DCIT, Circle- 6(1), New Delhi V. CH2M Hill (India) Pvt. Ltd., New Delhi

ITA 2598/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9805 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I1
• Assessment Year: 2012-2013
• Appeal Filed On: 13-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI DHEERAJ JAIN
• Assessee Lawyers: AJIT KR JAIN
• Keywords: Transfer pricing; International transaction
• Section: 144C; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-1 NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.2598/DEL/2018 ASSESSMENT YEAR: 2012-2013 DCIT, CIRCLE-6(1), NEW DELHI VS. CH2M HILL (INDIA) PVT. LTD., 604, SHAKUNTALA BUILDING 59, NEHRU PLACE, NEW DELHI. TAN/PAN: AAECA3097N (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SHRI DHEERAJ JAIN, SR.D.R. RESPONDENT BY: SHRI AJIT KR. JAIN, CA DATE OF HEARING: 11 03 2021 DATE OF PRONOUNCEMENT: 07 06 2021 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 31.01.2018, PASSED BY LD. CIT (A)-XLIV, NEW DELHI FOR THE QUANTUM OF ASSESSMENT P ASSED U/S.143(3) R.W.S. 144C FOR THE ASSESSMENT YEAR 2012 -13. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE, I.E., CH2M HILL (INDIA) PRIVATE LIMITED IS A SUBSIDIARY OF CH2M HIL L INTERNATIONAL LIMITED, USA. THE ASSESSEE-COMPANY IS PRIMARILY ENGAGED IN THE BUSINESS OF PROVIDING VARI OUS MANAGEMENT AND TECHNOLOGICAL SOLUTIONS IN SECTORS L IKE WATER AND WASTE MANAGEMENT, INFRASTRUCTURE DEVELOPMENT, O IL & GAS, TRANSPORTATION, ENERGY, CHEMICALS, MASTER PLAN NING AND I.T.A. NO.2598/DEL/2018 2 ENVIRONMENTAL SERVICES. IT IS ENGAGED IN THE BUSINE SS OF PROVIDING ENGINEERING SERVICES TO RELATED AS WELL A S UNRELATED PARTIES. THE RETURN OF INCOME WAS FILED DECLARING A TOTAL LOSS OF RS. 22,38,13,628/-. THE SAME WAS PROCESSED U/S. 143 (1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SC RUTINY, WHEREIN ASSESSING OFFICER EXAMINING THE FORM 3 CEB REPORT THAT THE ASSESSEE-COMPANY HAD ALSO ENTERED INTO INTERNATIONAL TRANSACTION WITH ITS AE, A REFERENCE WAS MADE TO THE TRANSFER PRICING OFFICER (TPO) TO DETERMINE THE ARMS LENGTH PRICE OF SUCH TRANSACTION U/S. 92CA(3) OF TH E ACT. THE INTERNATIONAL TRANSACTION UNDERTAKEN BY THE ASSESSE E DURING THE YEAR UNDER CONSIDERATION WERE ESSENTIALLY FOR R ENDERING OF TECHNICAL CONSULTANCY SERVICES AND AVAILING OF TECH NICAL CONSULTANCY SERVICES. DETAILS OF INTERNATIONAL TRAN SACTION AS PER FORM NO. 3CEB OF THE ASSESSEE-COMPANY WERE AS F OLLOWS: S. NO. NATURE OF TRANSACTIONS VALUE (IN INR) METHOD APPLIED 1 RENDERING OF TECHNICAL CONSULTANCY SERVICES 131,738,873 TRANSACTIONAL NET MARGIN METHOD (TNMM) 2 AVAILING OF TECHNICAL CONSULTANCY SERVICES 174,803,353 OTHER METHOD 3 REIMBURSEMENT OF EXPENSES 34,946,182 OTHER METHOD 4 RECOVERY OF EXPENSES 15,576,983 OTHER METHOD 3. IN ORDER TO BENCHMARK THE INTERNATIONAL TRANSACT ION OF RECEIPT OF TECHNICAL CONSULTANCY SERVICES, THE ASSE SSEE HAD I.T.A. NO.2598/DEL/2018 3 ADOPTED TNMM AS THE MOST APPROPRIATE METHOD. AS MENTIONED BY THE LEARNED TRANSFER PRICING OFFICER ( TPO) AT PAGE NUMBER 3-4 OF HIS ORDER, THE ASSESSEE HAD TAKE N A SET OF 8 COMPARABLE COMPANIES WITH AN AVERAGE MARGIN OF 14 .65% AND HAD USED MULTIPLE YEAR DATA. THE ASSESSEES OWN MARGIN WAS WORKED AT 41.31% USING SEGMENTAL DATA AND, THER EFORE, IT WAS ASSESSEES CONTENTION THAT ITS INTERNATIONAL TR ANSACTION WAS AT ARMS LENGTH. 4. DURING THE TRANSFER PRICING ASSESSMENT PROCEEDIN GS, THE TPO REJECTED THE SEGMENTAL RESULTS OF THE ASSESSEE AND RECOMPUTED THE MARGIN OF ASSESSEE COMPANY AT (-) 18 .23%. FURTHER, THE TPO REJECTED 5 COMPANIES OUT OF 8 COMP ANIES SELECTED BY THE ASSESSEE. THUS, THE TPO ACCEPTED ON LY 3 COMPANIES SELECTED BY THE ASSESSEE. FURTHER THE TPO SELECTED 5 NEW COMPANIES AND THEREAFTER PROPOSED A SET OF 8 COMPARABLE COMPANIES HAVING MEAN MARGIN OF 20.64%. THE LIST OF 8 COMPANIES IS AVAILABLE ON PAGE NUMBER 7 O F THE ORDER OF THE TPO. ACCORDINGLY, THE TPO PROPOSED AN ADJUST MENT OF INR 25.18 CRORES IN THE SHOW CAUSE NOTICE. 5. DURING THE TRANSFER PRICING ASSESSMENT PROCEEDIN GS, THE ASSESSEE SUBMITTED ITS DETAIL OBJECTIONS ON VARIOUS COMPANIES PROPOSED TO BE USED BY THE TPO AS COMPARA BLES. AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE TH E TPO FINALLY ARRIVED AT SET OF 5 COMPARABLE COMPANIES AS LISTED AT PAGE NUMBER 24 OF HIS ORDER AS GIVEN BELOW: I.T.A. NO.2598/DEL/2018 4 S. NO. COMPARABLE OP/OC% 1 CADES DIGITECH PVT. LTD. (MERGED) 2.92% 2 HOLTEC CONSULTING PVT. LTD. 59% 3 ONWARD TECHNOLOGIES LTD. 17.04% 4 ACROPETAL TECHNOLOGIES LTD. (SEG) 9.21% 5 TCE CONSULTING ENGINEERS LTD. 21.15% AVERAGE 22.72% 6. THE TPO APPLIED THE MEAN MARGIN OF 22.72% AS AGA INST THE LOSS OF THE ASSESSEE COMPANY AS DETERMINED BY H IM AT (-) 18.23%. THE TPO COMPUTED THE DIFFERENCE BETWEEN THE ARMS LENGTH PRICE AND THE PRICE CHARGED BY THE ASSESSEE AT RS. 25,97,46,129/-. HOWEVER, THE TPO ADJUSTED THE DIFFER ENCE IN THE RATIO OF INTERNATIONAL TRANSACTIONS TO THE TOTA L TRANSACTION AND PROPOSED AN ADJUSTMENT OF RS. 6,76,11,918/- BEI NG UPWARD ADJUSTMENT TO THE ALP OF THE INTERNATIONAL TRANSACTION. 7. AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CIT ( A), CHALLENGING THE ADJUSTMENT, WHO PARTLY ALLOWED THE A SSESSEES APPEAL. A BRIEF SUMMARY OF ORDER OF CIT (A) AS PER THE ORDER GIVING EFFECT TO THE ORDER OF THE CIT (A) DATED 23/ 08/2019, FILED BY THE ASSESSEE IN PAPER BOOK ON PAGE NUMBER 17, IS AS UNDER: S. NO. COMPARABLE OP/OC% AS PER THE TPOS ORDER OP/OC% AS PER THE DIRECTIONS OF THE CIT(A) I.T.A. NO.2598/DEL/2018 5 1 CADES DIGITECH PVT. LTD. (MERGED) 2.92% 1.26% 2 HOLTEC CONSULTING PVT. LTD. 59% EXCLUDED 3 ACROPETAL TECHNOLOGIES LTD. (SEG) 9.21% 9.21% 4 TCE CONSULTING ENGINEERS LTD. 21.15% 21.15% 5 ONWARD TECHNOLOGIES LTD. 17.04% 14.89% 6 DEVELOPMENT CONSULTANTS P. LTD. NOT IN TP ORDER 18.09% AVERAGE 22.72% 12.92% 8. THUS, THE ADJUSTMENT OF RS. 6,76,11,918/- MADE O N THIS ACCOUNT WAS REDUCED TO RS. 5,25,28,068/-. THEREAFTE R, BOTH THE APPELLANT AND THE DEPARTMENT HAVE FILED THEIR R ESPECTIVE APPEALS BEFORE THIS TRIBUNAL AGAINST THE ADJUSTMENT MADE BY LD. AO/ LD. TPO AND RELIEF GRANTED BY CIT (A) TO TH E APPELLANT, RESPECTIVELY. WITH RESPECT TO THE ASSESS EES APPEAL, THE APPELLANT ASSESSEE SUBSEQUENTLY FILED AN APPLIC ATION UNDER THE THE DIRECT TAX VIVAD SE VISHWAS ACT, 202 0 IN ORDER TO BUY PEACE AND SETTLE THE DISPUTE. RELEVANT INTIMATION IN THIS REGARD HAVE BEEN PLACED IN THE PAPER BOOK A T PAGE NUMBER 7. 9. NOW, THE DEPARTMENTS APPEAL IS BEFORE THE TRIBU NAL CHALLENGING ORDER OF THE CIT (A) BY RAISING THE FOL LOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN EXCLUSION OF COMPARABLE I.E. HOLTEC CONSULTING PVT. LTD. BY IGNORING THE TP PROCEEDINGS WHEREIN IT WAS ESTABLISHED THAT THE COMPANY IS I.T.A. NO.2598/DEL/2018 6 PRIMARILY ENGAGED IN THE BUSINESS OF RENDING ENGINE ERING CONSULTANCY SERVICES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEAL) ERRED BY IGNORING THE FACT THAT AN ENTITY CAN BE EX CLUDED FROM THE LIST OF COMPARABLES ONLY ON THE GROUND OF INCOMPATIBILIT Y TAKING INTO ACCOUNT COMPARABILITY FACTORS AS IS STIPULATED U/S 92C(1) OF THE INCOME TAX ACT, 1961 AND RULE 10B(2) & (3) OF THE I NCOME TAX RULES 1962 AND NOT ON THE BASIS OF HIGHER OR LOWER PROFIT RATE. 10. IN RELATION TO THE ABOVE GROUNDS, THE LD. DEPA RTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE REVENUE IS AGGRIEVED WITH ERRONEOUS EXCLUSION OF HOLTEC CONSULTING PVT. LTD. THE DR REFERRED TO THE ORDER OF THE TPO AND MENTIONED T HAT THE ASSESSEE COMPANY IS PRIMARILY ENGAGED IN PROVIDING PLANNING, CONSULTING, ENGINEERING, OPERATIONS AND T ECHNICAL CONSULTANCY SERVICES IN THE FIELD OF WATER AND WAST E MANAGEMENT, INFRASTRUCTURE DEVELOPMENT, OIL AND GAS , TRANSPORTATION, ENERGY, CHEMICALS, MASTER PLANNING AND ENVIRONMENTAL SERVICES. LD. DR REFERRING TO PAGE NU MBER 19 OF THE TPOS ORDER MENTIONED THAT THE COMPARABLES S ELECTED BY THE TPO BROADLY PERFORM FUNCTIONS SIMILAR TO THE ASSESSEE AND ARE PART OF THE SAME INDUSTRY SEGMENT. HE POINT ED OUT THAT THE SERVICES PROVIDED BY THE COMPANY ARE IN TH E NATURE OF TECHNICAL SERVICES WHICH MAY NOT BE EXACTLY SAME , BUT THE SERVICES ARE TECHNICAL SERVICES, PROVIDED BY THE EN GINEERS. HENCE BOTH THE ASSESSEE COMPANY AND THE COMPARABLE PERFORM THE SERVICES WHICH ARE COMPARABLE. 11. REFERRING TO THE ORDER OF THE LD. CIT (A) ON TH E EXCLUSION I.T.A. NO.2598/DEL/2018 7 OF HOLTEC CONSULTING PVT. LTD. LD. DR POINTED OUT T HAT THE CIT(A) ON PAGE NUMBER 85 OF HER ORDER WHILE GRANTIN G RELIEF HAS FOLLOWED HER ORDER FOR THE AY 2013-14. ON BEING ENQUIRED THE AR FOR THE ASSESSEE POINTED OUT THAT THE APPEAL FOR AY 2013-14 IS STILL PENDING BEFORE THIS ITAT. HE FURTH ER SUBMITTED THAT THE YEAR UNDER APPEAL I.E. AY 2012-1 3 BEING THE FIRST YEAR IN WHICH THE HOLTEC CONSULTING PVT. LTD. WAS ADDED AS A COMPARABLE BY THE TPO MAY BE DECIDED ON THE FACTS OF THIS YEAR. LEARNED DR RELIED HEAVILY ON PA RA NUMBER 14 OF THE TPO WHEREIN THE TPO HAS MENTIONED THE REA SONS FOR INCLUSION OF THIS COMPANY AS A GOOD COMPARABLE. 12. ON THE CONTRARY THE LEARNED AR FOR THE ASSESS EE REFERRED TO THE ANNUAL REPORT OF HOLTEC CONSULTING PVT. LTD. AS PLACED IN THE PAPER BOOK AT PAGE NUMBER 605 AND ALS O THE EXTRACT OF THE WEBSITE OF THIS COMPANY AVAILABLE ON PAGE NUMBER 651 OF THE PAPER BOOK. REFERRING TO THE EXTR ACTS OF THE WEBSITE THE AR POINTED OUT THAT HOLTEC CONSULTING P VT. LTD. IS NOT ONLY INTO ENGINEERING SUPPORT AND DETAILING BUT ALSO INTO CEMENT, POWER AND HIGHWAYS & BRIDGES. IT PROVIDES A WIDE RANGE OF SERVICES FROM CONCEPT TO COMMISSIONING OF GREEN FIELD MODERNIZATION/CONVERSION/EXPANSION OF CEMENT AS WEL L AS CAPTIVE POWER PLANTS/WASTE HEAT RECOVERY-BASED POWE R PLANT PROJECTS. IN ADDITION, THIS COMPANY ALSO OPERATES I N OTHER RELATED AREAS SUCH AS HIGHWAYS AND BRIDGES ENGINEER ING SUPPORT AND DETAILING, BUILDING MATERIAL HANDLING, ALTERNATE FUEL AND RAW MATERIAL ETC. THUS, THE AR ARGUED THAT THE FUNCTIONAL PROFILE OF THIS COMPANY CANNOT BE COMPAR ED WITH I.T.A. NO.2598/DEL/2018 8 THAT OF THE ASSESSEE COMPANY. 13. LD. AR ALSO REFERRED TO PAGE NUMBER 642 OF THE PAPER BOOK TO DEMONSTRATE THAT THERE ARE NO SEGMENTAL ACC OUNTS AVAILABLE WHICH CAN BE USED FOR THE PURPOSE OF COMP ARABILITY WITH THE ASSESSEE COMPANY PRESUMING SOME OF THE ACT IVITIES ARE COMPARABLE. THE AR THEN RELIED UPON THE FINDING S OF THE LD. CIT (A) WHEREIN IT IS HELD THAT FUNCTIONAL PROF ILE OF THE ASSESSEE COMPANY IS NOT SIMILAR TO THAT OF THE COMP ANY UNDER REFERENCE AT THE ENTITY LEVEL AND THE SEGMENTAL ACC OUNTS ARE NOT AVAILABLE. 14. WE HAVE CONSIDERED THE AFORESAID SUBMISSIONS A ND ALSO PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AS WELL AS MATERIAL REFERRED TO BEFORE US. THE ONLY CO MPARABLE WHICH HAS BEEN CHALLENGED BEFORE IS, HOLTEC CONSULT ING PVT. LTD. THIS WAS THE COMPARABLE CHOSEN BY THE TPO. THE ASSESSEE HAS CHALLENGED THE INCLUSION OF THE SAID C OMPARABLE ON ACCOUNT OF FUNCTIONAL DISSIMILARITY AS THIS COMP ANY WAS HAVING DIVERSIFIED OPERATIONS AND SERVICES INCLUDIN G GEOLOGY AND MINING PROJECT AND CONSTRUCTION MANAGEMENT, ENVIRONMENT MANAGEMENT, PERFORMANCE ENHANCEMENT, LOGISTICS ETC. FURTHER, IT HAS NO SEGMENTAL ACCOUNT FOR VARIOUS SCHEMES OF INCOME. HOWEVER, THE LD. TPO HELD THAT S INCE THE ASSESSEE IS ENGAGED IN PROVIDING VARIOUS MANAGEMENT AND TECHNOLOGICAL SOLUTIONS SERVICES IN THE FIELD OF WA TER AND WASTE MANAGEMENT, INFRASTRUCTURE DEVELOPMENT, ETC. WHICH CAN BE BROADLY COMPARED TO THE FUNCTIONS PERFORMED BY THIS I.T.A. NO.2598/DEL/2018 9 COMPANY WHICH IS ALSO IN THE NATURE OF TECHNICAL SE RVICES. BEFORE US, THE LD. COUNSEL AS POINTED OUT FROM THE ANNUAL REPORTS OF THE SAID COMPANY THAT HOLTEC CONSULTING PVT. LTD. IS NOT ONLY TO BE ENGINEERING SUPPORT AND DETAILING BUT ALSO INTO CEMENT POWER, HIGHWAYS AND BRIDGES. IT PROVIDE S WIDE RANGE OF SERVICES FROM CONCEPT OF COMMISSIONING OF GREEN FIELD MODERNIZATION/CONVERSION/ EXPANSION OF CEMENT AS WE LL AS CAPTIVE POWER PLANTS RECOVERY BASED POWER PLANT PRO JECTS. IN ADDITION TO THIS, COMPANY ALSO OPERATES IN HIGHWAYS AND BRIDGES, ENGINEERING SUPPORTS AND DEALING, BUILDING MATERIALS, MATERIAL HANDLING, ALTERNATE FUEL AND RAW MATERIALS ETC. FOR CARRYING OF SUCH ACTIVITIES AND REVENUES EARNED FRO M SUCH DIVERSIFIED ACTIVITIES, NO SEGMENTAL ACCOUNTS ARE A VAILABLE. THIS FACT HAS BEEN DULY NOTED BY THE LD. CIT (A) AT PAGES 84 AND 85 OF THE APPELLATE ORDER. ONCE IT IS AN ADMITT ED FACT THAT THERE IS NO SEGMENTAL ACCOUNT TO VARIOUS ACTIVITIES AND DIVERSIFIED SERVICES, OSTENSIBLY IT WOULD BE DIFFIC ULT TO BENCH MARK THE MARGIN OF THE SAID COMPANY WITH THE ASSESS EE COMPANY. PRECISELY, ON THIS GROUND ALONE, THE LD. C IT (A) IS DIRECTED TO EXCLUDE THE SAID COMPANY. THE RELEVANT PORTION OF THE LD. CIT (A) DEALING WITH THIS COMPARABLE READS AS UNDER: NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MA RCH 31, 2013 NOTE-15 REVENUE FROM OPERATIONS PARTICULARS MARCH 31, 2013 (RS.) MARCH 31, 2012 (RS.) INCOME FROM CONSULTANCY SERVICES 750,576,267 785,049,917 I.T.A. NO.2598/DEL/2018 10 32 SEGMENT REPORTING THE COMPANY IS PRIMARILY ENGAGED IN THE BUSINESS OF RENDERING ENGINEERING CONSULTANCY SERVICES TO ITS CLIENTS LOC ATED IN INDIA & ABROAD. AS THE OFFICE OF THE COMPANY IS SITUATED AT ONE PLACE IN INDIA ACCOUNTS ARE BEING MAINTAINED CENTRALLY, THE MANAGE MENT IS OF THE VIEW THAT THE ACCOUNTING STANDARD SEGMENT REPORTIN G (AS- 17) ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA IS NOT APPLICABLE TO THE COMPANY. HOWEVER, THE MANAGEMENT IS EXAMINING T HE APPLICABILITY OF THE SAME AND WILL DETERMINE THE MA NNER OF ACCOUNTING TO RETRIEVE THE DATA REQUIRED AS PER THE REPORTING REQUIREMENT OF AS-17 IF FOUND APPLICABLE. IT CAN BE SEEN FROM THE ABOVE, ABOVE SERVICES PROVI DED BY THIS COMPANY IN THE NATURE OF TECHNICAL SERVICES. HENCE, THOUGH SERVICES PROVIDED BY IT MAY NOT BE EXACTLY SAME, BUT THEY AR E TECHNICAL SERVICES PROVIDED BY ENGINEERS. HENCE, AS PER THE D ISCUSSION IN THE GENERAL DISCUSSION SECTION, IT IS A COMPARABLE. FURTHER, THE ANNUAL REPORT IS AVAILABLE IN THE PUBL IC DOMAIN AND ASSESSEE CAN OBTAIN IT FROM THE WEBSITE OF THE MCA OR THIS OFFICE. (B) THE APPELLANT HAS FURNISHED THE FOLLOWING INFOR MATION FROM THE WEBSITE OF THE COMPANY (SOURCE:HTTP://WWW.HOLTECNET . COM/INDEX.PHP?ID=2) AND STATED THAT THE COMPANY IS FUNCTIONAL DISSIMILAR ABOUT HOLTEC INCORPORATED IN 1967, HOLTEC CONSULTING PRIVATE LIM ITED IS AN ISO- CERTIFIED CONSULTING COMPANY, PRIMARILY POSITIONED TO SERVICE THE ENTIRE GAMUT OF NEEDS OF THE GLOBAL CEMENT INDUSTRY. IT AL SO OFFERS COMPREHENSIVE SERVICES IN THE AREAS OF POWER, HIGHW AYS, BRIDEGES AND ENGINEERING SUPPORT SERVICES FOR BULK MATERIAL HANDLING & STRUCTURAL STEEL DETAILING ITS PORTFOLIO OF SERVICE S SPANS ALL DISCIPLINES I.T.A. NO.2598/DEL/2018 11 OF ENGINEERING, BUSINESS CONSULTING, GEOLOGY & MINI NG, PROJECT & CONSTRUCTION MANAGEMENT, ENVIRONMENT MANAGEMENT, PE RFORMANCE ENHANCEMENT, LOGISTICS ETC. IN ADDITION HOLTEC OPER ATES AND MAINTAINS CEMENT PLANTS GLOBALLY FOR ITS CLIENTS AN D ALSO PROVIDES SOLUTIONS ENCOMPASSING THE INTEGRATED DELIVERY OF S ERVICES AND PRODUCTS THROUGH ITS DOMESTIC AND INTERNATIONAL GRO UP ENTITIES. SINCE ITS INCEPTION, HOLTEC HAS DELIVERED SIGNIFICA NT VALUE TO ITS 800+CLIENLELE COMPRISING OF CEMENT PRODUCERS, EQUIP MENT AND SERVICE PROVIDERS EPC AND CONSTRUCTION FIRMS, INFRASTRUCTUR E DEVELOPERS INVESTING AND FUNDING BODIES AND ALL OTHER RELEVANT STAKEHOLDERS THROUGH 3,900 + CONSULTING ASSIGNMENTS IN 90+COUNTR IES EXECUTED BBY ITS 300+MULTI DISCIPLINARY STAFF WITH AN EXPERIENCE INVENTORY OF 600+ PERSON-YEARS. OUR SERVICES HOLTEC OFFERS A WIDE RANGE OF SERVICES FROM CONCEPT TO COMMISSIONING FOR GREEN-FIELD MODERNIZATION/CONVERSION/EXPANSION OF CEMENT AS WELL AS CAPTIVE POWER PLANT/WASTE HEAT RECOVERY BASED PO WER PLANT PROJECTS. IN ADDITION, WE ALSO OPERATE IN OTHER REL ATED AREAS SUCH AS HIGHWAYS AND BRIDGES, ENGINEERING SUPPORT AND DETAI LING, BUILDING MATERIALS, MATERIAL HANDLING, ALTERNATE FUEL AND RA W MATERIALS (AFR) ETC. BECAUSE IT IS ENGAGED IN VARIOUS SECTOR OF THE ECON OMY AND PRIMARILY CATERS TO THE GLOBAL CEMENT INDUSTRY. IT HAS A DIVE RSIFIED PORTFOLIO OF SERVICES THAT SPANS AROUND ENGINEERING, GEOLOGY & M INING, BUSINESS CONSULTING, PROJECT & CONSTRUCTION MANAGEMENT, ENVI RONMENT MANAGEMENT, PERFORMANCE ENHANCEMENT, LOGISTICS, ETC . IT HAS ALSO BEEN STATED THAT THE COMPANY ALSO OFFERS WIDE RANGE OF SERVICES FROM CONCEPT TO COMMISSIONING FOR GREEN-FIELD, MODERNIZA TION/ CONVERSION/ EXPANSION OF CEMENT AS WELL AS CAPTIVE POWER PLANTS RECOVERY BASED POWER PLANT PROJECTS. I.T.A. NO.2598/DEL/2018 12 (C) THE APPELLANT HAS FURTHER STATED THAT THE SEGME NTAL ACCOUNTS OF THIS COMPANY ARE NOT AVAILABLE IN PUBLIC DOMAIN, WHICH M AKES IT DIFFICULT TO ANALYZE OR SELECT A PARTICULAR SEGMENT OF THIS C OMPANY, IF FOUND COMPARABLE TO THE APPELLANTS BUSINESS ACTIVITIES - AS THE COMPANY'S ENTIRE OPERATIONS CANNOT BE CONSIDERED COMPARABLE T O THAT OF THE APPELLANT. (D) IT IS FURTHER STATED THAT THE PROFIT IS 72.45%, WHICH IS ABNORMALLY HIGH. IT HAS BEEN OBSERVED BOTH IN THE OECD GUIDELI NES AS WELL AS THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF MENTO R GRAPHICS (SUPRA) THAT VERY HIGH PROFIT AND HIGH LOSS MAKING COMPANIE S OUGHT NOT TO BE CONSIDERED FOR THE PURPOSE OF BENCHMARKING AS IT WO ULD SKEW THE PROFIT MARGIN OF THE COMPARABLE SET OF COMPANIES. (E) IN VIEW OF THE ABOVE DISCUSSION IT IS OBSERVED THAT THE FUNCTIONAL PROFILE OF THE APPELLANT IS NOT SIMILAR TO THAT OF THE COMPANY UNDER REFERENCE AT THE ENTITY LEVEL. IT IS ALSO NOTED THA T SEGMENTAL DATA IS NOT AVAILABLE AND THAT THE COMPANY HAS SHOWED ABNORMAL PROFITS DURING THE YEAR. IN VIEW OF THE SAME, THE AO/TPO IS DIRECT ED TO EXCLUDE HOLTEC CONSULTING PVT. LTD. FROM THE FINAL LIST OF COMPARABLES. (B) IN THE YEAR UNDER REFERENCE IT IS SEEN THAT THE MATERIAL FACTS OF THE CASE ARE SIMILAR. THE APPELLANT HAS STATED THAT THE ABOVE-MENTIONED COMPARABLE SHOULD NOT BE INCLUDED IN THE FINAL SET DUE TO NON- AVAILABILITY OF SEGMENTAL ACCOUNTS; ABNORMAL PROFIT MARGINS AND SIGNIFICANTLY HIGHER ASSET BASE. A PERUSAL OF THE A NNUAL REPORT PLACED IN THE PAPER BOOK SHOWS THAT SEGMENTAL ACCOUNTS ARE NOT AVAILABLE FOR THE YEAR UNDER REFERENCE AND THAT THE COMPANY HAS A MUCH HIGHER ASSET BASE. ACCORDINGLY, THIS GROUND OF APPEAL IS D ECIDED IN FAVOUR OF THE APPELLANT. 15. IN VIEW OF THE AFORESAID FACTS ON RECORD AND AS DISCUSSED ABOVE, WE DO NOT FIND ANY REASON TO DEVIATE FROM TH E FINDING OF THE LD. CIT (A) FOR EXCLUSION OF THIS COMPARABLE. S AME IS I.T.A. NO.2598/DEL/2018 13 ACCORDINGLY CONFIRMED. ACCORDINGLY, THE TPO IS DIRE CTED TO EXCLUDE THE SAID COMPANY FROM THE LIST OF THE COMPA RABLES AND; SECONDLY, THE REVENUES APPEAL IS DISMISSED. 16. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JUNE, 2021 SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 07/06/2021 PKK: