 12.65% OF THE ASSESSEE), O N ACCOUNT OF THE FOLLOWING: SELECTING 3 NEW COMPARABLE COMPANIES WHICH WERE NOT SELECTED BY THE ASSESSEE REJECTING 5 COMPARABLE COMPANIES SELECTED BY THE A SSESSEE (B) REJECTING ADJUSTMENT IN MARGIN DUE TO DIFFERENT RI SK PROFILE OF COMPARABLE COMPANIES. 4. THE LEARNED ADDL. CIT (AFTER INCORPORATING HON' BLE DRPS ORDER) HAS ERRED ON FACTS AND IN LAW IN INITIATING PENALTY PROCEEDINGS U/S 271(L)(C). 5. THE APPELLANT CRAVES LEAVE TO ADD TO OR MODIFY T HE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE A PPEAL. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. HOLDER TOPSOE INDIA PVT. LTD. (HTIPL) IS FULLY OWNED SUBSIDIARY OF TOPSOE GROUP (WITH 99.99% SHARES BEING HELD BY HTIAS AND 1% SHARE BEING HELD BY ANOTHER ITA NO. 1289/DEL./2017 3 GROUP COMPANY- SUBCONTINENT AMMONIA INVESTMENT COMP ANY APS). HTIPL PROVIDES ENGINEERING SERVICES (INCLUDI NG PREPARATION OF ENGINEERING PACKAGES, EQUIPMENT DESIGNS, ETC.) A ND TECHNICAL ASSISTANCE SERVICES (INCLUDING PROVIDING ENGINEERS FOR SUPERVISION) TO HTAS FOR THEIR GLOBAL PROJECTS (INCLUDING PROJEC TS IN INDIA). 3. TAXPAYER IN ORDER TO BENCHMARK ITS INTERNATIONAL TRANSACTION QUA ENGINEERING AND TECHNICAL ASSISTANCE SERVICES A PPLIED TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD (MAM) WITH OP/OC AS THE PROFIT L EVEL INDICATOR (PLI) BY USING MULTIPLE YEARS DATA. TH E TAXPAYER CHOSEN 7 COMPARABLES WITH AVERAGE MARGIN OF 6.53% A S AGAINST ACTUAL MARGIN OF THE TAXPAYER OF 12.65% AND FOUND I TS INTERNATIONAL TRANSACTION AT ARMS LENGTH. 4. HOWEVER, LD. TPO IN ITS TP ANALYSIS SELECTED 5 COMPARABLES TO BENCHMARK THE INTERNATIONAL TRANSACTION OF THE T AXPAYER QUA TECHNICAL ASSISTANCE SERVICES BY ACCEPTING TNMM AS THE MOST APPROPRIATE METHOD WITH OP/OC AS PLI AND COMPUTED T HE AVERAGE MARGIN OF 32.45% AND THEREBY MADE AN ADJUSTMENT OF RS. 6,90,87,015/-. 5. THE TAXPAYER CARRIED THE MATTER BEFORE LD. DRP B Y WAY OF FILING OBJECTIONS WHICH HAVE BEEN PARTLY ALLOWED. F EELING AGGRIEVED ITA NO. 1289/DEL./2017 4 TAXPAYER HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. UNDISPUTEDLY THE TAXPAYER HAS ENDED INTO INTERNA TIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES (AES) QUA RENDERING OF ENGINEERING AND TECHNICAL ASSISTANCE SERVICES AS UNDER :- S. NO. NATURE OF TRANSACTIONS VALUES (RS.) 1. ENGINEERING & TECHNICAL ASSISTANCE SERVICES RENDERED 39,30,83,980 2. REIMBURSEMENT OF EXPENSES 1,22,713 8. THE LD. TPO HAS NOT DISPUTED THE TNMM AS MAM APP LIED BY THE TAXPAYER TO BENCHMARK THE INTERNATIONAL TRAN SACTIONS. POST- DRP DIRECTIONS, THE LD. TPO AFTER GRANTING WORKING CAPITAL ADJUSTMENT CALCULATED THE MARGIN OF 8 COMPARABLES A T 19.40%. IT IS ALSO NOT IN DISPUTE THAT AFTER ALLOWING RECTIFICATI ON APPLICATION BY THE TAXPAYER TPO EXCLUDED ONE MORE COMPARABLES AND CALCULATED THE MARGIN AT 18.65%. 9. POST- DRP DIRECTIONS AND AFTER PASSING ORDER BY THE LD. TPO DATED 28.02.2017 U/S 154 OF THE ACT FINAL LIST OF C OMPARABLES FOR ITA NO. 1289/DEL./2017 5 BENCHMARKING INTERNATIONAL TRANSACTIONS ENTERED INT O BY THE TAXPAYER WITH ITS AES IS AS UNDER :- S. NO. NAME OF THE COMPANY COMMENTS OP/OC% 1. HSCC (INDIA) LTD. NA 41.70 2. MITCON CONSULTANCY & ENGG. SERVICES LTD. NA 32.26 3. TCE CONSULTING ENGINEERINGS LTD. NA 19.12 4. UB ENGINEERING LTD. THE COMPANY PASSES ALL THE FILTERS 4.07 5. CADES DIGITECH P. LTD. THE COMPANY PASSES ALL THE FILTERS 0.03 6. KRATOS ENERGY & INFRASTRUCTURE LTD. THE COMPANY PASSES ALL THE FILTERS 7. MAHINDRA CONSULTING ENGINEERINGS LTD. NA 26.43 AVERAGE 18.65 10. AFTER COMPUTING THE AVERAGE OF COMPARABLES AT 1 8.65% AS AGAINST AVERAGE OF THE TESTED PARTY AS 6.53%. THE L D. TPO PROPOSED THE ARMS LENGTH PRICE OF INTERNATIONAL T RANSACTION AS UNDER :- PARTICULAR AMOUNT OPERATING COST 34,89,39,974 OP/OC (%) 18.65% ARMS LENGTH MARGIN 6,50,77,305 ARMS LENGTH PRICE (A) 41,40,17,279 PRICE SHOWN BY THE ASSESSEE (B) 39,30,83,980 ADJUSTMENT (DIFFERENCE A- B) 2,09,33,299 HENCE ADJUSTMENT HAS BEEN REDUCED FROM RS. 2,35,50, 348/- TO RS. 2,09,33,299/-. ITA NO. 1289/DEL./2017 6 11. NOW TO COMPRESS THE CONTROVERSY AT HAND RAISED BY THE ASSESSEE BY WAY OF FILING THE PRESENT APPEAL, LD. A R FOR THE TAXPAYER CONTENDED THAT THE TAXPAYER CHALLENGES THE EXCLUSION OF THREE COMPARABLES COMPANIES VIZ. MAHINDRA CONSULTING ENGINEERS LTD., MITCON CONSULTANCY & ENGG. SERVICES LTD. AND HSCC (INDIA) LTD. AND ALSO SOUGHT INCLUSION OF 3 COMPANIES AS COMPARABLE IN THE FINAL SET OF COMPARABLES VIZ. PETRON ENGINEERING CONSTRUCTION LTD., SIMON INDIA LTD. AND TOYO ENGINEERING LTD . 12. NOW WE WOULD EXAMINE THE SUITABILITY OF AFORESA ID COMPARABLES FOR THE PURPOSE OF EXCLUSION AND INCLUS ION AS CONTENDED BY LD. AR FOR THE TAXPAYER ONE BY ONE. GROUND NO. 1 13. GROUND NO. 1 IS DISMISSED HAVING NOT BEEN PRESS ED BY LD. AR FOR THE TAXPAYER. GROUND NO. 2 AND 3 EXCLUSION OF COMPARABLES SOUGHT BY THE TAXPAYER M/S. MAHINDRA CONSULTING ENGINEERS LTD.(MAHINDRA) 14. THE LD. AR FOR THE TAXPAYER SOUGHT EXCLUSION OF MAHINDRA ON THE GROUND THAT THIS COMPARABLES FAILS THE LD. T POS OWN RELATED ITA NO. 1289/DEL./2017 7 PARTY TRANSACTIONS (RPT) FILTER AS MAHINDRAS OWN R PT TRANSACTIONS ARE 40.60%. 15. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELIED UPON THE ORDER PASSED BY LOWER REVENUE AUTHORITIES BELOW . WHEN WE EXAMINE PARA 4.5 AT PAGE 6 OF THE TP ORDER TPO HIMS ELF HAS APPLIED FILTER TO EXCLUDE THE COMPANIES AS COMPARAB LES HAVING MORE THAN 25% OF RELATED PARTY TRANSACTIONS (RPT) O F SALES. THIS OBJECTION HAS BEEN SPECIFICALLY RAISED BY THE TAXPA YER BEFORE TPO AS WELL AS DRP BUT HAS NOT BEEN ADDRESSED TO AND TH EY CONTINUED TO RETAIN THE MAHINDRA AS A COMPARABLE. 16. WHEN WE EXAMINE PROFIT AND LOSS ACCOUNT OF MAHI NDRA AVAILABLE AT PAGE 107 OF THE PAPER BOOK., IT HAS CO ME ON RECORD THAT MAHINDRA HAS INCOME FROM CONSULTANCY SERVICES TO TH E TUNE OF RS. 15.22 CRORES AND INCOME FROM CONSULTANCY SERVICES W ITH RELATED PARTIES IS TO THE TUNE OF 6.18% AS IS EVIDENT FROM DETAIL OF RELATED PARTY GIVEN AT PAGE 109 AND 110 OF THE PAPER BOOK W HICH COMES TO 40.60%. IN THESE CIRCUMSTANCES WHEN MAHINDRA FAILS THE RPT FILTER APPLIED BY TPO IT CANNOT BE A SUITABLE COMPA RABLE. HENCE, ORDERED TO BE EXCLUDED FROM THE FINAL SET OF COMPAR ABLES TO BENCHMARK THE INTERNATIONAL TRANSACTIONS. ITA NO. 1289/DEL./2017 8 M/S. MITCON CONSULTANCY & ENGG. SERVICES LIMITED (M ITCON) 17. THE TAXPAYER SOUGHT TO EXCLUDE MITCON FROM THE FINAL LIST OF TAXPAYER ON THE GROUNDS INTER ALIA THAT IT IS FUNCT IONALLY DISSIMILAR VIS--VIS TAXPAYER ; THAT MITCON FAILS REVENUE FRO M SERVICES FILTER APPLIED BY THE TPO AND RELIED UPON ORDER PASSED BY CO-ORDINATE BENCH OF TRIBUNAL IS GRANITE SERVICES INTERNATIONAL (P.) LTD. V. ACIT [2017] 87 TAXMANN.COM 24 (DELHI TRIB.) TAXPAYER RAISED THIS OBJECTION BEFORE TPO AS WELL AS LD. DRP BUT TH E SAME HAVE NOT BEEN ADDRESSED TO. 18. LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELI ED UPON THE ORDER PASSED BY LOWER AUTHORITIES BELOW. 19. WHEN WE EXAMINE PARA 4.5 AT PAGE 5 AND 6 OF THE TPO ORDER. THE LD. TPO HIMSELF APPLIED THE FILTERS TO EXCLUDE COMPANIES FROM THE FINAL LIST OF COMPARABLES WHOSE REVENUE IS LESS THAN 75% OF THE TOTAL INCOME. HOWEVER, WHEN WE EXAMINE PROFIT AND L OSS ACCOUNT OF THE MITCON AVAILABLE AT PAGE 44 OF THE PAPER BOO K REVENUE EARNED BY THE MITCON FROM CONSULTANCY FEE DURING TH E YEAR UNDER ASSESSMENT COMES TO 55.65%, WHICH IS LESS THAN THE FILTER OF 75% APPLIED BY THE TPO. 20. CO-ORDINATE BENCH OF TRIBUNAL EXAMINED THE SUIT ABILITY OF MITCON IN GRANITE SERVICES INTERNATIONAL (P.) LTD. (SUPRA) VIS-- ITA NO. 1289/DEL./2017 9 VIS A ROUTINE ENGINEERING AND TECHNICAL ASSISTANT SERVIC E PROVIDER AND ORDER TO EXCLUDE THE SAME BY RETURNING FOLLOWIN G FINDINGS :- 20. SO FAR AS MITCON CONSULTANCY AND ENGINEERING SERVICES LTD., IS CONCERNED WE FIND THIS COMPANY PR OVIDES 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 REVEN UE. MILTON ALSO OWNS FIXED ASSETS SUCH AS WIND TURBINE GENERAT ORS AND THEREFORE, HAS A HIGH FIXED ASSET TO SALES RATIO OF 34.09%. WE FIND THIS COMPANY WAS REJECTED BY THE TRIBUNAL IN A SSESSEES OWN CASE GRANITE SERVICES INTERNATIONAL (P) LTD. V. ASSTT. CIT [2017] 87 TAXMANN.COM 24 (DELHI-TRIB) BY OBSERVING AS UNDER :- 7. SIMILARITY, IN RESPECT OF MITCON CONSULTANCY A ND ENGINEERING SERVICES LIMITED AND RITES LTD. IT IS S UBMITTED THAT BOTH THESE COMPANIES HAVE MULTI DIMENSIONAL FUNCTIONALITY AND MOSTLY SERVING THE RELATED PARTIE S, AND APART FROM THAT THE SEGMENTAL DATA IS NOT AVAILABLE. ON F ACTS, LD. DR DOES NOT DISPUTE THE SAME. WE, THEREFORE, HOLD THAT THESE TWO COMPANIES ALSO CANNOT BE COMPARABLES TO THE ASSESSE E COMPANY. 21. IN VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT MITCON IS NOT A SUITABLE COMPARABLE VIS--VIS TAXPA YER ON ACCOUNT OF FUNCTIONAL DISSIMILARITY AS IT IS PROVIDING SOLU TION IN POWER, ENERGY EFFICIENCY, RENEWABLE ENERGY, CLIMATE CHANGE AND ENVIRONMENTAL MANAGEMENT SECTORS BESIDES TRAINING C OURSES & SKILL BASED TRAINING PROGRAMMES. AND ON THE GROUND THAT IT FAILS TPOS FILTERS OF 75% REVENUE EARNING FROM SERVICE S WHEREAS MITCON IS HAVING REVENUE FROM CONSULTANCY FEE IS ON LY 55.65%, HENCE, WE ORDER TO EXCLUDE MITCON FROM THE FINAL SE T OF COMPARABLE FOR BENCHMARKING THE INTERNATIONAL TRANS ACTION. ITA NO. 1289/DEL./2017 10 HSCC (INDIA) LTD. (HSCC) 22. TAXPAYER SOUGHT TO EXCLUDE HSCC FROM THE FINAL SET OF COMPARABLE FOR BENCHMARKING THE INTERNATIONAL TRA NSACTION ON THE GROUNDS INTER ALIA THAT IT IS A MINI RATNA CATEGORY GOVERNMENT COMPANY AND A SUBSIDIARY OF NBCC (INDIA LTD.) ; THA T IT HAS EARNED UNUSUALLY HIGH MARGIN OF 48.91% ; THAT IT IS FUNCT IONALLY DISSIMILAR AND RELIED UPON DCIT V. TEREX INDIA (P) LTD. [2019] 104 TAXMANN.COM 28, RAMPGREEN SOLUTION V. CIT 60 TAXMAN N.COM 355 (DELHI HC) AND AVENUE ASIA ADVISORS (P.) LTD. V. DY. CIT [2017] 85 TAXMANN.COM 311 (DELHI HC), LI & FUNG (IN DIA) (P.) LTD. V. ACIT [2018] 96 TAXMANN.COM 151 (DELHI-TRIB. ) 23. LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELI ED UPON THE ORDER PASSED BY LOWER AUTHORITIES BELOW. 23.1 SUITABILITY OF HSCC AS A COMPARABLE VIS--VIS A ROUTINE ENGINEERING AND CONSULTANCY PROVIDER HAS BEEN EXAMI NED BY THE COORDINATE BENCH OF TRIBUNAL IN CASE OF TEREX INDIA (P) LTD. (SUPRA) AVAILABLE AT PAGE 16 TO 44 OF THE PAPER BOO K WHEREIN IT HAS BEEN ORDERED TO BE EXCLUDED BEING A GOVERNMENT OF I NDIA ENTERPRISE AS MAJOR PART OF ITS BUSINESS IS FROM TH E GOVERNMENT ITSELF. 24. EVEN FUNCTIONAL PROFILE OF HSCC IS DISSIMILAR T O TAXPAYER AS IT IS ALSO INTO PROVIDING HEALTH SERVICES BEING A M ULTI DISCIPLINARY ITA NO. 1289/DEL./2017 11 ORGANIZATION WITH EXPERIENCED PROFESSIONALS LIKE HE ALTH PLANNERS AND ECONOMISTS, DOCTORS, BIOMEDICAL ENGINEERS, COMP UTER EXPERTS, PHARMACISTS, ARCHITECTS AND PUBLIC HEALTH ENGINEERS ETC. SO THE FUNCTION OF HSCC ARE DISSIMILAR TO TAXPAYER WHO IS A ROUTINE ENGINEERING CONSULTANCY SERVICE PROVIDER, HENCE WE ORDER TO EXCLUDE THE SAME FROM FINAL LIST OF COMPARABLE TO T HE BENCHMARK OF INTERNATIONAL TRANSACTIONS. GROUND NO. 3B INCLUSION OF COMPARABLES SOUGHT FOR BY THE TAXPAYER PETRON ENGINEERING CONSTRUCTION LTD. (PETRON) 25. THIS IS TAXPAYERS COMPARABLES WHICH HAS BEEN R EJECTED BY THE TPO ON THE GROUND THAT IT FAILS SERVICE FILTER AND THAT IT IS FUNCTIONALLY DISSIMILAR. DRP ALSO CONFIRMED THE FIN DINGS OF THE TPO. 26. SO FAR AS QUESTION OF QUALIFYING THE SERVICE FI LTER OF 75% APPLIED BY THE TPO IS CONCERNED, WHEN WE EXAMINE T HE CONTENTIONS RAISED BY THE LD. AR FOR THE ASSESSEE T HAT PETRON QUALIFIES THE SERVICE FILTER OF 75% APPLIED BY THE TPO, AUDITED FINANCIALS HAVE NOT BEEN BROUGHT ON RECORD BY THE T AXPAYER. MOREOVER PETRON AS A COMPARABLE HAS BEEN ACCEPTED B Y THE ITA NO. 1289/DEL./2017 12 TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2009-10, C OPY OF ORDER IS AVAILABLE AT PAGE 116 TO 142, BY RETURNING FOLLOWIN G FINDINGS :- WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO FUNCTIONAL DISSIMILARITY BETWEEN THE TESTED PARTY A ND THE COMPARABLE AS BOTH OF THEM ARE PROVIDING SIMILAR SE RVICES ALTHOUGH THE SECTORS MIGHT BE A LITTLE DIFFERENT AN D THE LD. TPO WAS WRONG IN EXCLUDING IT. WE DIRECT THE INCLUS ION OF THIS COMPARABLE IN THE FINAL SET OF COMPARABLES. IN AY 2010-11 ALSO PETRON HAS BEEN ACCEPTED AS A SU ITABLE COMPARABLE VIS--VIS TAXPAYER IN ITS OWN CASE, COP Y OF ORDER IS AVAILABLE AT PAGE 155 TO 265. FOLLOWING THE DECISIO N RENDERED BY CO-ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CAS E, AS THERE IS A NO CHANGE IN THE BUSINESS MODEL DURING THE YEAR U NDER ASSESSMENT , WE ARE OF THE CONSIDERED VIEW THAT PET RON IS A SUITABLE COMPARABLE VIS--VIS TAXPAYER AND THE TPO/DRP HAVE WRONGLY REJECTED THE SAME ON GROUND OF FAILURE OF SERVICE F ILTER OF 75%. SO, WE ORDER TO INCLUDE PETRON IN THE FINAL SET OF COMP ARABLES FOR THE BENCHMARKING OF INTERNATIONAL TRANSACTION. SIMON INDIA LTD. (SIMON) 27. THIS IS AGAIN TAXPAYERS COMPARABLES REJECTED BY THE TPO/DRP ON GROUND THAT IT FAILS SERVICE FILTERS. AG AIN WHEN WE EXAMINE AUDITED FINANCIAL OF SIMON AVAILABLE AT PAG E 53 TO 54 OF THE PAPER BOOK, IT IS PROVED ON RECORD THAT SIMON S ALE OF ENGINEERING SUPPLIES AND SERVICES AMOUNTS TO RS. 95 75.41 LAKHS, ITA NO. 1289/DEL./2017 13 ENOUGH TO QUALIFY THE SERVICE FILTER APPLIED BY THE TPO. MOREOVER SIMON HAS BEEN ACCEPTED AS A SUITABLE COMPARABLES B Y THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2009-10 (COPY OF ORDE R IS AVAILABLE AT PAGE 116 TO 142) AND THERE IS NO CHANGE IN THE B USINESS MODEL OF THE TAXPAYER DURING THE YEAR UNDER ASSESSMENT. 28. SO, FOLLOWING THE ORDER PASSED BY THE CO-ORDINA TE BENCH OF TRIBUNAL AND IN VIEW OF FACTS DISCUSSED ABOVE, WE A RE OF THE CONSIDERED VIEW THAT SIMON IS A SUITABLE COMPARABLE S VIS--VIS TAXPAYER, HENCE, ORDER TO BE INCLUDED IN THE FINAL SET OF COMPARABLES FOR BENCHMARKING THE INTERNATIONAL TRAN SACTIONS. SUBJECT TO VERIFICATION OF FINANCIALS AVAILABLE AT PAGE 53,54 OF THE PAPER BOOK BY AO/TPO. TOYO ENGINEERING LTD. (TOYO) 29. THIS COMPARABLE OF THE TAXPAYER HAS BEEN REJECT ED BY THE TPO ON GROUND OF FUNCTIONAL DISSIMILARITY. THE LD. AR FOR THE ASSESSEE CONTENDED THAT TOYO IS ALSO RENDERING SIMI LAR SERVICES AS THAT OF THE TAXPAYER IN THE FIELD OF PETROCHEMICAL & FERTILIZERS, REFINERY, OIL & GAS ETC., AND FURTHER CONTENDED THA T THIS COMPANY IS THE COMPETITOR OF THE TAXPAYER. 30. WHEN, WE EXAMINE THE TP ORDER AT PAGE 7, THE LD . TPO REJECTED TOYO AS COMPARABLE VIS--VIS TAXPAYER BY M ERELY RECORDING THAT COMPANY IS FUNCTIONALLY DIFFERENT FR OM THE TAXPAYER, ITA NO. 1289/DEL./2017 14 HENCE, NOT A SUITABLE COMPARABLE. AT THE SAME TIME , ASSESSEE HAS NOT BROUGHT ON RECORD ANNUAL REPORTS OF TOYO TO WOR K OUT IT IS SUITABILITY. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT MATTER IS REQUIRED TO BE REMANDED BACK TO TPO/ AO TO DECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. GROUND NO. 3B :- 31. THE LD. TPO/DRP MADE ADDITION OF RS. 2,35,50,34 8/- ON ACCOUNT OF REJECTING ADJUSTMENT IN THE MARGIN DUE T O DIFFERENT RISK PROFILE OF THE COMPARABLE COMPANIES. LD. DRP DENIED THIS RISK ADJUSTMENT ON THE GROUND THAT THE TAXPAYER IS A CAP TIVE SERVICE PROVIDER TO ITS AE AND OPERATES IN A RISK INSULATED ENVIRONMENT BEING WORKING ON A COST PLUS MODEL AND IS COMPENSAT ED FOR ALL THE COST BORNE BY IT. 32. THE LD. AR AS WELL AS LD. DR FOR THE REVENUE BR OUGHT TO NOTICE OF THE BENCH THAT IN AY 2009-10 AND 2010-11, THIS ISSUE HAS BEEN RESTORED BACK TO THE TPO/AO BY THE TRIBUNA L VIDE ORDER DATED 02.05.2017 AND 26.02.2018 PASSED IN ITA NO. 2133/DEL/2014 AND ITA NO. 654/DEL./2015 . IN VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT IDENTICAL ISSUE OF THIS YEAR IS ALSO REQUIRED TO BE REMANDED BACK TO THE TPO/AO TO DECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. ITA NO. 1289/DEL./2017 15 TAXPAYER IS DIRECTED TO BRING ON RECORD THE EVIDENC E TO PROVE THE RISK ADJUSTMENT VIS--VIS COMPARABLES IF ANY. CONSE QUENTLY, GROUND NO. 3B IS DECIDED IN FAVOUR OF THE ASSESSEE FOR STATISTICAL PURPOSES. 33. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, APPEA L FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH NOVEMBER, 2019. SD/- SD/- (R.K.PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER D ATED : 19/11/ 2019 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXVI, NEW DELHI. 5. CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI ITA NO. 1289/DEL./2017 16 DATE OF DICTATION 08.11.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11.11.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER