M/s. Hyundai Rotem Company, Delhi V. ACIT, New Delhi

ITA 1722/DEL/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4226 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I1
• Next Hearing Date: 25-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 27-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Keywords: Transfer pricing; International transaction; Rule of consistency
• Section: 92C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I, NEW DELHI BEFORE SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.(TP) NO.1722/DEL/2015 (ASSESSMENT YEAR 2010-11) HYUNDAI ROTEM COMPANY, VS. ACIT, CIRCLE 2(1)(1), N-3, 3 RD FLOOR, NEW DELHI SOUTH EXTNSION, PARK NO.1, DELHI-110 049 GIR / PAN :AABCK6367L (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI SALIL KAPOOR, ADV., MS. ANANYA KAPOOR, ADV. RESPONDENT BY : SHRI AMRENDRA KUMAR, CIT DR DATE OF HEARING: 17.06.2016 DATE OF PRONOUNCEMENT:05.08.2016 ORDER PER BEENA A. PILLAI, JM: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. ACIT CIRCLE 2 (1) (1), INTERNATIONAL TAXATION, NEW DELHI DATED 16/02/2015 FOR ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSMENT ORDER/DIRECTIONS PASSED BY THE LEARNED ASSESSING OFFICER ('AO') / TRANSFER PRI CING OFFICER (TPO') / DISPUTE RESOLUTION PANEL ('DRP') I S ILLEGAL, UNJUST, BAD IN LAW AND HIGHLY EXCESSIVE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE REFERENCE MADE BY THE AO SUFFERS FROM JURISDICTIONAL ERROR. THE AO HAS NOT RECORDED ANY REASON IN THE DRAFT ASSESSMENT ORDER BASED ON WHICH , 2 I.T.A.NO.1722./DEL/2015 HE REACHED TO THE CONCLUSION THAT IT WAS 'NECESSARY OR EXPEDIENT' TO REFER THE MATTER TO THE TRANSFER PRIC ING OFFICER ('TPO') FOR COMPUTATION OF THE ARM'S LENGTH PRICE (,ALP'), AS IS REQUIRED UNDER SECTION 92CA(1) OF TH E INCOME-TAX ACT 1961 ('ACT'). 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED IN LAW AND IN FACTS BY NOT FOLLOWING THE PRINCIPLE OF CONSISTENCY WITHOUT CHANGE OF FACTS VIS A VIS PREVI OUS YEARS. IN OTHER WORDS, ASSESSING OFFICER/TPO/DRP ERRED IN LAW IN REJECTING THE BENCHMARKING APPROACH ADOPTED BY APPELLANT IN TRANSFER PRICING DOCUMENTATION, WHEREAS ADMITTEDLY, THE FUNCTIONAL PROFILE AND NATURE OF INTERNATIONAL TRANSACTIONS IN THE CURRENT YEAR ARE SAME AS PREVIOUS YEAR. THE ASSESSING OFFICER/DRP/TPO FAILED TO CONSIDER THAT SIMILAR BENCHMARKING APPROACH AND TP DOCUMENTATION HAS BEEN ACCEPTED IN PREVIOUS YEARS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED IN LAW AND IN FACTS BY NOT TAKING COGNIZANCE OF THE ARTICL E 7(5) OF THE INDIA KOREA TAX TREATY. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/ LD. TPO FAILED TO UNDERSTAND THE BUSINESS MODEL AND FUNCTIONAL AND RISK PROFILE OF THE ASSESSEE. HENCE, COMPARISON HAS BEEN MADE WITH COMPANIES HAVING DIFFERENT FUNCTIONA L PROFILE. 6. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED BY NOT ACCEPTING THE ECONOMIC ANALYSIS UNDERTAKEN BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF T HE ACT READ WITH THE RULES, AND MODIFYING THE ECONOMIC ANALYSIS FOR THE DETERMINATION OF THE ALP OF THE ASSESSEE'S INTERNATIONAL TRANSACTIONS AND HOLDING T HAT THE INTERNATIONAL TRANSACTIONS ARE NOT AT ARM'S LEN GTH. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. ASSESSING OFFICER/ HON'BLE DRP/LD. 3 I.T.A.NO.1722./DEL/2015 TPO ERRED BY DISREGARDING THE FUNCTIONAL COMPARABILITY OF THE COMPANIES CONSIDERED COMPARABLE AT THE TIME OF THE DOCUMENTATION BY THE ASSESSEE. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED IN CONSIDERING COMPANIES FUNCTIONALLY DIFFERENT FROM ROTEM - POS AS COMPARABLE. 9. WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED IN FOLLOWING AN INCONSISTENT APPROACH IN THE SELECTION OF THE COMPARABLE COMPANIES. 10. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE CASES, BY USING INCORRECT FILTERS. 11. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED IN TREATING FOREIGN EXCHANGE GAIN OR LOSS AS NON- OPERATING ITEM FOR THE COMPUTATION OF NET OPERATING MARGINS OF THE COMPARABLE COMPANIES. 12. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED IN USING SINGLE YEAR DATA AS AGAINST THE MULTIPLE YEAR DATA USED BY THE APPELLANT, TO COMPUTE THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF THE APPELLANT USING TRANSACTIONAL NET MARGIN METHOD ('TNMM') METHOD. 13. WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED IN PLACING RELIANCE ON THE FINANCIAL DATA WHICH WAS NOT AVAILABLE IN THE PUBLIC DOMAIN AT THE TIME WHEN THE ECONOMIC ANALYSI S WAS UNDERTAKEN AND TRANSFER PRICING STUDY WAS CONDUCTED. 4 I.T.A.NO.1722./DEL/2015 14. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED IN NOT MAKING SUITABLE ADJUSTMENTS TO ACCOUNT FOR DIFFERENCES IN THE RISK PROFILE OF THE ASSESSEE VIS -A-VIS THE COMPARABLES. 15. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/HON'BLE DRP/LD. TPO ERRED BY NOT APPLYING THE PROVISO TO SECTION 92C OF THE ACT AND FAILED TO ALLOW THE APPELLANT THE BENEFIT OF VARIAT ION OF 5 PERCENT IN DETERMINING THE ARM'S LENGTH PRICE . 16. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER/DRP/TPO FAILED TO USE SEGMENTAL RESULTS OF COMPANIES FOR THE PURPOSES OF BENCHMARKING WHEREVER AVAILABLE. 17. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER/DRP/TPO ERRED IN COMPARING APPELLANT WITH COMPANIES HAVING DISPROPORTIONATE SCALE OF OPERATIONS, LARGE TURNOVE R, DIFFERENT COST STRUCTURE AND ASSET BASE. 18. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, AO/DRP/TPO ERRED IN INCLUDING COMPANIES WITH PECULIAR ECONOMIC CIRCUMSTANCES AND ALSO ERRED IN EXCLUDING COMPANIES WITH DECLINING TURNOVER. 19. ON THE GIVEN FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, AO ERRED IN CHARGING INTEREST U/S 234B. 20. THAT THE EXPLANATIONS GIVEN, EVIDENCE PRODUCED AND MATERIAL PLACED AND MADE AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED AND THE SAME DO NOT JUSTIFY THE ADDITIO N MADE. 21. THAT THE ADDITION / DISALLOWANCE MADE ARE ILLEGAL, UNJUST AND BAD IN LAW AND ARE BASED ON MER E SURMISES AND CONJUNCTURES AND THE SAME CANNOT BE JUSTIFIED BY ANY MATERIAL ON RECORD. 5 I.T.A.NO.1722./DEL/2015 2. THE BRIEF FACTS OF THE CASE THAT EMANATES FROM T HE ORDER OF THE AUTHORITIES BELOW ARE AS UNDER: 2.1 ASSESSEE IS A COMPANY INCORPORATED IN KOREA AND HAS PROJECT OFFICES (PO) IN INDIA FOR CARRYING OUT ON-SITE WORK IN RELATION TO SPECIFIED LICENSING, COORDINATI ON AND OTHER ACTIVITIES. DURING THE YEAR UNDER CONSIDERATI ON, ASSESSEE HAD 3 PROJECT OFFICES IN INDIA BEING ROTEM RS 1, ROTEM RS 3 AND BRCL. THE ROLE OF THE ROTEM RS1 PROJ ECT OFFICE, IS TO OVERVIEW THE REPLACEMENT/MODIFICATION JOB BEING UNDERTAKEN BY OUTSOURCING COMPANIES AND LACE WITH THE MRC PERSONNEL IN RELATION TO MARITIME AND TROUBLESHOOTING IN RELATION TO ROLLING STOCK SUPPLI ED UNDER CONTRACT ROTEM RS 3 UNDERTAKES THE SUPPLY OF COMPONENTS TO BEML AND IS NOT INVOLVED IN ON-SITE ACTIVITIES. THE ON-SITE ACTIVITIES OF TESTING AND COMMISSIONING IN INDIA ARE UNDERTAKEN BY BEML AS AN INDEPENDENT MEMBER TO MR MB CONSORTIUM. RS3 PO ONLY ACTS AS A COMMUNICATION CHANNEL BETWEEN ROTEM AND T HE MRC EVEN THOUGH THE MEETING MAY PERTAIN TO ON-SITE PORTION OF THE CONTRACT. THE ROLE OF BMRCL PO IS LA RGELY SIMILAR TO THOSE UNDER DMRCS RS3 CONTRACT. 2.2 THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY TH E ASSESSEE FOR THE YEAR UNDER CONSIDERATION ARE AS UN DER: RS 1 PO: 6 I.T.A.NO.1722./DEL/2015 NAME OF THE TRANSACTION METHOD SELECTED VALUE OF INTERNATIONAL TRANSACTION RENDERING OF ADMINISTRATIVE SUPPORT AND COORDINATION SERVICES TNMM(OP/TC) 3,50,73,914 RS 3 PO: NAME OF THE TRANSACTION METHOD SELECTED VALUE OF INTERNATIONAL TRANSACTION RENDERING OF ADMINISTRATIVE SUPPORT AND COORDINATION SERVICES TNMM(OP/TC) 17,03,58,098 REIMBURSEMENT OF EXPENSES TO AE 93,51,586 REIMBURSEMENT OF EXPENSES BY AE NO BENCHMARKING 1,19,98,903 BMRCL PO NAME OF THE TRANSACTION METHOD SELECTED VALUE OF INTERNATIONAL TRANSACTION RENDERING OF ADMINISTRATIVE SUPPORT AND COORDINATION SERVICES TNMM(OP/TC) 73,82,625 REIMBURSEMENT OF EXPENSES OF AE 12,76,556 2.3 THE ASSESSEE HAS CHOSEN TRANSACTION NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD (MAM) AND OPERATING PROFIT/OPERATING COSTS (OP/OC) AS THE PROFIT 7 I.T.A.NO.1722./DEL/2015 LEVEL INDICATOR (PLI). IN THE TRANSFER PRICING STUD Y, THE ASSESSEE HAD ARRIVED AT 12 COMPARABLE COMPANIES WIT H AN AVERAGE MARGIN OF -4.05%, EACH USING MULTIPLE YEAR DATA, FOR ALL THE THREE POS. THIS HAS BEEN COMPARED WITH THE ASSESSEE WITH OPERATING MARGIN OF 8.82% FOR RS 3 P ROJECT, 9% FOR RS 1 PROJECT AND 9.08% FOR BMRCL PROJECT. 2.4 THE COMPARABLES SELECTED BY THE ASSESSEE FOR BENCHMARKING INTERNATIONAL TRANSACTIONS WITH ITS AE S ARE AS UNDER: S.NO. NAME OF THE COMPARABLE COMPANY 1 ACCESS INDIA ADVISORS LTD. 2 ASIAN BUSINESS EXHIBITION & CONFERENCES LTD. 3 EDCIL (INDIA) LTD. 4 ICARA MANAGEMENT CONSULTING SERVICES LTD. 5 CYBER MEDIA RESEARCH LTD. (EARLIER IDC (INDIA) LTD.) 6 IN HOUSE PRODUCTIONS LTD. 7 INDIA TOURISM DEVELOPMENT CORPORATION LTD. 8 MA FOL GLOBAL SERVICES 9 MA FOL MANAGEMENT CONSULTANTS LTD. 10 OVERSEAS MANPOWER CORPN. LTD. 11 TIMES INNOVATIVE MEDIA LTD. 2.5 THE LD.TPO APPLIED VARIOUS FILTERS AND HELD THE COMPARABLES SELECTED BY THE ASSESSEE WERE FUNCTIONA LLY 8 I.T.A.NO.1722./DEL/2015 DIFFERENT IN SOME CASES, AND IN SOME COMPARABLE HE HELD THAT THE FINANCIAL YEAR ENDING WERE DIFFERENT. HE T HUS REJECTED THE COMPARABLES SELECTED BY THE ASSESSEE A ND ARRIVED AT NEW SET OF COMPARABLES CONSISTING OF 6 COMPANIES HAVING AN AVERAGE OP/TC AT 27.74% WHICH A RE AS UNDER: S.NO NAME OF THE COMPARABLE COMPANY 1 APITCO LTD. 2 CYBER MEDIA RESEARCH LTD. (IDC) 3 GLOBAL PROCUREMENT CONSULTANTS LTD. 4 HCCA BUSINESS SERVICES PVT. LTD. 5 TSR DARASHAW LTD. 6 QUADRANT COMMUNICATIONS LTD. 3. AGGRIEVED BY THE ORDER OF THE LD.TPO THE ASSESSE E FILED ITS OBJECTIONS BEFORE THE DRP. THE DRP UPHELD THE ADDITION MADE BY THE LD. TPO. SUBSEQUENTLY THE DY. CIT GAVE EFFECT TO THE DIRECTIONS OF THE DRP AND MADE ADJUSTMENT TO AN EXTENT OF RS.21,640,167/- TO THE RETURNED INCOME OF THE ASSESSEE. 3.1 AGGRIEVED BY THE ORDER OF THE DY.CIT THE ASSESS EE IS IN APPEAL BEFORE US NOW. 4. THE ONLY ISSUE THAT NEEDS TO BE ADDRESSED IS IN RESPECT OF SELECTION OF COMPARABLES. THE ASSESSEE I S 9 I.T.A.NO.1722./DEL/2015 CHALLENGING INCLUSION OF 4 COMPATIBLES WHICH ARE AS UNDER: S.NO. NAME OF THE COMPARABLE COMPANY OP/OC 1. APITCO LTD. 40.09% 2. GLOBAL PROCUREMENT CONSULTANTS LTD. 37.19% 3. HCCA BUSINESS SERVICES LTD. 20.05% 4. TSR DARSHAW LTD. 41.15% 4.1 APART FROM THAT ASSESSEE IS INSISTING ON INCLUS ION OF 7 COMPARABLES WHICH ARE AS UNDER: S.NO. NAME OF THE COMPARABLE COMPANY OP/OC 1. EDUCATIONAL CONSULTANTS(I) LTD. 7.37% 2. ICRA MANAGEMENT CONSULTING SERVICES LTD. 1.37% 3. IN HOUSE PRODUCTION LTD. 4.09% 4. INDIA TOURISM DEVELOPMENT CORP.LTD. 1.13% 5. HT MUSIC ENTERTAINMENT LTD. 3.98% 6. MA FOI GLOBAL SERVICES -43.45% 7. OVERSEAS MANPOWER CORPN. LTD. -21.03% 5. AT THE OUTSET THE LD. AR POINTED OUT THAT THE IS SUE OF INCLUSION/EXCLUSION OF CERTAIN COMPARABLES STANDS COVERED BY THE ORDER OF LD.TPO FOR ASSESSMENT YEAR 2009- 10 AND 2011-12 WHICH ARE AS UNDER: 10 I.T.A.NO.1722./DEL/2015 COMPARABLES EXCLUDED BY THE LD. TPO FOR ASSESSMENT YEAR 2009-10 AND 2011-12: 1. GLOBAL PROCUREMENT CONSULTANTS LTD. 2. HCCA BUSINESS SERVICES LTD. 3. TSR DARASHAW LTD. COMPARABLES ACCEPTED BY THE LD. TPO FOR ASSESSMENT YEAR 2009-10 AND 2011-12: 1. EDUCATIONAL CONSULTANTS(I) LTD. 2. ICRA MANAGEMENT CONSULTANTS LTD. 5.1 HE SUBMITTED THAT IN THE EVENT THESE FIVE COMPARABLES ARE EXCLUDED / INCLUDED ACCORDINGLY, TH E ASSESSEE WOULD BE WELL WITHIN THE RANGE OF +/- 5%. HE SUBMITTED THAT THE FUNCTIONALITY AND THE FINANCIAL SEGMENTS HAVE NOT CHANGED IN PREVIOUS AND SUBSEQUEN T ASSESSMENT YEARS, VIZ-A-VIZ THE YEAR UNDER CONSIDERATION. WE ARE THUS RESTRICTING THE ADJUDICATION ONLY TO TH E EXTENT OF THE COMPARABILITY OF THE FIVE COMPANIES DISPUTE D BY THE ASSESSEE FROM BEING EXCLUDED/INCLUDED AS MENTIONED HEREINABOVE. 5.2 LD.AR PLACED RELIANCE UPON THE FOLLOWING JUDGME NTS IN SUPPORT OF HIS PLEA REGARDING THE APPLICATION OF PRINCIPLE OF RES JUDICATA TO THE FACTS OF THE PRESENT CASE : A) RADHASOAMI SATSANG VS. CIT REPORTED IN 193 ITR 321 (SC); 11 I.T.A.NO.1722./DEL/2015 B) TAMASEK HOLDINGS ADVISORS (I) (P) LTD VS. DCIT (201 3) 38 TAXMANN.COM 80 (MUMBAI-TRIB); C) BRITONS CARPET ASIA PVT. LTD. VS. DCIT (2011) 46 SO T 289 (PUNE); D) CIT VS. NEO POLY PACK (P) LTD. (2000) 245 ITR 492 (DEL). 5.3 THE LD. AR SUBMITTED THAT THESE COMPARABLES HAV E BEEN CONSIDERED AND HAS BEEN DECIDED CONSISTENTLY I N THE PRECEDING AND SUBSEQUENT ASSESSMENT YEAR, IN A PARTICULAR MANNER, FOR THE SAKE OF CONSISTENCY, THE SAME VIEW SHOULD CONTINUE TO PREVAIL IN THE YEAR UNDER CONSIDERATION, UNLESS THERE IS SOME MATERIAL CHANGE IN THE FACTS. 6. ON THE OTHER HAND THE LD. DR SUBMITS THAT THE BA SIC CHARACTERIZATION IS DIFFERENT AND EVERY YEAR HAS TO BE CONSIDERED DIFFERENTLY. HE SUBMITTED THAT THE INCLUSION/EXCLUSION OF A PARTICULAR COMPARABLES MUS T BE CONSIDERED INDEPENDENTLY. 7. WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW, RECORDS/PAPER BOOK PLACED BEFORE US, AND THE JUDGMENTS RELIED UPON BY THE LD.AR. THE ORD ER PASSED BY THE LD.TPO FOR ASSESSMENT YEAR 2009-10 REVEALS THAT THESE COMPARABLES HAS BEEN EXCLUDED/INCLUDED AS PRAYED FOR HEREIN ABOVE. THE TRANSFER PRICING DOCUMENTATION MAINTAINED BY THE ASSESSEE IN RESPECT OF ROTEM RS 1 PROJECT OFFICE AN D ROTEM RS 3 PROJECT OFFICE REVEALS THAT THIS CONTRAC T HAS 12 I.T.A.NO.1722./DEL/2015 BEEN ENTERED INTO BY THE ASSESSEE, WAY BACK IN 2001 AND 2007 RESPECTIVELY. IT IS ALSO OBSERVED THAT THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESS EE IN THE YEAR UNDER CONSIDERATION ARE SIMILAR TO THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESS EE FOR ASSESSMENT YEAR 2009-10 AND 2011-12. FURTHER NEITHE R THE LD. TPO NOR THE LD. DR HAS BEEN ABLE TO POINT O UT EVEN A SINGLE DISTINGUISHING FEATURE IN RESPECT OF THE ASSESSMENT YEAR IN QUESTION WHICH COULD HAVE PROMPT ED THE LD. TPO TO TAKE A DIFFERENT VIEW FROM ASSESSMEN T YEAR 2009-10 AND 2011-12. WITHOUT ANY PROPER REASON OR CHANGE IN THE FUNCTIONALITY AND FINANCIAL DATA, IT CANNOT BE HELD THAT THESE COMPANIES ARE TO BE EXCLUDED/INC LUDED (AS PRAYED FOR HEREIN ABOVE), IN THE INTERMEDIARY P ERIOD OF THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. TP O HAS TO BRING SOME MATERIAL ON RECORD TO SHOW AS TO WHY THESE COMPARABLES WHICH WERE EXCLUDED/INCLUDED (AS PRAYED FOR HEREIN ABOVE) IN THE EARLIER YEAR AND AL SO IN SUCCEEDING YEAR, CANNOT BE EXCLUDED/INCLUDED IN THE YEAR UNDER CONSIDERATION. GLOBAL PROCUREMENT CONSULTANTS LTD. 8. THIS COMPANY HAS BEEN CHOSEN BY THE TPO AS A COMPARABLES. THIS COMPANY IS MAINLY ENGAGED IN RENDERING SERVICES TO GOVERNMENT BODIES AND INTERNA TIONAL ORGANIZATION. IT IS ENGAGED IN PROVIDING VARIED SER VICES INCONSISTENCY SEGMENT LIKE BIT SUPPORT SERVICES, PERFORMANCE REVIEW, VALUATION ASSIGNMENTS, FINANCIA L 13 I.T.A.NO.1722./DEL/2015 ADVISORY SERVICES ETC. WHEREAS ROTEM RS 1 PO IS PERFORMING FUNCTIONS LIKE LICENSING, COORDINATION MAINTENANCE AND TROUBLESHOOTING AND MARKETING AND CONTRACTING ACTIVITIES, CONTRACT EXECUTION, TESTING AND COMMISSIONING, LIES INNING/INTERFACING WITH THE DMR C CARRIED ON BY ROTEM RS 3 PO, WITHOUT ANY RISK BEING BONE BY THE ASSESSEE. THUS THIS COMPANY IS NOT FUNCTIONA LLY SIMILAR TO THE ACTIVITIES CARRIED ON BY THE ASSESSE E AND MORE SO WHEN IT HAS BEEN REJECTED BY THE LD. TPO IN THE EARLIER ASSESSMENT YEAR AS WELL AS IN THE SUCCEEDIN G ASSESSMENT YEAR. THE LD. DR DOES NOT DISPUTE REGARD ING THE REJECTION OF THIS COMPANY BY THE LD. TPO IN THE EARLIER AS WELL AS SUCCEEDING ASSESSMENT YEAR. THUS FOLLOWI NG THE RULE OF CONSISTENCY WE DIRECT THE LD. TPO TO EXCLUD E THIS COMPANY IN THE LIST OF COMPARABLES. HCCA BUSINESS SERVICES LTD. 9. THIS COMPANY HAS BEEN CHOSEN BY THE LD.TPO. THIS IS A COMPANY THAT OFFERS SERVICES LIKE PAYROLL PROC ESSING AND COMPENSATION STRUCTURING, MANAGEMENT OF LABOUR AND LEGAL COMPLIANCES, PAYROLL LEGS REGULATORY COMPLIAN CES, EMPLOYEE REIMBURSEMENT PROCESSING AND ACCOUNTING SERVICES. IN A NUTSHELL THIS COMPANY IS A LEADING S ERVICE PROVIDER IN THE ENTIRE GAMUT OF HR OPERATIONS AND ADMINISTRATION. 9.1 THUS THIS COMPANY IS NOT FUNCTIONALLY SIMILAR T O THE ACTIVITIES CARRIED ON BY THE ASSESSEE AND MORE SO W HEN IT 14 I.T.A.NO.1722./DEL/2015 HAS BEEN REJECTED BY THE LD. TPO IN THE EARLIER ASS ESSMENT YEAR AS WELL AS IN THE SUCCEEDING ASSESSMENT YEAR. THE LD. DR DOES NOT DISPUTE REGARDING THE REJECTION OF THIS COMPANY BY THE LD. TPO IN THE EARLIER AS WELL AS SUCCEEDING ASSESSMENT YEAR. THUS FOLLOWING THE RULE OF CONSISTENCY WE DIRECT THE LD. TPO TO EXCLUDE THIS C OMPANY IN THE LIST OF COMPARABLES. TSR DARSHAW LTD. 10. THIS COMPANY HAS BEEN CHOSEN BY THE TPO. THIS COMPANY HAS BEEN FOUND TO BE ONE OF INDIAS LEADING BUSINESS PROCESS OUTSOURCING ORGANIZATION. THIS COM PANY HAS WELL-TRAINED HR PERSONNEL THIS WHICH ARE THE KE Y REQUIREMENTS FOR HANDLING BPO ACTIVITIES CARRIED ON BY THIS COMPANY. BASICALLY THIS COMPANY IS INTO RENDER ING SPECIFIC PAYROLL SERVICES TO ITS CLIENTS. THUS THIS COMPANY IS NOT FUNCTIONALLY SIMILAR TO THE ACTIVITIES CARRI ED ON BY THE ASSESSEE AND MORE SO WHEN IT HAS BEEN REJECTED BY THE LD.TPO IN THE EARLIER ASSESSMENT YEAR AS WELL AS IN THE SUCCEEDING ASSESSMENT YEAR. THE LD. DR DOES NOT DIS PUTE REGARDING THE REJECTION OF THIS COMPANY BY THE LD. TPO IN THE EARLIER AS WELL AS SUCCEEDING ASSESSMENT YEAR. THUS FOLLOWING THE RULE OF CONSISTENCY WE DIRECT THE LD. TPO TO EXCLUDE THIS COMPANY IN THE LIST OF COMPARABLES. EDUCATIONAL CONSULTANTS(I) LTD. 11. THIS COMPANY HAS BEEN CHOSEN BY THE ASSESSEE AS A COMPARABLE. THE LD. AR SUBMITTED THAT THIS COMPANY HAS 15 I.T.A.NO.1722./DEL/2015 BEEN ACCEPTED BY THE LD. TPO IN FOR ASSESSMENT YEAR 2009-10 AND 2011-12 ON THE SEGMENTAL BASIS. IT IS F URTHER SUBMITTED THAT THE ASSESSEE HAS TAKEN THE SEGMENTAL INFORMATION RELATING TO INCOME EARNED FROM TECHNICA L ASSISTANCE AND HUMAN RESOURCE DEVELOPMENT FOR THE PURPOSES OF COMPATIBILITY OF THIS COMPANY WITH THAT OF THE ASSESSEE. THE LD. DR DOES NOT DISPUTE REGARDING THE REJECTION OF THIS COMPANY BY THE LD. TPO IN THE EAR LIER AS WELL AS SUCCEEDING ASSESSMENT YEAR. THUS FOLLOWING THE RULE OF CONSISTENCY WE DIRECT THE LD. TPO TO INCLUD E THIS COMPANY IN THE LIST OF COMPARABLES. ICRA MANAGEMENT CONSULTANTS LTD. 12. THIS COMPANY HAS BEEN CHOSEN BY THE ASSESSEE AS A COMPARABLE. THE LD. AR SUBMITTED THAT THIS COMPANY IS FUNCTIONALLY SIMILAR AS IT OFFERS CONSULTANCY SERVI CES IN THE AREAS OF STRATEGY RISK MANAGEMENT OPERATIONS IMPROVEMENT REGULATORY ECONOMICS AND TRANSACTION ADVISORY. IT HAS BEEN POINTED OUT BY THE LD.AR THAT , THIS COMPARABLE WAS ACCEPTED BY THE TPO IN ASSESSEES OW N CASE FOR ASSESSMENT YEAR 2009-10 AND 2011-12. THE L D. DR DOES NOT DISPUTE REGARDING THE REJECTION OF THIS COMPANY BY THE LD. TPO IN THE EARLIER AS WELL AS SUCCEEDING ASSESSMENT YEAR. THUS FOLLOWING THE RULE OF CONSISTENCY WE DIRECT THE LD. TPO TO INCLUDE THIS C OMPANY IN THE LIST OF COMPARABLES. 16 I.T.A.NO.1722./DEL/2015 12.1 IN RESPECT OF THE REMAINING COMPARABLES WHICH HAS BEEN DISPUTED DUE TO ITS INCLUSION OR EXCLUSION HAS NOT BEEN OBJECTED BY THE LD. AR. WE ACCORDINGLY ARE NOT INCLINED TO ADJUDICATE UPON THE COMPATIBILITY OF TH OSE COMPANIES WITH THAT OF ASSESSEE. 13. IN THE RESULT THE GROUND RAISED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH AUG., 2016. SD./- SD./- (N. K. SAINI) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 05.08. 2016 SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) 17 I.T.A.NO.1722./DEL/2015 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 5/8/16 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 5/8 SR. PS/PS 7 FILE SENT TO BENCH CLERK 8/8 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER