ExxonMobil Gas (India) Pvt. Ltd., Delhi V. ACIT, New Delhi

ITA 1491/DEL/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3744 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 13-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHA KANT SAHU SENIOR
• Keywords: Related party transaction; Transfer pricing; International transaction; Set aside
• Section: 234B; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-1 : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1491/DEL./2015 (ASSESSMENT YEAR : 2010-11) M/S. EXXON MOBIL GAS (INDIA) PVT. LTD., VS. ACIT, C IRCLE 8(2), 11033, LANE NO.3, DORIWALAN, NEW DELHI. KAROL BAGH, DELHI 110 005. (PAN : AABCE1792K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VISHAL KALRA, ADVOCATE MS. REEMA MALIK, CA MS. SURABHI SURI, ADVOCATE REVENUE BY : SHRI SUBHAKANT SAHU, SENIOR DR DATE OF HEARING : 30.10.2019 DATE OF ORDER : 28.11.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER THE APPELLANT, M/S. EXXON MOBIL GAS (INDIA) PVT. L TD. (EMGIPL) (HEREINAFTER REFERRED TO AS THE TAXPAYER ) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORD ER DATED 30.12.2014 PASSED BY THE AO IN CONSONANCE WITH THE ORDERS PASSED BY THE LD. DRP/TPO UNDER SECTION 143 (3) READ WITH SECTION ITA NO.1491/DEL./2015 2 144C(13) OF THE ACT QUA THE ASSESSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA THAT :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO HAS ERRED IN ASSESSING THE INCOME OF TH E APPELLANT FOR THE RELEVANT ASSESSMENT YEAR AT INR 2,28,58,370 , AS AGAINST RETURNED INCOME OF INR 98,77,683. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/ TRANSFER PRICING OFFICER ('TPO') HAVE ERRED IN MAKING TRANSFER PRICING ADJUSTMENTS AND THE DISPUTE RESOLUTION PANEL ('DRP') FURTHER ERRED IN UPHOLDING THE ADJUST MENT IN RESPECT OF THE INTERNATIONAL TRANSACTION PERTAINING TO BUSINESS SUPPORT SERVICES, ALLEGING THE SAME TO BE NOT AT AR M'S LENGTH IN TERMS OF THE PROVISIONS OF SECTIONS 92C(1) AND 92C( 2) OF THE ACT, READ WITH RULE 100 OF THE INCOME-TAX RULES, 1962 (' THE RULES'). 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP / AO / TPO HAVE ERRED, IN ARBITRARILY REJECTING CERTAIN FUNCTIONALLY COMPARABLE COMPANIES IDENTIFIE D BY THE APPELLANT ON A SUBJECTIVE BASIS, INTER ALIA, USING UNREASONABLE COMPARABILITY CRITERION. 3.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP / AO / TPO HAVE GROSSLY ERRED IN RE-CH ARACTERISING BUSINESS OF THE APPELLANT AS MARKETING SUPPORT SERV ICES WITHOUT APPRECIATING THAT THE APPELLANT HAS BEEN ENGAGED IN PROVIDING BUSINESS SUPPORT SERVICES AND THE SAME WAS DULY ACC EPTED BY THE REVENUE AUTHORITIES IN EARLIER YEARS AS WELL AS SUB SEQUENT YEAR. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP / AO / TPO HAVE ERRED IN ARBITRARILY S ELECTING COMPARABLE COMPANIES BASED ON INCORRECT APPRECIATIO N OF FUNCTIONAL, ASSET AND RISK PROFILE, AND ARBITRARY S EARCH FILTERS. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP / AO / TPO HAVE ERRED IN NOT CONSIDERI NG THE FOREIGN EXCHANGE GAIN OR LOSS, AS THE CASE MAY BE, TREATING THE SAME NON-OPERATIVE INCOME / EXPENSE, WHILE COMPUTIN G PROFIT LEVEL INDICATOR ('PLI') OF THE APPELLANT AS WELL AS OF THE COMPARABLES. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP / AO / TPO HAVE ERRED IN NOT GRANTING THE BENEFIT OF ECONOMIC / RISK ADJUSTMENTS. 7. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP / AO / TPO HAVE ERRED IN NOT PROVIDING THE APPELLANT ITA NO.1491/DEL./2015 3 THE BENEFIT OF (+/-) 5 PERCENT RANGE AS PROVIDED BY THE PROVISO OF SECTION 92C(2) OF THE ACT. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP / AO / TPO HAVE ERRED IN IGNORING THE PROVISIONS OF RULE 108(4) OF THE RULES AND JUDICIAL PRONOUNCEMENT S, WHICH ADVOCATES USE OF MULTIPLE YEAR DATA AND DIFFERENT F INANCIAL YEAR DATA OF COMPARABLE COMPANIES FOR THE PURPOSE OF DET ERMINATION OF THE ARM'S LENGTH PRICE. 9. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE AO HAS ERRED IN LEVYING INTEREST UNDER SECTIONS 234B AND 234D OF THE ACT. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. EXXON MOBIL GAS (IND IA) PVT. LTD., THE TAXPAYER WAS INCORPORATED ON MAY 28, 2003 AND I S INTO THE BUSINESS OF PROVIDING BUSINESS SUPPORT SERVICES AS MAY BE REQUIRED BY ITS AFFILIATES. THE MOBIL PACIFIC SERVICES INC. HOLDS 99.99% EQUITY IN THE TAXPAYER AND 0.01% EQUITY IS HELD BY EXXON VENTURE HOLDING INC. THE TAXPAYER PROVIDES CERTAIN SUPPORT SERVICES TO ITS ASSOCIATED ENTERPRISES (AE), WHICH INCLUDE CONDUCTI NG MARKET SURVEY ACTIVITIES AND ADMINISTRATIVE SERVICES. BRO ADLY, THE SERVICES PROVIDED BY THE TAXPAYER TO ITS AE ARE AS UNDER :- CONDUCTING MARKET SURVEYS AND PROVIDING MARKET INFORMATION. ASSISTING ITS AES TO DEVELOP BUSINESS STRATEGIES FO R INDIA BY PROVIDING GENERAL GUIDANCE ON INDIAN ECONOMY AND MARKET CONDITIONS. FACILITATING COMMUNICATION AMONG EXXON MOBIL GROUP ENTITIES AND / OR ITS AFFILIATES, FOREIGN COMPANIES , INDIAN COMPANIES AND GOVERNMENT AUTHORITIES. ITA NO.1491/DEL./2015 4 ATTENDING AND COORDINATING MEETINGS AMONG EXXON MOBIL GROUP ENTITIES AND/OR AFFILIATES AND OTHER FO REIGN AND INDIAN COMPANIES TO PREVENT MISUNDERSTANDING DU E TO LANGUAGE BARRIERS. HANDLING ADMINISTRATING MATTERS WITH RESPECT TO MEETINGS AND TRAVEL ARRANGEMENT; AND GENERALLY ACTING AS LIAISON AMONG EXXON MOBIL GROUP ENTITIES AND/OR ITS AFFILIATES AND OTHER FOREIGN CO MPANIES AND THEIR INDIAN CUSTOMERS AND GOVERNMENT AUTHORITI ES. 3. DURING THE YEAR UNDER ASSESSMENT, THE TAXPAYER E NTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS AE AS UNDER :- SL. NO. NATURE OF TRANSACTION METHOD APPLIED VALUE OF INTERNATIONAL TRANSACTION 1 PROVISION OF MARKET SURVEY AND RELATED ADVISORY SERVICES. TNMM 11,62,42,507 2 RECEIPT OF SHARED SERVICES - 3,47,884 3 REIMBURSEMENT OF EXPENSES - 9,22,283 4 REIMBURSEMENT OF SALARY COST - 2,12,64,664 5 RECOVERY OF SALARY COST - 51,96,029 6 RECOVERY OF EXPENSES - 1,43,35,518 4. THE TAXPAYER IN ITS TRANSFER PRICING ANALYSIS QU A PROVISION OF BUSINESS SUPPORT SERVICES APPLIED TRANSACTIONAL NET MARGIN METHOD (TNMM) WITH OPERATING PROFIT/OPERATING COST (OP/OC) AS PROFIT LEVEL INDICATOR (PLI) AS MOST APPROPRIATE METHOD (MAM) CHOSEN 23 COMPANIES AS COMPARABLES USED MULTI PLE YEAR DATA, AND COMPUTED MARGIN OF COMPARABLES AT 6.63% A S AGAINST ITS ITA NO.1491/DEL./2015 5 OWN MARGIN OF 14.63% AND FOUND ITS INTERNATIONAL TR ANSACTIONS AT ARMS LENGTH. 5. TPO, AFTER APPLYING VARIOUS FILTERS, ACCEPTED TN MM WITH OP/OC AS PLI AS MOST APPROPRIATE METHOD (MAM) AS TH E MAM APPLIED BY THE TAXPAYER TO BENCHMARK ITS INTERNATIO NAL TRANSACTION CHOSEN SIX COMPARABLES WITH AVERAGE MARGIN OF 27.74 %. 6. CONSEQUENTLY, TPO COMPUTED THE ARMS LENGTH PRIC E OF INTERNATIONAL TRANSACTIONS AT RS.13,01,70,892/- AS AGAINST RS.11,62,42,507/- DETERMINED BY THE TAXPAYER. 7. THE TAXPAYER CARRIED THE MATTER BEFORE THE LD. D RP BY WAY OF FILING OBJECTIONS, WHO HAS PARTLY ALLOWED THE OB JECTIONS. FEELING AGGRIEVED, THE TAXPAYER HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEAL. 8. 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. 9. UNDISPUTEDLY, LD. TPO/DRP HAVE ACCEPTED THE TNMM WITH OP/OC AS PLI AS MAM APPLIED BY THE TAXPAYER TO BENC HMARK ITS INTERNATIONAL TRANSACTIONS QUA BUSINESS SUPPORT SER VICES AFTER PROVIDING WORKING CAPITAL ADJUSTMENT. FUNCTIONAL PR OFILE OF THE TAXPAYER HAS ALSO NOT BEEN DISPUTED BY THE LD. TPO /DRP. AFTER ITA NO.1491/DEL./2015 6 GIVING EFFECT TO THE DIRECTIONS ISSUED BY THE LD. D RP, FINAL SET OF COMPARABLES WITH CORRECT MARGINS ARE AS UNDER :- S.NO. NAME OF THE COMPANY ADJUSTED NCPS 1 APITCO LIMITED 31.75 2 CYBER MEDIA RESEARCH LIMITED 15.90 3 GLOBAL PROCUREMENT CONSULTANTS LTD. 36.16 4 HCCA BUSINESS SERVICES PVT. LTD. 20.56 5 QUADRANT COMMUNICATIONS LTD. 15.13 6 TSR DARASHAW LIMITED (AMT IN LAKHS) 41.35 AVERAGE 26.81 10. CONSEQUENTLY, LD. TPO COMPUTED THE ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTIONS AS UNDER :- PARTICULARS AMOUNT (RS.) OPERATING COST (OC) 10,19,03,000 ARMS LENGTH MARGIN (%) 26.81% ARMS LENGTH PRICE (126.81% OF OC) 12,92,23,194 PRICE RECEIVED 11,62,42,507 ADJUSTMENT 1,29,80,687 GROUND NO.1 11. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. GROUNDS NO.2, 3 & 4 12. AT THE VERY OUTSET, LD. AR FOR THE TAXPAYER IN ORDER TO COMPRESS THE CONTROVERSY RAISED BY FILING PRESENT A PPEAL TO THE EXTENT THAT AO/TPO/DRP HAVE ERRED IN SELECTING 3 CO MPARABLES VIZ. APTICO LTD., GLOBAL PROCUREMENT CONSULTANTS LTD. AN D TSR DARASHAW LTD., WHICH ARE OTHERWISE INCOMPARABLE ON NUMEROUS ITA NO.1491/DEL./2015 7 GROUNDS. NOW, WE WOULD DISCUSS THE SUITABILITY OF AFORESAID COMPARABLES VIS--VIS THE TAXPAYER QUA PROVIDING OF BUSINESS SUPPORT SERVICES ONE BY ONE. APTICO LIMITED (APTICO) 13. THE TAXPAYER SOUGHT EXCLUSION OF APTICO FROM TH E FINAL SET OF COMPARABLES TO BENCHMARK THE INTERNATIONAL TRANSACT IONS QUA PROVISION OF BUSINESS SUPPORT SERVICES ON THE GROUN DS INTER ALIA THAT APTICO IS HAVING A DIFFERENT PROFILE; THAT NO SEGME NTAL INFORMATION IS AVAILABLE QUA DIVERSIFIED STREAMS OF INCOME AND RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN PHILIP MORRIS SERVICES INDIA S.A. VS. DDIT (2018) 95 TAXMANN.COM 156 (DELHI- TRIB.) , WHICH WAS CONFIRMED BY THE HONBLE DELHI HIGH COU RT. 14. LD. DR FOR THE REVENUE, ON THE OTHER HAND, SUPP ORTED THE ORDER PASSED BY THE TPO/DRP BY CONTENDING THAT TPO HAS NOT RECHARACTERIZED TAXPAYERS SERVICES AND THAT WEBSIT E INFORMATION AVAILABLE AT PAGE 409 WAS TAKEN ON 25.05.2018 IS NO T RELEVANT TO THE YEAR UNDER CONSIDERATION AND RELIED UPON THE OR DERS OF THE LOWER REVENUE AUTHORITIES. 15. PERUSAL OF THE ANNUAL REPORT AND WEBSITE EXTRAC T QUA APTICO, AVAILABLE AT PAGES 378 AND 392 OF THE PAPER BOOK AN D WEBSITE EXTRACT AVAILABLE AT PAGE 409, SHOWS THAT DURING TH E YEAR UNDER ASSESSMENT, APTICO RECORDED TOTAL REVENUES OF RS.16 09.11 LAKHS ITA NO.1491/DEL./2015 8 CONTRIBUTED BY ALL MAJOR BUSINESS SEGMENTS : CLUSTE R DEVELOPMENT RS.479.87 LAKHS; PROJECT RELATED SERVICES RS.326.01 LAKHS; SKILL DEVELOPMENT RS.275.75 LAKHS; TOURISM & RESEARCH STU DIES RS.148.36 LAKHS; ENTREPRENEURSHIP DEVELOPMENT & TRA INING RS.108.73 LAKHS; ASSET RECONSTRUCTION & MANAGEMENT SERVICES RS.55.03 LAKHS; MICRO ENTERPRISES DEVELOPMENT RS.52 .83 LAKHS; ENERGY RELATED SERVICES RS.48.35 LAKHS; ENVIRONMENT MANAGEMENT RS.39.98 LAKHS; EMERGING AREAS RS.6.84 L AKHS AND OTHER INCOME RS.67.36 LAKHS. 16. PERUSAL OF THE SCHEDULE ANNEXED WITH PROFIT & L OSS ACCOUNT SHOWS THAT APTICO IS HAVING INCOME FROM DIFFERENT S TREAMS. PERUSAL OF INFORMATION, AVAILABLE AT WEBSITE OF THE COMPANY PLACED AT PAGE 409 OF THE PAPER BOOK, ALSO SHOWS THAT THE SERVICES PROVIDED BY APTICO INCLUDE BUT NOT LIMITED TO THE D OMAINS OF PROJECT REPORT PREPARATION, TECHNO ECONOMIC STUDIES , FEASIBILITY STUDIES, MICRO ENTERPRISE DEVELOPMENT, SKILL DEVELO PMENT, PROJECT MANAGEMENT CONSULTING, INDUSTRIAL CLUSTER DEVELOPME NT, ENVIRONMENT MANAGEMENT CONSULTING, ENERGY MANAGEMEN T CONSULTING, MARKET & SOCIAL RESEARCH AND ASSET RECO NSTRUCTION MANAGEMENT SERVICES. 17. COORDINATE BENCH OF THE TRIBUNAL IN PHILIP MORRIS SERVICES INDIA S.A. VS. DDIT (SUPRA) EXAMINED THE SUITABILITY OF APTICO AS A ITA NO.1491/DEL./2015 9 COMPARABLE VIS--VIS ROUTINE BUSINESS SUPPORT SERVI CE PROVIDER AND FOUND THE SAME NON-COMPARABLE ON THE GROUND THAT AP TICO IS ENGAGED IN PROVIDING HIGH END TECHNICAL SERVICES TO OTHER GOVERNMENT COMPANIES AND PUBLIC SECTOR UNDERTAKINGS ; THAT IT IS INTO DIVERSIFIED BUSINESS. AFORESAID ORDER PASSED BY THE TRIBUNAL HAS BEEN AFFIRMED BY THE HONBLE HIGH COURT REPORTED IN (2019) 102 TAXMANN.COM 376 (DELHI) BY RETURNING FOLLOWING FINDINGS :- 14. LD. AR BROUGHT TO OUR NOTICE THAT THE APITCO L TD. WAS REJECTED BY A CATENA OF DECISIONS RENDERED BY DIFFE RENT BENCHES OF THIS TRIBUNAL INCLUDING A COORDINATE BENCH OF THIS TRIBUNAL IN CIENA INDIA (P) LTD. V. DCIT IN ITA NO. 2948 AND 32 24/DEL/2013 FOLLOWING WHICH IN AVAYA INDIA PRIVATE LIMITED VERS US DCIT IN ITA NO.146/DEL/2013. HE ALSO PLACED RELIANCE ON THE NATION REPORTED IN KOBELCO CRANES INDIA PRIVATE LIMITED V. ITO IN ITA NO.8021DE1/2016. IN INTERNATIONAL SOS SERVICES INDI A PRIVATE LIMITED VERSUS DCIT ITA NO.1631/DEL/2014 THIS COMPA NY WAS EXCLUDED ON ACCOUNT OF BEING HUNDRED PERCENT GOVERN MENT ORGANISATION AND THE APPEAL AGAINST THIS DECISION O F THE TRIBUNAL WAS DISMISSED BY THE HON'BLE JURISDICTIONAL HIGH CO URT.. FURTHER IT COULD BE SEEN IN VESTEGAARD ASIA PRIVATE LIMITED VERSES DCIT IN ITA NO. 6670/DEL/2015 AND H & M MOURITZ INDIA PR IVATE LIMITED VERSES DCIT IN ITA 282/BANG/2015 IT IS HELD THAT THE APTICO PVT LTD., IS NOT A GOOD COMPARABLE WITH ANY COMPANY RENDERING BUSINESS SUPPORT SERVICES ON THE GROUND T HAT THIS COMPANY IS A PUBLIC SECTOR UNDERTAKING AND ITS OPER ATIONS ARE MAINLY BASED THE ON THE POLICY REQUIREMENTS OF THE GOVERNMENT. 15. FURTHER RELIANCE IS PLACED BY THE COUNSEL ON TH E DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN TYSOKKRUPP INDUSTRIES INDIA PRIVATE LIMITED VERSES ACIT IN ITA NO. 6460/M UM/2012 WHEREIN IT WAS HELD THAT THIS COMPANY BEING A GOVER NMENT ENTERPRISES IS NOT COMPARABLE WITH A PRIVATE BUSINE SS SERVICE PROVIDER BECAUSE IN CASE OF GOVERNMENT ENTERPRISES PROFIT MOTIVE IS NOT IRRELEVANT CONSIDERATION, AND GOVERNMENT COM PANIES WORK FOR OTHER PUBLIC SECTOR UNDERTAKINGS AND IN THAT SE NSE THE RELATED PARTY TRANSACTIONS ARE MUCH MORE THAN THE FILTER OF 25%. THIS DECISION OF THE TRIBUNAL WAS UPHELD BY THE HON'BLE BOMBAY HIGH COURT IN ITA NUMBER 20/02/2018 OF 2013. ITA NO.1491/DEL./2015 10 16. THE REASONS RECORDED BY THE TRIBUNAL IN ALL THE DECISIONS REFERRED TO ABOVE HOLD GOOD FOR THE ASSESSEE ALSO I NASMUCH AS THE ASSESSEE IS A PRIVATE COMPANY IN THE FIELD OF PROVI DING BUSINESS SUPPORT SERVICES. WE. THEREFORE, WHILE RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE DECISIONS HOLD THAT AP ITCO LTD., IS NOT A GOOD COMPARABLE WITH THE ASSESSEE AND IS ACCO RDINGLY LIABLE TO BE EXCLUDED. WE, THEREFORE, DIRECTLY LD. TPO TO EXCLUDE THIS COMPANY FROM THE FINALIST OF COMPARABLES TO BENCHMA RK THE INTERNATIONAL TRANSACTION RELATING TO THE MARKET SU PPORT SERVICES PROVIDED BY THE ASSESSEE TO ITS AES. 18. AS PER THE RATIO LAID DOWN BY HONBLE DELHI HIGH COURT IN RAMPGREEN SOLUTIONS PVT. LTD. VS. CIT ITA 102/2015 ORDER DATED 10.08.2015 , THE FUNCTIONS OF A COMPANY IS TO BE TAKEN AS COMPARABLE CANNOT BE IGNORED. SO, SINCE FUNCTIONS OF APTICO ARE DIFFERENT VIS--VIS THE TAXPAYER, IT CANNOT BE TAKE N AS A SUITABLE COMPARABLE. 19. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND FO LLOWING THE AFORESAID DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL, CONFIRMED BY THE HONBLE HIGH COURT, WE A RE OF THE CONSIDERED VIEW THAT APTICO BEING INTO DIVERSIFIED BUSINESS ACTIVITIES WITH NO SEGMENTAL INFORMATION AVAILABLE AND BEING INTO PROVIDING HIGH END CONSULTANCY SERVICES IS NOT A SU ITABLE COMPARABLE VIS--VIS THE TAXPAYER WHO IS A ROUTINE BUSINESS SUPPORT SERVICE PROVIDER, HENCE ORDERED TO BE EXCLUDED FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS. ITA NO.1491/DEL./2015 11 GLOBAL PROCUREMENT CONSULTANTS LIMITED (GPCL) 20. THE TAXPAYER SOUGHT EXCLUSION OF GPCL FROM THE FINAL SET OF COMPARABLES FOR BENCHMARKING THE INTERNATIONAL TRAN SACTIONS ON THE GROUNDS INTER ALIA THAT GPCL HAS DIFFERENT BUSINESS PROFILE; THAT ITS SEGMENTAL FINANCIALS ARE NOT AVAILABLE; THAT GPCL I S PERMITTED BY EXPORT IMPORT BANK OF INDIA IN ASSOCIATION WITH LEA DING INDIAN PUBLIC SECTOR AND PRIVATE SECTOR CONSULTANCY ORGANI SATION ON THE BASIS OF PUBLIC PRIVATE ENTREPRENEURSHIP MODEL; AN D RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN PHILIP MORRIS SERVICES INDIA S.A. VS. DDIT (2018) 95 TAXMANN.COM 156 (DELHI- TRIB.) , WHICH WAS CONFIRMED BY THE HONBLE DELHI HIGH COU RT. 21. LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELI ED UPON THE ORDERS OF THE LOWER REVENUE AUTHORITIES. 22. PERUSAL OF THE ANNUAL REPORT, AVAILABLE AT PAGE 416 OF THE PAPER BOOK, SHOWS THAT GPCL ENCOMPASSES PREPARING A ND REVIEWING TECHNICAL SPECIFICATIONS, ESTIMATION OF C OSTS, SELECTION OF VENDORS, INSPECTION AND EXPEDITING AND QUALITY CONT ROL & TIME MANAGEMENT. FURTHERMORE, IT HAS ALSO COME ON RECOR D FROM ANNUAL REPORT THAT GPCL IS OPERATING IN FIELD OF POWER, WA TER RESOURCES, TRANSPORTATION, INDUSTRIES AND OTHER SECTORS; THAT GPCL ALSO UNDERTAKES TRAINING THROUGH STATE OF THE ART TAILOR MADE TRAINING ITA NO.1491/DEL./2015 12 MODULES FOR TRANSFER OF EXPERTISE, BID SUPPORT SERV ICES IN INTERNATIONAL FUNDED PROJECTS, INDEPENDENT PROCUREM ENT REVIEW OF MULTILATERALLY FUNDED PROJECTS SPREAD ACROSS THE GL OBE AND PROCUREMENT AUDITS, WHEREAS NO SUCH SEGMENTAL FINAN CIALS ARE AVAILABLE QUA DIVERSIFIED NATURE OF SERVICES BEING PROVIDED BY THE GPCL. GPCL HAS BEEN ORDERED TO BE EXCLUDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN PHILIP MORRIS SERVICES INDIA S.A. VS. DDIT (SUPRA) AS A COMPARABLE VIS--VIS ROUTINE BUSINESS SUPPORT SERVICE PROVIDER BY RETURNING FOLLOWING FINDINGS :- 26. WE HAVE GONE THROUGH THE MATERIAL PROVIDED IN THE PAPER BOOK IN RESPECT OF GLOBAL PROCUREMENT CONSULTANTS L TD. AND FIND THAT GLOBAL PROCUREMENT CONSULTANTS LTD., IS PRIMAR ILY ENGAGED IN PREPARING AND REVIEWING TECHNICAL SPECIFICATIONS , ESTIMATION OF CASTES, SELECTION OF VENDORS, INSPECTION AND A EXPE DITING AND QUALITY CONTROL AND TIME MANAGEMENT. IT IS ALSO CLE AR THAT THE COMPANY RENDERS THE PROCUREMENT RELATED SERVICES IN EXCLUSIVELY IN CIS COUNTRIES, EASTERN EUROPE AND EMERGING ECONO MIES IN THE AFRICAN CONTINENT, BY KETTERING RELATES IN THE AREA S LIKE HEALTH, EDUCATION, URBAN AND RURAL DEVELOPMENT, AGRICULTURE , MINING, TRANSPORTATION, COMMUNICATION, ENERGY, WATER RESOUR CES AND OTHER KEY FACTORS. WE ALSO FURTHER FIND FROM THE RE CORD THAT GLOBAL PROCUREMENT CONSULTANTS LTD., CONDUCTS PROCU REMENT PUSHED REVENUE FOR WORLD BANK FINANCED PROJECTS, RE NDERS FINANCIAL ADVISORY SERVICES WITH A HIGH VOLATILE MA RGINS. 27. THIS PROFILE WHAT WE HAVE OBSERVED FROM THE REC ORD CERTAINLY MAKES THIS COMPANY TO STAND APART FROM TH E MARKET SUPPORT SERVICE PROVIDERS. FURTHER IT IS SUBMITTED BY THE LD. AR THAT THIS COMPANY REJECTED BY LD. DRP, DELHI IN THE CASE OF TRAVEL SECURITY SERVICES (INDIA) PRIVATE LTD FOR ASSESSMEN T YEAR 2011-12 BY HOLDING THAT THIS COMPANY IS FUNCTIONALITY SIMIL AR AND SHOULD BE DELETED FROM THE SET OF COMPARABLE COMPANIES REN DERING BUSINESS SUPPORT SERVICES. FURTHER A COORDINATE BE NCH OF THIS TRIBUNAL IN KOBELCO CRANES INDIA PRIVATE LIMITED VS . ITO IN ITA NO. 802/DEL/2016 EXCLUDED THIS COMPANY AS COMPARABL E TO THE MARKETING SUPPORT SERVICES. SO ALSO IN ADIDAS TECHN ICAL SERVICES LTD VS. DCIT IN ITA NO. 862/DEL/2016 AND ITA NO. 1233/DEL/2015 A COORDINATE BENCH OF THIS TRIBUNAL E XCLUDED THIS ITA NO.1491/DEL./2015 13 GLOBAL PROCUREMENT CONSULTANTS LTD., AS A GOOD COMP ARABLE TO THE MARKETING SUPPORT SERVICE PROVIDERS ON THE GROU ND OF FUNCTIONALITY SIMILARITY. 28. THIS PROFILE OF THIS GLOBAL PROCUREMENT CONSUL TANTS LTD., AS NARRATED BY THE LD. TPO HIMSELF SPEAKS IN UNEQUI VOCAL TERMS THAT THIS GLOBAL PROCUREMENT CONSULTANTS LTD., IS A COMPANY ESTABLISHED BY THE GOVERNMENT TO SERVE THE PURPOSE OF PROFESSIONAL PROCUREMENT AND MANAGEMENT SERVICES NE EDS AND ALSO TO PROVIDE COMBINES MANAGEMENT SERVICES REQUIR ED BY THE GOVERNMENT DEPARTMENTS OR THEIR PROJECT EXECUTION A GENCIES TO CARRY OUT THE PROCUREMENT IN TIME BOUND AND EFFICI ENT MANNER WITHIN THE FRAMEWORK OF GOVERNMENT REGULATIONS AND GUIDELINES OF INTERNATIONAL INSTITUTIONS, WHICH IS NOT SUCH A CHARACTERISTIC OF THE BUSINESS OF THE ASSESSEE. THE BUSINESS MODEL IT SELF IS DIFFERENT, LET ALONE THE DISPROPORTION IS OF THE FI NANCIALS. WE HAVE NO HESITATION, IN THE FACE OF THE PROFILE OF GLOBAL PROCUREMENT CONSULTANTS LTD., THAT IT IS NOT A GOOD COMPARABLE AT ALL TO THE ASSESSEE AND FOR THAT MATTER TO ANY PRIVATE MARKETI NG SUPPORT SERVICE PROVIDER, AS SUCH WE DIRECT THE LD. TPO TO EXCLUDE THIS COMPANY FROM THE LIST OF COMPARABLES TO BENCHMARK T HE INTERNATIONAL TRANSACTION OF THE ASSESSEE IN PROVID ING THE MARKET SUPPORT SERVICES TO ITS AES. 23. HONBLE HIGH COURT CONFIRMED THE AFORESAID EXCL USION OF GPCL AS A COMPARABLE. 24. AS PER THE RATIO LAID DOWN BY HONBLE DELHI HIGH COURT IN RAMPGREEN SOLUTIONS PVT. LTD. VS. CIT ITA 102/2015 ORDER DATED 10.08.2015 , THE FUNCTIONS OF A COMPANY IS TO BE TAKEN AS COMPARABLE CANNOT BE IGNORED. SO, SINCE FUNCTIONS OF GPCL ARE DIFFERENT VIS--VIS THE TAXPAYER, IT CANNOT BE TAKE N AS A SUITABLE COMPARABLE. 25. IN VIEW OF THE FACTS AND CIRCUMSTANCES AND FOLL OWING THE AFORESAID DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL, CONFIRMED BY HONBLE DELHI HIGH COURT, GP CL IS INTO ITA NO.1491/DEL./2015 14 DIVERSIFIED NATURE OF ACTIVITIES; THAT IT IS ESTABL ISHED BY GOVERNMENT TO SERVE THE PROFESSIONAL PROCUREMENT AND MANAGEMEN T SERVICES NEED; THAT IT HAS DIFFERENT BUSINESS MODEL WITH NO FINANCIAL SEGMENTAL ARE AVAILABLE, IS NOT A SUITABLE COMPARAB LE VIS--VIS THE TAXPAYER WHO IS INTO ROUTINE BUSINESS SUPPORT SERVI CE PROVIDER, HENCE ORDERED TO BE EXCLUDED. TSR DARASHAW LTD. (TSRDL) 26. THE TAXPAYER SOUGHT EXCLUSION OF TSRDL ON THE G ROUNDS INTER ALIA THAT IT HAS A DIFFERENT BUSINESS PROFILE ; THAT TPO HAS TAKEN ENTITY LEVEL REVENUE FROM FINANCIALS COMPRISING OF DIVERSE SEGMENTS AND SERVICES; THAT IT HAS INSTALLED STATE OF THE ART INFRASTRUCTURE OVER THE LAST 12 MONTHS AND RELIED U PON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN PHILIP MORRIS SERVICES INDIA S.A. VS. DDIT (SUPRA), CONFIRMED BY HONBLE DELHI HIGH COURT. 27. LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELI ED UPON THE ORDERS OF THE LOWER REVENUE AUTHORITIES. 28. PERUSAL OF THE ANNUAL REPORT, RELEVANT PAGE 465 AND 481 OF THE PAPER BOOK, EXPLAINS THE OUTLOOK OF TSRDL AS UN DER :- PAYROLL PROCESS OUTSOURCING' CONTINUES TO BE PROMI SING EVEN IN THE CURRENT CHALLENGING ENVIRONMENT AND IN LINE WIT H THE GROWTH OF THE BUSINESS, TSRDL HAS EMERGED STRONGER AND HAS BEEN ABLE TO RETAIN ITS MARKET SHARE. TSRDL HAS NOW SELECTED A NEW GLOBAL PAYROLL ERP APPLICATION CALLED RAMCO FOR ITS FAST G ROWING PAYROLL BUSINESS, WHICH IS ON PAR WITH SIMILAR APPL ICATIONS IN THE ITA NO.1491/DEL./2015 15 BUSINESS. THIS WILL ENABLE TSRDL TO BE ABLE TO CATE R TO VARIOUS COMPLEXITIES OF THE PAYROLL REQUIREMENTS OF THE CLI ENTS. IT CONTINUES TO BE THE KEY FOCUS WHEREIN THE COMPANY H AS INSTALLED STATE OF THE ART INFRASTRUCTURE OVER THE LAST 12 MO NTHS AND HAS CHANGED OVER TO NEW AND LATEST APPLICATIONS FOR ITS TRADITIONAL BUSINESS IN REGISTRY AND SHARE TRANSFER BUSINESS . 29. FURTHERMORE, PERUSAL OF BUSINESS OUTLOOK AT PAG E 465 SHOWS THAT IT HAS INSTALLED STATE OF THE ART INFRASTRUCTU RE OVER THE LAST 12 MONTHS AND HAS CHANGED OVER TO NEW AND LATEST APPLI CATIONS FOR ITS TRADITIONAL BUSINESS IN REGISTRY AND SHARE TRANSFER BUSINESS AND IT HAS BEEN ENABLED IT TO CATER TO VARIOUS COMPLEXITIE S OF THE PAYROLL REQUIREMENTS OF THE CLIENTS. MOREOVER, TSRDL HAS B EEN SELECTED AS NEW GLOBAL PAYROLL ERP APPLICATION CALLED RAMCO FOR ITS FAST GROWING PAYROLL BUSINESS. 30. COORDINATE BENCH OF THE TRIBUNAL IN PHILIP MORRIS SERVICES INDIA S.A. VS. DDIT (SUPRA) EXCLUDED TSRDL FROM THE FINAL SET OF COMPARABLES BY RETURNING FOLLOWING FINDINGS :- 39. ON A PERUSAL OF RECORD AND THE ANNUAL REPORT O F TSR DARASHAW LTD. WE FIND THAT TSR DARASHAW LTD. IS MAI NLY INTO THE PAYROLL PROCESS OUTSOURCING WITH A NEW GLOBAL P AYROLL ERP APPLICATION CALLED RAMCO FOR ITS PAYROLL BUSINESS. FURTHER THE ORDER OF LD. TPO ITSELF READS THAT TSR DARASHAW LTD . UNDERTAKES THE REGISTRAR AND TRANSFER AGENT ACTIVITY FUNCTIONS FOR EQUITY AND PREFERENCE SHARES, VENTURE INSTRUMENTS AND BONDS, C OMMERCIAL PAPER AND PRIVATE PLACEMENTS. MOREOVER THIS COMPANY , UNDER THIS SEGMENT ALSO UNDERTAKES TRANSFER PROCESSING CUSTOME R/QUERY HANDLING AND CORRESPONDENCE SPLIT/CONSOLIDATION/REN EWAL OF CERTIFICATES, PROCESSING AND DISTRIBUTION OF INTERE ST TO SLASH DIVIDEND WARRANTS, PAYMENTS BY PHYSICAL WARRANTS/TH ROUGH ECS/DIRECTOR CREDITED. IN THE SEGMENT OF RECORDS MA NAGEMENT ACTIVITY, TSR DARASHAW LTD. UNDERTAKES STORAGE, RET ENTION AND TRIBAL OF PHYSICAL AND/OR ELECTRONIC RECORDS. IN TH E SEGMENT OF PAYROLL AND TRUST FUND ACTIVITY, TSR DARASHAW LTD. HANDLES THE ITA NO.1491/DEL./2015 16 ACTIVITIES NORMALLY HANDLED BY PAYROLL AND RETIREM ENT FUNDS SECTION IN ANY ORGANISATION INCLUDING INTERFACE WIT H THE REGULATORY AUTHORITIES. THESE FUNCTIONS ARE NOT AT ALL COMPARABLE WITH THE FUNCTIONS PERFORMED BY THE ASSESSEE. AT TH E SAME TIME NO SEGMENTAL INFORMATION IS AVAILABLE AS TO THE REV ENUES. 40. FURTHER THE COORDINATE BENCHES OF THIS TRIBUNAL IN MICROSOFT CORPORATION INDIA PRIVATE LIMITED VS. DCI T IN ITA NO. 5766/DEL/2011, ELI LILLY AND CO (INDIA) PRIVATE LTD VS. ACIT IN ITA NO. 788/DEL/2015 AND KOBELCO CRANES INDIA PR IVATE LIMITED VS. ITO IN ITA NO. 802/DEL/2016, ADOBE SYST EMS INDIA PRIVATE LIMITED VS. JCIT IN ITA NO. 1163/DEL/2014, AND ADIDAS TECHNOLOGY SERVICES PRIVATE LIMITED VS. DCIT IN ITA NO. 862/DEL/2016 HELD THAT TSR DARASHAW LTD. IS NOT A G OOD COMPARABLE TO THE COMPANIES RENDERING MARKET SUPPOR T SERVICES. 41. IN THIS FACTUAL AND LEGAL POSITION, WHERE OF TH E CONSIDERED OPINION THAT TSR DARASHAW LTD. IS NOT AT ALL A GOOD COMPARABLE TO THE ASSESSEE WHO IS RENDERING ONLY MARKET SUPPOR T SERVICES IN NO WAY COMPARABLE TO THE FUNCTIONS PERFORMED BY THE TSR DARASHAW LTD. WE, THEREFORE, DIRECT THE LD. TPO TO DELETE THIS COMPANY FROM THE FINALIST OF COMPARABLES. 31. HONBLE HIGH COURT CONFIRMED THE AFORESAID EXCL USION OF TSRDL AS A COMPARABLE. 32. AS PER THE RATIO LAID DOWN BY HONBLE DELHI HIGH COURT IN RAMPGREEN SOLUTIONS PVT. LTD. VS. CIT ITA 102/2015 ORDER DATED 10.08.2015 , THE FUNCTIONS OF A COMPANY IS TO BE TAKEN AS COMPARABLE CANNOT BE IGNORED. SO, SINCE FUNCTIONS OF TSRDL ARE DIFFERENT VIS--VIS THE TAXPAYER, IT CANNOT BE TAKE N AS A SUITABLE COMPARABLE. 33. IN VIEW OF THE FACTS AND CIRCUMSTANCES NARRATED ABOVE AND FOLLOWING THE AFORESAID DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, CONFIRMED BY THE HONBLE DELHI HIGH COURT , WE ARE OF ITA NO.1491/DEL./2015 17 THE CONSIDERED VIEW THAT TSRDL IS HAVING DIFFERENT BUSINESS PROFILE VIS--VIS THE TAXPAYER WHO IS A ROUTINE BUS INESS SUPPORT SERVICE PROVIDER; THAT TPO HAS TAKEN ENTITY LEVEL R EVENUE FROM FINANCIALS WHICH ARE OF DIVERSE SEGMENTS AND SERVIC ES; THAT IT HAS ESTABLISHED STATE OF THE ART INFRASTRUCTURE OVER TH E LAST 12 MONTHS AND IT HAS SELECTED NEW GLOBAL PAYROLL ERP APPLICAT ION CALLED RAMCO FOR ITS FAST GROWING PAYROLL BUSINESS, IS NOT A SUITABLE COMPARABLE VIS--VIS THE TAXPAYER WHO IS A ROUTINE BUSINESS SUPPORT SERVICE PROVIDER, HENCE ORDERED TO BE EXCLUDED. GROUND NO.5 34. LD. AR FOR THE TAXPAYER CONTENDED THAT DRP/TPO HAD NOT CONSIDERED FOREIGN EXCHANGE GAIN OR LOSS AS THE CAS E MAY BE BY TREATING THE SAME NON-OPERATIVE INCOME OF THE TAXPA YER BY TREATING THE PLI OF THE TAXPAYER AS WELL AS THE COMPARABLES. 35. BY NOW, IT IS SETTLED PRINCIPLE OF LAW THAT FOR EIGN EXCHANGE GAIN OR LOSS ON ACCOUNT OF INTERNATIONAL TRANSACTIO NS ENTERED WITH ITS AE IN THE ORDINARY COURSE OF BUSINESS I.E. IN PROVI SION OF BUSINESS SUPPORT SERVICES, THE SAME CANNOT BE TREATED AS NON -OPERATING IN NATURE. 36. HONBLE DELHI HIGH COURT IN CASE OF PR.CIT VS. B.C. MANAGEMENT SERVICES (P) LTD. (2018) 403 ITR 45 (DEL HI) HELD THAT, FOREIGN EXCHANGE GAIN/LOSS IS PART OF THE OPERATI NG INCOME ITA NO.1491/DEL./2015 18 FOR ALP DETERMINATION . IN PR. CIT VS. AMERIPRISE (P) LTD. ITA NO.206 OF 2016 DATED 23.03.2016 , HONBLE DELHI HIGH COURT HELD THAT, FOREIGN EXCHANGE GAIN EARNED BY THE TAXPAYER WHICH IS IN RELATION TO TRADING ITEMS AND EMANATING FROM INTERN ATIONAL TRANSACTIONS, DIRECT VALUE DERIVED FROM IT CANNOT B E TREATED AS NON- OPERATING LOSSES AND GAINS. 37. IN VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT TPO/DRP HAVE ERRED IN NOT CONSIDERING THE FOREIGN E XCHANGE GAIN OR LOSS AS OPERATING INCOME/EXPENSES. SO, THE TPO IS DIRECTED TO TREAT FOREIGN EXCHANGE GAIN/LOSS AS OPERATING INCOM E/EXPENSES WHILE COMPUTING PLI OF THE TAXPAYER AS WELL AS OF T HE COMPARABLES. SO, GROUND NO.5 IS DETERMINED IN FAVOUR OF THE TAXP AYER. GROUND NO.6 38. THE TAXPAYER ALSO SOUGHT BENEFIT OF RISK ADJUST MENT NOT GRANTED BY THE TPO ON THE GROUND THAT THE TAXPAYER IS PROVIDING BUSINESS SUPPORT SERVICES TO ITS AE ON COST PLUS 10 % MARK-UP, FOR WHICH IT DOES NOT BEAR ANY RISK ON ACCOUNT OF SERVI CE DELIVERY, PRICE, UTILIZATION, CREDIT ETC. WHEN, UNDISPUTEDLY , THE TAXPAYER IS RENDERING BUSINESS SUPPORT SERVICES TO ITS AE AT CO ST PLUS 10% MARK UP AND BEARING NO PRICE RISK OR UTILIZATION RI SK, IT IS ENTITLED FOR ADJUSTMENT ON ACCOUNT OF DIFFERENCE IN RISK PRO FILE, BUSINESS COMPARABLE COMPANIES U/S 10B(2) OF THE INCOME-TAX R ULES, 1962. ITA NO.1491/DEL./2015 19 39. COORDINATE BENCH OF THE TRIBUNAL IN SONY INDIA (P) LTD. VS. DCIT (2008) 114 ITD 448 (DEL.) DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE TAXPAYER BY RETURNING FOLLOWING FINDI NGS :- AS REGARDS THE OTHER AMOUNT OF RS.83,06,011 FORMIN G PART OF MISCELLANEOUS INCOME IT COULD BE SEEN THAT THE SAID AMOUNT WAS RECEIVED BY THE ASSESSEE FROM ITS FOREIGN ASSOCIATE ON ACCOUNT OF CANCELLATION OF A CONTRACT. AS THE WORK UNDERTAKEN UNDER THE SAID AGREEMENT WAS IN RELATION TO THE DEVELOPMENT OF SOFTWARE WHICH. WAS THE MAIN BUSINESS ACTIVITY OF I TS UNDERTAKING ELIGIBLE FOR DEDUCTION UNDER SECTION 1 DB, THE COMPENSATION RECEIVED BY THE ASSESSEE ON CANCELLATION/TERMINATION OF THE SAID CONTRACT/AGREE MENT WAS INTEGRAL PART OF ITS MAIN BUSINESS. THERE WAS, THUS, A CLEAR AND DIRECT NEXUS BETWEEN THE AMOUNT OF RS.83,06,011 RECEIVED BY THE ASSESSEE AS COMPENSATI ON FOR CANCELLATION OF THE CONTRACT AND THE MAIN BUSIN ESS OF SOFTWARE DEVELOPMENT OF ITS UNDERTAKING AND THE SAID INCOME FORMING PART OF THE SAID MAIN BUSINESS 01 TH E UNDERTAKING WAS ELIGIBLE FOR DEDUCTION UNDER SECTIO N 10B BEING DERIVED FROM THE SAID UNDER-TAKING. FOR T HE APPLICATION OF WORDS 'DERIVED FROM; THERE SHOULD BE A DIRECT NEXUS BETWEEN THE INCOME AND THE INDUSTRIAL UNDER-TAKING AND ONCE SUCH NEXUS IS ESTABLISHED, TH E SAID INCOME CERTAINLY CONSTITUTES THE INCOME DERIVE D FROM SUCH UNDERTAKING. AS SUCH, CONSIDERING ALL THE FACTS OF THE CASE, THE AMOUNT OF RS.83,06,011 CONSTITUTED ITS PROFIT DERIVED FROM THE UNDERTAKING ELIGIBLE FOR DEDUCTION UNDER SECTION 10B AND THE DEDUCTION UNDER THAT SECTION WAS RIGHTLY CLAIMED BY IT IN RESPECT OF THE SAID INCOME. IN THAT VIEW OF THE MAT TER, THE IMPUGNED ORDER OF THE COMMISSIONER (APPEALS) ON THAT ISSUE WAS TO BE SET ASIDE AND THE ASSESSING OF FICER WAS TO BE DIRECTED TO ALLOW THE DEDUCTION UNDER SEC TION 10A/10B IN RESPECT OF COMPENSATION AS CLAIMED BY TH E ASSESSEE. 40. IN VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT SINCE THE TAXPAYER RENDERED SERVICES TO ITS AES ON COST PLUS MARK, ITA NO.1491/DEL./2015 20 FOR WHICH IT IS REIMBURSED AND NO PRICE RISK OR UTI LIZATION IS BORNE BY IT, THE TAXPAYER IS ENTITLED FOR BENEFIT OF RISK ADJUSTMENT VIS--VIS COMPARABLES CHOSEN BY THE TPO. SO, GROUND NO.6 IS DETERMINED IN FAVOUR OF THE TAXPAYER. GROUNDS NO.7, 8 & 9 41. GROUNDS NO.7, 8 & 9 BEING CONSEQUENTIAL IN NATU RE NEED NO SPECIFIC FINDINGS GROUND NO.8 42. GROUND NO.8 IS DISMISSED HAVING NOT BEEN PRESSE D DURING THE COURSE OF ARGUMENTS 43. RESULTANTLY, THE APPEAL FILED BY THE TAXPAYER I S PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 28 TH DAY OF NOVEMBER, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 28 TH DAY OF NOVEMBER , 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.